equipment into which the replacement engine is installed.
    (c) Engines or equipment that are temporarily exempt from EPA
exhaust emission standards are also exempt from the requirements of
this part 1060 for the same period as the exhaust exemption.
    (d) For equipment powered by more than one engine, all the engines
installed in the equipment must be exempt from all applicable EPA
exhaust emission standards for the equipment to also be exempt under
paragraph (a) or (b) of this section.
    (e) In unusual circumstances, we may exempt equipment from the
requirements of this part 1060 even if the equipment is powered by one
or more engines that are subject to EPA exhaust emission standards. See
40 CFR part 1068. Such exemptions will be limited to:
    (1) Testing. See 40 CFR 1068.210.
    (2) National security. See 40 CFR 1068.225.
    (3) Economic hardship. See 40 CFR 1068.245 and 1068.250.
    (f) Evaporative emission standards generally apply based on the
model year of the equipment, which is determined by the equipment's
date of final assembly. However, in the first year of new emission
standards, equipment manufacturers may apply evaporative emission
standards based on the model year of the engine as shown on the
engine's emission control information label. For example, for fuel line
permeation standards starting in 2012, equipment manufacturers may
order a batch of 2011 model year engines for installation in 2012 model
year equipment, subject to the anti-stockpiling provisions of 40 CFR
1068.105(a). The equipment with the 2011 model year engines would not
need to meet fuel line permeation standards, as long as the equipment
is fully assembled by December 31, 2012.

Sec.  1060.640  What special provisions apply to branded equipment?

    The following provisions apply if you identify the name and
trademark of another company instead of your own on your emission
control information label for equipment, as provided by Sec.  1060.135:
    (a) You must have a contractual agreement with the other company
that obligates that company to take the following steps:
    (1) Meet the emission warranty requirements that apply under Sec.
1060.120. This may involve a separate agreement involving reimbursement
of warranty-related expenses.
    (2) Report all warranty-related information to the certificate
holder.
    (b) In your application for certification, identify the company
whose trademark you will use and describe the arrangements you have
made to meet your requirements under this section.
    (c) You remain responsible for meeting all the requirements of this
chapter, including warranty and defect-reporting provisions.

Subpart H--Averaging, Banking, and Trading Provisions

Sec.  1060.701  Applicability.

    (a) You are allowed to comply with the emission standards in this
part with emission credits only if the exhaust standard-setting part
explicitly allows it for evaporative emissions.
    (b) The following CFR parts allow some use of emission credits:
    (1) 40 CFR part 1045 for marine vessels.
    (2) 40 CFR part 1051 for recreational vehicles.
    (3) 40 CFR part 1054 for Small SI equipment.
    (c) As specified in 40 CFR part 1048, there is no calculation of
emission credits for Large SI equipment.

Sec.  1060.705  How do I certify components to an emission level other
than the standard under this part or use such components in my
equipment?

    As specified in this section, a component or system may be
certified to a family emission limit (FEL) instead of the otherwise
applicable emission standard.
    (a) Requirements for certifying component manufacturers. See
subpart C of this part for instructions regarding the general
requirements for certifying components.
    (1) When you submit your application for certification, indicate
the FEL to which your components will be certified. This FEL will serve
as the applicable standard for your component and the equipment that
uses the component. For example, when the regulations of this part use
the phrase ``demonstrate compliance with the applicable emission
standard'' it will mean ``demonstrate compliance with the FEL'' for
your component.
    (2) You may not change the FEL for an engine family. To specify a
different FEL for your components, you must send a new application for
certification for a new emission family.
    (3) Unless your FEL is below all emission standards that could
potentially apply, you must ensure that all equipment manufacturers
that will use your component are aware of the limitations regarding the
conditions under which they may use your component.
    (4) It is your responsibility to read the relevant instructions in
the standard-setting parts identified in Sec.  1060.15.
    (b) Requirements for equipment manufacturers. See subpart C of this

part for instructions regarding your ability to rely on the component
manufacturer's certificate.
    (1) The FEL of the component will serve as the applicable standard
for your equipment.
    (2) If the FEL is above the emission standard you must ensure that
the exhaust standard-setting part allows you to use emission credits to
comply with emission standards and that you will have an adequate
source of emission credits. You must certify your equipment as
specified in Sec.  1060.201 and the rest of subpart C of this part.

Subpart I--Definitions and Other Reference Information

Sec.  1060.801  What definitions apply to this part?

    The following definitions apply to this part. The definitions apply
to all subparts unless we note otherwise. All undefined terms have the
meaning the Act gives to them. The definitions follow:
    Accuracy and precision means the sum of accuracy and repeatability,
as defined in 40 CFR 1065.1001. For example, if a measurement device is
determined to have an accuracy of  1% and a repeatability
of  2%, then its accuracy and precision would be  3%.
    Act means the Clean Air Act, as amended, 42 U.S.C. 7401-7671q.
    Adjustable parameter means any device, system, or element of design
that someone can adjust and that, if adjusted, may affect emissions.
You may ask us to exclude a parameter if you show us that it will not
be adjusted in use in a way that affects emissions.
    Applicable emission standard or applicable standard means an
emission standard to which a fuel-system component; or, where a fuel-
system component has been or is being certified another standard or
FEL, applicable emission standards means the FEL and other standards to
which the fuel-system component has been or is being certified. This
definition does not apply to subpart H of this part.
    Butane working capacity means the measured amount of hydrocarbon
vapor that can be stored on a canister when tested according to ASTM
D5228-92 (incorporated by reference in Sec.  1060.810). You may
determine carbon capacity for a given system by multiplying the mass of
carbon in the system by weight-specific carbon working capacity of a
specific type of carbon.
    Certification means relating to the process of obtaining a
certificate of conformity for an emission family that complies with the
emission standards and requirements in this part.
    Certified emission level means the highest official emission level
in an emission family.
    Cold-weather equipment includes the following types of handheld
equipment: chainsaws, cut-off saws, clearing saws, brush cutters with
engines at or above 40cc, commercial earth and wood drills, and ice
augers. This includes earth augers if they are also marketed as ice
augers.
    Configuration means a unique combination of hardware (material,
geometry, and size) and calibration within an emission family. Units
within a single configuration differ only with respect to normal
production variability.
    Designated Compliance Officer means the Manager, Heavy-Duty and
Nonroad Engine Group (6405-J), U.S. Environmental Protection Agency,
1200 Pennsylvania Ave., NW., Washington, DC 20460.
    Designated Enforcement Officer means the Director, Air Enforcement
Division (2242A), U.S. Environmental Protection Agency, 1200
Pennsylvania Ave., NW., Washington, DC 20460.
    Detachable fuel line means a fuel line or fuel line assembly
intended to be used with a portable nonroad fuel tank and which is
connected by special fittings to the fuel tank and/or engine for easy
disassembly. Fuel lines that require a wrench or other tools to
disconnect are not considered detachable fuel lines.
    Diffusion emissions means evaporative emissions caused by the
venting of fuel tank vapors as a result of molecular motion rather than
fuel heating.
    Diurnal emissions means evaporative emissions that occur as a
result of venting fuel tank vapors during daily temperature changes
while the engine is not operating. Diurnal emissions include diffusion
emissions.
    Effective length-to-diameter ratio means the mean vapor path length
of a carbon canister divided by the effective diameter of that vapor
path. The effective diameter is the diameter of a circle with the same
cross-sectional area as the average cross-sectional area of the carbon
canister's vapor path.
    Emission control system means any device, system, or element of
design that controls or reduces the regulated evaporative emissions
from a piece of nonroad equipment.
    Emission-data unit means a fuel line, fuel tank, fuel system, or
fuel-system component that is tested for certification. This includes
components tested by EPA.
    Emission-related maintenance means maintenance that substantially
affects emissions or is likely to substantially affect emission
deterioration.
    Emission family has the meaning given in Sec.  1060.230.
    Equipment means vehicles, marine vessels, and other types of
nonroad equipment that are subject to this part's requirements.
    Evaporative means relating to fuel emissions that result from
permeation of fuel through the fuel-system materials and from
ventilation of the fuel system.
    Exhaust standard-setting part means the part in the Code of Federal
Regulations that contains exhaust emission standards for a particular
piece of equipment (or the engine in that piece of equipment). For
example, the exhaust standard-setting part for off-highway motorcycles
is 40 CFR part 1051. Exhaust standard-setting parts may include
evaporative emission requirements or describe how the requirements of
this part 1060 apply.
    Exposed gasket surface area means the surface area of the gasket
inside the fuel tank that is exposed to fuel or fuel vapor. For the
purposes of calculating exposed surface area of a gasket, the thickness
of the gasket and the outside dimension of the opening being sealed are
used. Gasket overhang into the fuel tank should be ignored for the
purpose of this calculation.
    Family emission limit (FEL) means an emission level declared by the
manufacturer to serve in place of an otherwise applicable emission
standard under an ABT program specified by the exhaust standard-setting
part. The family emission limit must be expressed to the same number of
decimal places as the emission standard it replaces. The family
emission limit serves as the emission standard for the emission family
with respect to all required testing.
    Fuel line means hoses or tubing designed to contain liquid fuel.
The exhaust standard-setting part may further specify which types of
hoses and tubing are subject to the standards of this part.
    Fuel system means all components involved in transporting,
metering, and mixing the fuel from the fuel tank to the combustion
chamber(s), including the fuel tank, fuel tank cap, fuel pump, fuel
filters, fuel lines, carburetor or fuel-injection components, and all
fuel-system vents. In the case where the fuel tank cap or other
components (excluding fuel lines) are directly mounted on the fuel
tank, they are considered to be a part of the fuel tank.
    Fuel CE10 has the meaning given in Sec.  1060.515(a).
    Fuel type means a general category of fuels such as gasoline or
natural gas. There can be multiple grades within a single fuel type,
such as premium

gasoline, regular gasoline, or gasoline with 10 percent ethanol.
    Gasoline means one of the following:
    (1) For in-use fuels, gasoline means fuel that is commonly and
commercially know as gasoline, including ethanol blends.
    (2) For testing, gasoline has the meaning given in subpart F of
this part.
    Good engineering judgment means judgments made consistent with
generally accepted scientific and engineering principles and all
available relevant information. See 40 CFR 1068.5 for the
administrative process we use to evaluate good engineering judgment.
    Installed marine fuel tank means any fuel tank designed for
delivering fuel to a Marine SI engine, excluding portable nonroad fuel
tanks.
    Large SI means relating to engines that are subject to evaporative
emission standards in 40 CFR part 1048.
    Low-permeability material means a material with permeation emission
rates at or below 10 (g-mm)/(m\2\-day) when measured according to SAE
J2659 (incorporated by reference in Sec.  1060.810), where the test
temperature is 23 [deg]C, the test fuel is Fuel CE10, and testing
immediately follows a four-week preconditioning soak with the test
fuel.
    Manufacture means the physical and engineering process of
designing, constructing, and assembling an engine, piece of nonroad
equipment, or fuel-system components subject to the requirements of
this part.
    Manufacturer has the meaning given in section 216(1) of the Act. In
general, this term includes:
    (1) Any person who manufactures an engine or piece of nonroad
equipment for sale in the United States or otherwise introduces a new
nonroad engine or a piece of new nonroad equipment into U.S. commerce.
    (2) Any person who manufactures a fuel-system component for an
engine subject to the requirements of this part as described in Sec.
1060.1(a).
    (3) Importers who import such products into the United States.
    Marine SI means relating to vessels subject to evaporative emission
standards in 40 CFR part 1045.
    Marine vessel has the meaning given in 40 CFR Sec.  1045.801, which
generally includes all nonroad equipment used as a means of
transportation on water.
    Model year means one of the following things:
    (1) For equipment defined as ``new nonroad equipment'' under
paragraph (1) of the definition of ``new nonroad engine,'' model year
means one of the following:
    (i) Calendar year.
    (ii) Your annual new model production period if it is different
than the calendar year. This must include January 1 of the calendar
year for which the model year is named. It may not begin before January
2 of the previous calendar year and it must end by December 31 of the
named calendar year.
    (2) For other equipment defined as ``new nonroad equipment'' under
paragraph (2) of the definition of ``new nonroad engine,'' model year
has the meaning given in the exhaust standard-setting part.
    (3) For other equipment defined as ``new nonroad equipment'' under
paragraph (3) or paragraph (4) of the definition of ``new nonroad
engine,'' model year means the model year of the engine as defined in
the exhaust standard-setting part.
    New nonroad equipment means equipment meeting one or more of the
following criteria:
    (1) Nonroad equipment for which the ultimate purchaser has never
received the equitable or legal title. The equipment is no longer new
when the ultimate purchaser receives this title or the product is
placed into service, whichever comes first.
    (2) Nonroad equipment that is defined as new under the exhaust
standard-setting part. (Note: equipment that is not defined as new
under the exhaust standard-setting part may be defined as new under
this definition of ``new nonroad equipment.'')
    (3) Nonroad equipment with an engine that becomes new (as defined
in the exhaust standard-setting part) while installed in the equipment.
The equipment is no longer new when it is subsequently placed into
service. This paragraph (3) does not apply if the engine becomes new
before being installed in the equipment.
    (4) Nonroad equipment not covered by a certificate of conformity
issued under this part at the time of importation and manufactured
after the requirements of this part start to apply (see Sec.  1060.1).
The equipment is no longer new when it is subsequently placed into
service. Importation of this kind of new nonroad equipment is generally
prohibited by 40 CFR part 1068.
    Nominal capacity means the a fuel tank's volume as specified by the
fuel tank manufacturer, using at least two significant figures, based
on the maximum volume of fuel the tank can hold with standard refueling
techniques.
    Nonroad engine has the meaning we give in 40 CFR 1068.30. In
general this means all internal-combustion engines except motor vehicle
engines, stationary engines, engines used solely for competition, or
engines used in aircraft. This part does not apply to all nonroad
engines (see Sec.  1060.1).
    Nonroad equipment means a piece of equipment that is powered by or
intended to be powered by one or more nonroad engines. Note that Sec.
1060.601 describes how we treat outboard engines, portable marine fuel
tanks, and associated fuel-system components as nonroad equipment under
this part 1060.
    Nontrailerable boat means a vessel 26 feet or more in length.
    Official emission result means the measured emission rate for an
emission-data unit.
    Placed into service means put into initial use for its intended
purpose.
    Portable marine fuel tank means a portable nonroad fuel tank that
is used or intended to be used with a marine vessel.
    Portable nonroad fuel tank means a fuel tank that meets each of the
following criteria:
    (1) It has design features indicative of use in portable
applications, such as a carrying handle and fuel line fitting that can
be readily attached to and detached from a nonroad engine.
    (2) It has a nominal fuel capacity of 12 gallons or less.
    (3) It is designed to supply fuel to an engine while the engine is
operating.
    Production period means the period in which a certified component
will be produced under a certificate of conformity.
    Recreational vehicle means vehicles that are subject to evaporative
emission standards in 40 CFR part 1051. This generally includes engines
that will be installed in recreational vehicles if the engines are
certified separately under 40 CFR 1051.20.
    Revoke has the meaning given in 40 CFR 1068.30. If we revoke a
certificate or an exemption, you must apply for a new certificate or
exemption before continuing to introduce the affected equipment into
U.S. commerce.
    Round means to round numbers according to standard procedures as
specified in 40 CFR 1065.1001.
    Running loss emissions means unburned fuel vapor that escapes from
the fuel system to the ambient atmosphere while the engine is
operating, excluding permeation emissions and diurnal emissions.
Running loss emissions generally result from fuel-temperature increases
caused by heat released from in-tank fuel pumps, fuel recirculation, or
proximity to heat sources such as the engine or exhaust components.
    Sealed means lacking openings to the atmosphere that would allow
liquid or

vapor to leak out under normal operating pressures or other pressures
specified in this part. Sealed fuel systems may have openings for
emission controls or fuel lines needed to route fuel to the engine.
    Small SI means relating to engines that are subject to emission
standards in 40 CFR part 90 or 1054.
    Structurally integrated nylon fuel tank means a fuel tank having
all the following characteristics:
    (1) The fuel tank is made of a polyamide material that does not
contain more than 50 percent by weight of a reinforcing glass fiber or
mineral filler and does not contain more than 10 percent by weight of
impact modified polyamides that use rubberized agents such as EPDM
rubber.
    (2) The fuel tank must be used in a cut-off saw or chainsaw or be
integrated into a major structural member where, as a single component,
the fuel tank material is a primary structural/stress member for other
major components such as the engine, transmission, or cutting
attachment.
    Subchapter U means 40 CFR parts 1000 through 1299.
    Suspend has the meaning given in 40 CFR 1068.30. If we suspend a
certificate, you may not introduce into U.S. commerce equipment from
that emission family unless we reinstate the certificate or approve a
new one. If we suspend an exemption, you may not introduce into U.S.
commerce equipment that was previously covered by the exemption unless
we reinstate the exemption.
    Tare means to use a container or other reference mass to zero a
balance before weighing a sample. Generally, this means placing the
container or reference mass on the balance, allowing it to stabilize,
then zeroing the balance without removing the container or reference
mass. This allows you to use the balance to determine the difference in
mass between the sample and the container or reference mass.
    Test unit means a piece of fuel line, a fuel tank, or a fuel system
in a test sample.
    Test sample means the collection of fuel lines, fuel tanks, or fuel
systems selected from the population of an emission family for emission
testing. This may include testing for certification, production-line
testing, or in-use testing.
    Ultimate purchaser means, with respect to any new nonroad
equipment, the first person who in good faith purchases such new
nonroad equipment for purposes other than resale.
    Ultraviolet light means electromagnetic radiation with a wavelength
between 300 and 400 nanometers.
    United States has the meaning given in 40 CFR 1068.30.
    U.S.-directed production volume means the amount of equipment,
subject to the requirements of this part, produced by a manufacturer
for which the manufacturer has a reasonable assurance that sale was or
will be made to ultimate purchasers in the United States.
    Useful life means the period during which new nonroad equipment is
required to comply with all applicable emission standards. See Sec.
1060.101.
    Void has the meaning given in 40 CFR 1068.30. If we void a
certificate, each piece of equipment introduced into U.S. commerce
under that emission family for that production period is considered
noncompliant, and you are liable for each piece of equipment introduced
into U.S. commerce under the certificate and may face civil or criminal
penalties or both. This applies equally to each piece of equipment in
the emission family, including equipment introduced into U.S. commerce
before we voided the certificate. If we void an exemption, each piece
of equipment introduced into U.S. commerce under that exemption is
considered uncertified (or nonconforming), and you are liable for each
piece of equipment introduced into U.S. commerce under the exemption
and may face civil or criminal penalties or both. You may not introduce
into U.S. commerce any additional equipment using the voided exemption.
    Volatile liquid fuel means any fuel other than diesel or biodiesel
that is a liquid at atmospheric pressure and has a Reid Vapor Pressure
higher than 2.0 pounds per square inch.
    We (us, our) means the Administrator of the Environmental
Protection Agency and any authorized representatives.
    Wintertime equipment means equipment using a wintertime engine, as
defined in 40 CFR 1054.801. Note this definition applies only for Small
SI equipment.

Sec.  1060.805  What symbols, acronyms, and abbreviations does this
part use?

    The following symbols, acronyms, and abbreviations apply to this
part:

[deg] degree.
ASTM American Society for Testing and Materials.
C Celsius.
CFR Code of Federal Regulations.
CWFL Cold-weather fuel line (see Sec.  1060.102).
EPA Environmental Protection Agency.
FEL family emission limit.
g gram.
gal gallon.
hr hour.
in inch.
kPa kilopascal.
kW kilowatt.
L liter.
LEFL Low-emission fuel line (see Sec.  1060.102).
m meter.
min minute.
mm millimeter.
NRFL Nonroad fuel line (see Sec.  1060.102).
psig pounds per square inch of gauge pressure.
SAE Society of Automotive Engineers.
SHED Sealed Housing for Evaporative Determination.
U.S. United States.
U.S.C. United States Code.
W watt.

Sec.  1060.810  What materials does this part reference?

    Documents listed in this section have been incorporated by
reference into this part. The Director of the Federal Register approved
the incorporation by reference as prescribed in 5 U.S.C. 552(a) and 1
CFR part 51. Anyone may inspect copies at the U.S. EPA, Air and
Radiation Docket and Information Center, 1301 Constitution Ave., NW.,
Room B102, EPA West Building, Washington, DC 20460 or at the National
Archives and Records Administration (NARA). For information on the
availability of this material at NARA, call<PHONE_NUMBER>, or go to:
http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html
.

    (a) ASTM material. Table 1 of this section lists material from the
American Society for Testing and Materials that we have incorporated by
reference. The first column lists the number and name of the material.
The second column lists the sections of this part where we reference
it. Anyone may purchase copies of these materials from the American
Society for Testing and Materials, 100 Barr Harbor Dr., P.O. Box C700,
West Conshohocken, PA 19428 or http://www.astm.com. Table 1 follows:

               Table 1 to Sec.   1060.810.--ASTM Materials
------------------------------------------------------------------------
                                                            Part 1060
               Document number and name                     reference
------------------------------------------------------------------------
ASTM D 471-06, Standard Test Method for Rubber                  1060.515
 Property-Effect of Liquids...........................
ASTM D3802-79 (Reapproved 2005), Standard Test Method           1060.240
 for Ball-Pan Hardness of Activated Carbon............
ASTM D5228-92 (Reapproved 2005), Standard Test Method           1060.240
 for Determination of Butane Working Capacity of
 Activated Carbon.....................................
------------------------------------------------------------------------

    (b) SAE material. Table 2 of this section lists material from the
Society of Automotive Engineers that we have incorporated by reference.
The first column lists the number and name of the material. The second
column lists the sections of this part where we reference it. Anyone
may purchase copies of these materials from the Society of Automotive
Engineers, 400 Commonwealth Drive, Warrendale, PA 15096 or http://www.sae.org.

Table 2 follows:

               Table 2 to Sec.   1060.810.--SAE Materials
------------------------------------------------------------------------
                                                            Part 1060
               Document number and name                     reference
------------------------------------------------------------------------
SAE J30, Fuel and Oil Hoses, June 1998................          1060.515
SAE J1527, Marine Fuel Hoses, February 1993...........          1060.515
SAE J2260, Nonmetallic Fuel System Tubing with One or           1060.510
 More Layers, November 1996...........................
SAE J2659, Test Method to Measure Fluid Permeation of           1060.801
 Polymeric Materials by Speciation, December 2003.....
------------------------------------------------------------------------

Sec.  1060.815  What provisions apply to confidential information?

    (a) Clearly show what you consider confidential by marking,
circling, bracketing, stamping, or some other method.
    (b) We will store your confidential information as described in 40
CFR part 2. Also, we will disclose it only as specified in 40 CFR part
2. This applies both to any information you send us and to any
information we collect from inspections, audits, or other site visits.
    (c) If you send us a second copy without the confidential
information, we will assume it contains nothing confidential whenever
we need to release information from it.
    (d) If you send us information without claiming it is confidential,
we may make it available to the public without further notice to you,
as described in 40 CFR 2.204.

Sec.  1060.820  How do I request a hearing?

    (a) You may request a hearing under certain circumstances, as
described elsewhere in this part. To do this, you must file a written
request, including a description of your objection and any supporting
data, within 30 days after we make a decision.
    (b) For a hearing you request under the provisions of this part, we
will approve your request if we find that your request raises a
substantial factual issue.
    (c) If we agree to hold a hearing, we will use the procedures
specified in 40 CFR part 1068, subpart G.

Sec.  1060.825  What reporting and recordkeeping requirements apply
under this part?

    Under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.), the
Office of Management and Budget approves the reporting and
recordkeeping specified in the applicable regulations. The following
items illustrate the kind of reporting and recordkeeping we require for
products regulated under this part:
    (a) We specify the following requirements related to equipment
certification in this part 1060:
    (1) In 40 CFR 1060.20 we give an overview of principles for
reporting information.
    (2) In 40 CFR part 1060, subpart C, we identify a wide range of
information required to certify engines.
    (3) In 40 CFR 1060.301 we require manufacturers to make engines or
equipment available for our testing if we make such a request.
    (4) In 40 CFR 1060.505 we specify information needs for
establishing various changes to published test procedures.
    (b) We specify the following requirements related to the general
compliance provisions in 40 CFR part 1068:
    (1) In 40 CFR 1068.5 we establish a process for evaluating good
engineering judgment related to testing and certification.
    (2) In 40 CFR 1068.25 we describe general provisions related to
sending and keeping information.
    (3) In 40 CFR 1068.27 we require manufacturers to make equipment
available for our testing or inspection if we make such a request.
    (4) In 40 CFR 1068.105 we require equipment manufacturers to keep
certain records related to duplicate labels from engine manufacturers.
    (5) [Reserved]
    (6) In 40 CFR part 1068, subpart C, we identify several reporting
and recordkeeping items for making demonstrations and getting approval
related to various exemptions.
    (7) In 40 CFR part 1068, subpart D, we identify several reporting
and recordkeeping items for making demonstrations and getting approval
related to importing equipment.
    (8) In 40 CFR 1068.450 and 1068.455 we specify certain records
related to testing production-line products in a selective enforcement
audit.
    (9) In 40 CFR 1068.501 we specify certain records related to
investigating and reporting emission-related defects.
    (10) In 40 CFR 1068.525 and 1068.530 we specify certain records
related to recalling nonconforming equipment.

PART 1065--ENGINE-TESTING PROCEDURES

    134. The authority citation for part 1065 continues to read as
follows:

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

Subpart A--[Amended]

    135. Section 1065.1 is amended by revising paragraph (a) to read as
follows:

Sec.  1065.1  Applicability.

    (a) This part describes the procedures that apply to testing we
require for the following engines or for vehicles using the following
engines:
    (1) [Reserved]

    (2) Model year 2010 and later heavy-duty highway engines we
regulate under 40 CFR part 86. For earlier model years, manufacturers
may use the test procedures in this part or those specified in 40 CFR
part 86, subpart N, according to Sec.  1065.10.
    (3) Nonroad diesel engines we regulate under 40 CFR part 1039 and
stationary diesel engines that are certified to the standards in 40 CFR
part 1039 as specified in 40 CFR part 60, subpart IIII. For earlier
model years, manufacturers may use the test procedures in this part or
those specified in 40 CFR part 89 according to Sec.  1065.10.
    (4) [Reserved]
    (5) Marine spark-ignition engines we regulate under 40 CFR part
1045. For earlier model years, manufacturers may use the test
procedures in this part or those specified in 40 CFR part 91 according
to Sec.  1065.10.
    (6) Large nonroad spark-ignition engines we regulate under 40 CFR
part 1048, and stationary engines that are certified to the standards
in 40 CFR part 1048 as specified in 40 CFR part 60, subpart JJJJ.
    (7) Vehicles we regulate under 40 CFR part 1051 (such as
snowmobiles and off-highway motorcycles) based on engine testing. See
40 CFR part 1051, subpart F, for standards and procedures that are
based on vehicle testing.
    (8) Small nonroad spark-ignition engines we regulate under 40 CFR
part 1054 and stationary engines that are certified to the standards in
40 CFR part 1054 as specified in 40 CFR part 60, subpart JJJJ. For
earlier model years, manufacturers may use the test procedures in this
part or those specified in 40 CFR part 90 according to Sec.  1065.10.
* * * * *

PART 1068--GENERAL COMPLIANCE PROVISIONS FOR NONROAD PROGRAMS

    136. The authority citation for part 1068 continues to read as
follows:

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

Subpart A--[Amended]

    137. Section 1068.1 is revised to read as follows:

Sec.  1068.1  Does this part apply to me?

    (a) The provisions of this part apply to everyone with respect to
the following engines and to equipment using the following engines
(including owners, operators, parts manufacturers, and persons
performing maintenance).
    (1) Locomotives we regulate under 40 CFR part 1039.
    (2) Land-based nonroad compression-ignition engines we regulate
under 40 CFR part 1039.
    (3) Stationary compression-ignition engines certified to the
provisions of 40 CFR part 1039, as indicated under 40 CFR part 60,
subpart IIII.
    (4) Marine diesel engines we regulate under 40 CFR part 1042.
    (5) Marine spark-ignition engines we regulate under 40 CFR part
1045.
    (6) Large nonroad spark-ignition engines we regulate under 40 CFR
part 1048.
    (7) Stationary spark-ignition engines certified to the provisions
of 40 CFR parts 1048 or 1054, as indicated under 40 CFR part 60,
subpart JJJJ.
    (8) Recreational engines and vehicles we regulate under 40 CFR part
1051 (such as snowmobiles and off-highway motorcycles).
    (9) Small nonroad spark-ignition engines we regulate under 40 CFR
part 1054.
    (b) This part does not apply to any of the following engine or
vehicle categories:
    (1) Light-duty motor vehicles (see 40 CFR part 86).
    (2) Heavy-duty motor vehicles and motor vehicle engines (see 40 CFR
part 86).
    (3) Aircraft engines (see 40 CFR part 87).
    (4) Land-based nonroad diesel engines we regulate under 40 CFR part
89.
    (5) Small nonroad spark-ignition engines we regulate under 40 CFR
part 90.
    (6) Marine spark-ignition engines we regulate under 40 CFR part 91.
    (7) Locomotive engines (see 40 CFR part 92).
    (8) Marine diesel engines (see 40 CFR parts 89 and 94).
    (c) Paragraph (a)(1) of this section identifies the parts of the
CFR that define emission standards and other requirements for
particular types of engines and equipment. This part 1068 refers to
each of these other parts generically as the ``standard-setting part.''
For example, 40 CFR part 1051 is always the standard-setting part for
snowmobiles. Follow the provisions of the standard-setting part if they
are different than any of the provisions in this part.
    (d)(1) The provisions of Sec. Sec.  1068.30, 1068.310, and 1068.320
apply for stationary spark-ignition engines built on or after January
1, 2004, and for stationary compression-ignition engines built on or
after January 1, 2006.
    (2) The provisions of Sec. Sec.  1068.30 and 1068.235 apply for the
types of engines/equipment listed in paragraph (a) of this section
beginning January 1, 2004, if they are used solely for competition.
    138. A new Sec.  1068.2 is added to read as follows:

Sec.  1068.2  How does this part apply for engines and how does it
apply for equipment?

    (a) See the standard-setting part to determine if engine-based and/
or equipment-based standards apply. (Note: Some equipment is subject to
engine-based standards for exhaust emission and equipment-based
standards for evaporative emissions.)
    (b) The provisions of this part apply differently depending on
whether the engine or equipment is required to be certified.
    (1) This subpart A and subpart B of this part apply to engines and
equipment, without regard to which is subject to certification
requirements in the standard-setting part.
    (2) Subparts C, D, and E of this part apply to the engines or to
the equipment, whichever is subject to certification requirements in
the standard-setting part.
    (3) Subpart F of this part generally applies to the engines or to
the equipment, whichever is subject to standards under the standard-
setting part. However, since subpart F of this part addresses in-use
engines and equipment (in which the engine is installed in the
equipment), the requirements do not always distinguish between engines
and equipment.
    (c) For issues related to testing, read the term ``engines/
equipment'' to mean engines for engines subject to engine-based testing
and equipment for equipment subject to equipment-based testing;
otherwise, read the term ``engines/equipment'' to mean engines for
sources subject to engine-based standards and equipment for sources
subject to equipment-based standards.
    (d) Where we use the term engines (rather than engines/equipment),
read it to mean engines without regard to whether the source is subject
to engine-based standards or testing. Where we use the term equipment
(rather than engines/equipment), read it to mean equipment without
regard to whether the source is subject to equipment-based standards or
testing. (Note: The definition of ``equipment'' in Sec.  1068.30
includes the engine.)
    (e) The terminology convention described in this section is not
intended to limit our authority or your obligations under the Clean Air
Act.
    139. Section 1068.5 is amended by revising paragraph (a) to read as
follows:

Sec.  1068.5  How must manufacturers apply good engineering judgment?

    (a) You must use good engineering judgment for decisions related to
any

requirements under this chapter. This includes your applications for
certification, any testing you do to show that your certification,
production-line, and in-use engines/equipment comply with requirements
that apply to them, and how you select, categorize, determine, and
apply these requirements.
* * * * *
    140. Section 1068.20 is amended by revising paragraphs (a) and (d)
to read as follows:

Sec.  1068.20  May EPA enter my facilities for inspections?

    (a) We may inspect your testing, manufacturing processes, storage
facilities (including port facilities for imported engines and
equipment or other relevant facilities), or records, as authorized by
the Act, to enforce the provisions of this chapter. Inspectors will
have authorizing credentials and will limit inspections to reasonable
times--usually, normal operating hours.
* * * * *
    (d) We may select any facility to do any of the following:
    (1) Inspect and monitor any aspect of engine or equipment
manufacturing, assembly, storage, or other procedures, and any
facilities where you do them.
    (2) Inspect and monitor any aspect of engine or equipment test
procedures or test-related activities, including test engine/equipment
selection, preparation, service accumulation, emission duty cycles, and
maintenance and verification of your test equipment's calibration.
    (3) Inspect and copy records or documents related to assembling,
storing, selecting, and testing an engine or piece of equipment.
    (4) Inspect and photograph any part or aspect of engines or
equipment and components you use for assembly.
* * * * *
    141. Section 1068.25 is revised to read as follows:

Sec.  1068.25  What information must I give to EPA?

    If you are subject to the requirements of this part, we may require
you to give us information to evaluate your compliance with any
regulations that apply, as authorized by the Act. This includes the
following things:
    (a) You must provide the information we require in this chapter. We
may require an authorized representative of your company to approve and
sign any submission of information to us, and to certify that the
information is accurate and complete.
    (b) You must establish and maintain records, perform tests, make
reports and provide additional information that we may reasonably
require under section 208 of the Act (42 U.S.C. 7542). This also
applies to engines/equipment we exempt from emission standards or
prohibited acts.
    142. Section 1068.27 is revised to read as follows:

Sec.  1068.27  May EPA conduct testing with my production engines/
equipment?

    If we request it, you must make a reasonable number of production-
line engines or pieces of production-line equipment available for a
reasonable time so we can test or inspect them for compliance with the
requirements of this chapter.
    143. Section 1068.30 is revised to read as follows:

Sec.  1068.30  What definitions apply to this part?

    The following definitions apply to this part. The definitions apply
to all subparts unless we note otherwise. All undefined terms have the
meaning the Act gives to them. The definitions follow:
    Act means the Clean Air Act, as amended, 42 U.S.C. 7401-7671q. the
Clean Air Act, as amended, 42 U.S.C. 7401 et seq.
    Aftertreatment means relating to a catalytic converter, particulate
filter, or any other system, component, or technology mounted
downstream of the exhaust valve (or exhaust port) whose design function
is to reduce emissions in the engine exhaust before it is exhausted to
the environment. Exhaust-gas recirculation (EGR) is not aftertreatment.
    Aircraft means any vehicle capable of sustained air travel above
treetop heights.
    Certificate holder means a manufacturer (including importers) with
a currently valid certificate of conformity for at least one family in
a given model year.
    Date of manufacture means--
    (1) For engines, the later of the following dates:
    (i) The date on which an engine is assembled to the point of being
able to run. This does not require installation of a cooling system,
fuel tank, or aftertreament devices.
    (ii) The date on which a partially complete engine that was
introduced into U.S. commerce with an exemption under Sec.  1068.262 is
assembled in its final certified configuration.
    (2) For equipment, the date on which assembly of the equipment is
completed.
    Days means calendar days, including weekends and holidays.
    Defeat device has the meaning given in the standard-setting part.
    Designated Officer means the Manager of the Heavy-Duty and Nonroad
Engine Group (6405-J), U.S. Environmental Protection Agency, 1200
Pennsylvania Ave., Washington, DC 20460.
    Engine means a complete or partially complete internal combustion
engine. The term engine broadly includes any assembly of an engine
block and at least one other attached component. The term engine does
not include engine blocks with no attached components, nor does it
include any assembly of engine components that does not include the
engine block. This includes complete and partially complete engines as
follows:
    (1) A complete engine is a fully assembled engine in its final
configuration.
    (2) A partially complete engine is an engine that is not fully
assembled or is not in its final configuration. Except where we specify
otherwise in this part or the standard-setting part, partially complete
engines are subject to the same standards and requirements as complete
engines. The following would be considered examples of partially
complete engines:
    (i) An engine that is missing only an aftertreatment component.
    (ii) An engine that was originally assembled as a motor-vehicle
engine that will be recalibrated for use as a nonroad engine.
    (iii) An engine that was originally assembled as a land-based
engine that will be modified for use as a marine propulsion engine.
    (iv) A short block consisting of engine components connected to the
engine block, but missing the head assembly.
    (v) A loose engine that will be installed in an off-highway
motorcycle that will be subject to vehicle-based standards.
    Engine-based standard means an emission standard expressed in units
of grams of pollutant per kilowatt-hour, and which applies to the
engine. Emission standards are either engine-based or equipment-based.
    Engine-based test means an emission test intended to measure
emissions in units of grams of pollutant per kilowatt-hour, without
regard to whether the standard applies to the engine or equipment.
    Engine/equipment and engines/equipment mean either engine(s) or
equipment. Specifically these terms mean the following:
    (1) Engine(s) when only engine-based standards apply.
    (2) Engine(s) for testing issues when engine-based testing applies.

    (3) Engine(s) and equipment when both engine-based and equipment-
based standards apply.
    (4) Equipment when only equipment-based standards apply.
    (5) Equipment for testing issues when equipment-based testing
applies.
    Equipment means one of the following things:
    (1) Any vehicle, vessel, or other type of equipment that is subject
to the requirements of this part, or that uses an engine that is
subject to the requirements of this part. An installed engine is part
of the equipment.
    (2) Fuel-system components that are subject to an equipment-based
standard under this chapter. Installed fuel-system components are part
of the engine.
    Equipment-based standard means an emission standard that applies to
the equipment in which an engine is used or to fuel-system components
associated with an engine, without regard to how the emissions are
measured. Where equipment-based standards apply, we require that the
equipment or fuel-system components be certified, rather than just the
engine. Emission standards are either engine-based or equipment-based.
For example, recreational vehicles we regulate under 40 CFR part 1051
are subject to equipment-based standards, even if emission measurements
are based on engine operation alone.
    Exempted means relating to engines/equipment that are not required
to meet otherwise applicable standards. Exempted engines/equipment must
conform to regulatory conditions specified for an exemption in this
part 1068 or in the standard-setting part. Exempted engines/equipment
are deemed to be ``subject to'' the standards of the standard-setting
part, even though they are not required to comply with the otherwise
applicable requirements. Engines/equipment exempted with respect to a
certain tier of standards may be required to comply with an earlier
tier of standards as a condition of the exemption; for example, engines
exempted with respect to Tier 3 standards may be required to comply
with Tier 1 or Tier 2 standards.
    Family means engine family or emission family, as applicable under
the standard-setting part.
    Final deteriorated test result has the meaning given in the
standard-setting part. If it is not defined in the standard-setting
part, it means the emission level that results from applying all
appropriate adjustments (such as deterioration factors) to the measured
emission result of the emission-data engine.
    Good engineering judgment means judgments made consistent with
generally accepted scientific and engineering principles and all
available relevant information.
    Incomplete engine assembly means an assembly of engine components
that includes at least the engine block and one other component, but
lacks certain parts essential for engine operation. An engine block
with no other assembled components is not an incomplete engine assembly
under this section. An assembly of engine parts that does not include
the engine block is also not an incomplete engine assembly.
    Manufacturer has the meaning given in section 216(1) of the Act (42
U.S.C. 7550(1)). In general, this term includes any person who
manufactures an engine or piece of equipment for sale in the United
States or otherwise introduces a new engine or piece of equipment into
U.S. commerce. This includes importers that import new engines or new
equipment into the United States for resale. It also includes secondary
engine manufacturers.
    Model year has the meaning given in the standard-setting part.
Unless the standard-setting part specifies otherwise, model year for
individual engines/equipment is based on the date of manufacture or a
later date determined by the manufacturer. The model year of a new
engine that is neither certified nor exempt is deemed to be the
calendar year in which it is sold, offered for sale, imported, or
delivered or otherwise introduced into commerce in the United States.
    Motor vehicle has the meaning given in 40 CFR 85.1703(a).
    New has the meaning we give it in the standard-setting part.
    Nonroad engine means:
    (1) Except as discussed in paragraph (2) of this definition, a
nonroad engine is an internal combustion engine that meets any of the
following criteria:
    (i) It is (or will be) used in or on a piece of equipment that is
self-propelled or serves a dual purpose by both propelling itself and
performing another function (such as garden tractors, off-highway
mobile cranes and bulldozers).
    (ii) It is (or will be) used in or on a piece of equipment that is
intended to be propelled while performing its function (such as
lawnmowers and string trimmers).
    (iii) By itself or in or on a piece of equipment, it is portable or
transportable, meaning designed to be and capable of being carried or
moved from one location to another. Indicia of transportability
include, but are not limited to, wheels, skids, carrying handles,
dolly, trailer, or platform.
    (2) An internal combustion engine is not a nonroad engine if it
meets any of the following criteria:
    (i) The engine is used to propel a motor vehicle, an aircraft, or
equipment used solely for competition.
    (ii) The engine is regulated under 40 CFR part 60, (or otherwise
regulated by a federal New Source Performance Standard promulgated
under section 111 of the Act (42 U.S.C. 7411)).
    (iii) The engine otherwise included in paragraph (1)(iii) of this
definition remains or will remain at a location for more than 12
consecutive months or a shorter period of time for an engine located at
a seasonal source. A location is any single site at a building,
structure, facility, or installation. Any engine (or engines) that
replaces an engine at a location and that is intended to perform the
same or similar function as the engine replaced will be included in
calculating the consecutive time period. An engine located at a
seasonal source is an engine that remains at a seasonal source during
the full annual operating period of the seasonal source. A seasonal
source is a stationary source that remains in a single location on a
permanent basis (i.e., at least two years) and that operates at that
single location approximately three months (or more) each year. See
Sec.  1068.31 for provisions that apply if the engine is removed from
the location.
    Operating hours means:
    (1) For engine and equipment storage areas or facilities, times
during which people other than custodians and security personnel are at
work near, and can access, a storage area or facility.
    (2) For other areas or facilities, times during which an assembly
line operates or any of the following activities occurs:
    (i) Testing, maintenance, or service accumulation.
    (ii) Production or compilation of records.
    (iii) Certification testing.
    (iv) Translation of designs from the test stage to the production
stage.
    (v) Engine or equipment manufacture or assembly.
    Piece of equipment means any vehicle, vessel, locomotive, aircraft,
or other type of equipment using engines to which this part applies.
    Placed into service means used for its intended purpose.
    Reasonable technical basis means information that would lead a
person familiar with engine design and function to reasonably believe a
conclusion, related to compliance with the requirements of this part.
For example, it would be reasonable to believe that parts performing
the same function as the original parts (and to the

same degree) would control emissions to the same degree as the original
parts.
    Revoke means to terminate the certificate or an exemption for a
family. If we revoke a certificate or exemption, you must apply for a
new certificate or exemption before continuing to introduce the
affected engines/equipment into U.S. commerce. This does not apply to
engines/equipment you no longer possess.
    Secondary engine manufacturer means anyone who produces a new
engine by modifying a complete or partially complete engine that was
made by a different company. For the purpose of this definition,
``modifying'' does not include making changes that do not remove an
engine from its original certified configuration. Secondary engine
manufacturing includes, for example, converting automotive engines for
use in industrial applications, or land-based engines for use in marine
applications. This applies whether it involves a complete or partially
complete engine and whether the engine was previously certified to
emission standards or not. Manufacturers controlled by the manufacturer
of the base engine (or by an entity that also controls the manufacturer
of the base engine) are not secondary engine manufacturers; rather,
both entities are considered to be one manufacturer for purposes of
this part. Equipment manufacturers that substantially modify engines
are secondary engine manufacturers. Also, equipment manufacturers that
certify to equipment-based standards using engines produced by another
company are deemed to be secondary engine manufacturers.
    Small business means either of the following:
    (1) A company that qualifies under the standard-setting part for
special provisions for small businesses or small-volume manufacturers.
    (2) A company that qualifies as a small business under the
regulations adopted by the Small Business Administration at 13 CFR
121.201.
    Standard-setting part means a part in the Code of Federal
Regulations that defines emission standards for a particular engine
and/or piece of equipment (see Sec.  1068.1(a)). For example, the
standard-setting part for marine spark-ignition engines is 40 CFR part
1045. For provisions related to evaporative emissions, the standard-
setting part may be 40 CFR part 1060, as specified in 40 CFR 1060.1.
    Suspend means to temporarily discontinue the certificate or an
exemption for a family. If we suspend a certificate, you may not
introduce into U.S. commerce engines/equipment from that family unless
we reinstate the certificate or approve a new one. If we suspend an
exemption, you may not introduce into U.S. commerce engines/equipment
that were previously covered by the exemption unless we reinstate the
exemption.
    Ultimate purchaser means the first person who in good faith
purchases a new nonroad engine or new piece of equipment for purposes
other than resale.
    United States means the States, the District of Columbia, the
Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana
Islands, Guam, American Samoa, and the U.S. Virgin Islands.
    U.S.-directed production volume means the number of engine/
equipment units, subject to the requirements of this part, produced by
a manufacturer for which the manufacturer has a reasonable assurance
that sale was or will be made to ultimate purchasers in the United
States.
    Void means to invalidate a certificate or an exemption ab initio.
If we void a certificate, all the engines/equipment introduced into
U.S. commerce under that family for that model year are considered
noncompliant, and you are liable for all engines/equipment introduced
into U.S. commerce under the certificate and may face civil or criminal
penalties or both. This applies equally to all engines/equipment in the
family, including engines/equipment introduced into U.S. commerce
before we voided the certificate. If we void an exemption, all the
engines/equipment introduced into U.S. commerce under that exemption
are considered uncertified (or nonconforming), and you are liable for
engines/equipment introduced into U.S. commerce under the exemption and
may face civil or criminal penalties or both. You may not introduce
into U.S. commerce any additional engines/equipment using the voided
exemption.
    Voluntary emission recall means a repair, adjustment, or
modification program voluntarily initiated and conducted by a
manufacturer to remedy any emission-related defect for which engine
owners have been notified.
    We (us, our) means the Administrator of the Environmental
Protection Agency and any authorized representatives.
    144. A new Sec.  1068.31 is added to read as follows:

Sec.  1068.31  What provisions apply to nonroad or stationary engines
that change their status?

    This section specifies the provisions that apply when an engine
previously used in a nonroad application is subsequently used in an
application other than a nonroad application, or when an engine
previous used in a stationary application (i.e., an engine that was not
used as a nonroad engine and that was not used to propel a motor
vehicle, an aircraft, or equipment used solely for competition) is
moved.
    (a) Changing the status of a stationary engine to be a new nonroad
engine as described in paragraph (b) of this section is a violation of
Sec.  1068.101(a)(1) unless the engine has been certified to be
compliant with all requirements of this chapter that apply to new
nonroad engines of the same type (for example, a compression-ignition
engine rated at 40 kW) and model year, and is in its certified
configuration.
    (b) A stationary engine becomes a new nonroad engine if--
    (1) It is used in an application that meets the criteria specified
in paragraphs (1)(i) or (ii) in the definition of ``nonroad engine'' in
Sec.  1068.30.
    (2) It meets the criteria specified in paragraph (1)(iii) of the
definition of ``nonroad engine'' in Sec.  1068.30 and is moved so that
it fails to meet (or no longer meets) the criteria specified in
paragraph (2)(iii) in the definition of ``nonroad engine'' in Sec.
1068.30.
    (c) A stationary engine does not become a new nonroad engine if it
is moved but continues to meet the criteria specified in paragraph
(2)(iii) in the definition of ``nonroad engine'' in Sec.  1068.30 in
its new location. For example, a transportable engine that is used in a
single specific location for 18 months and is later moved to a second
specific location where it will remain for at least 12 months is
considered to be a stationary engine in both locations.
    (d) Changing the status of a nonroad engine to be a new stationary
engine as described in paragraph (e) of this section is a violation of
Sec.  1068.101(a)(1) unless the engine complies with all the
requirements of this chapter for new stationary engines of the same
type (for example, a compression-ignition engine rated at 40 kW) and
model year. For a new stationary engine that is required to be
certified under 40 CFR part 60, the engine must have been certified to
be compliant with all the requirements that apply to new stationary
engines of the same type and model year, and must be in its certified
configuration.
    (e) A nonroad engine ceases to be a nonroad engine and becomes a
new stationary engine if--
    (1) At any time, it meets the criteria specified in paragraph
(2)(iii) in the definition of ``nonroad engine'' in Sec.  1068.30. For
example, a portable generator engine ceases to be a nonroad engine if
it is used or will be used in

a single specific location for 12 months or longer. If we determine
that an engine will be or has been used in a single specific location
for 12 months or longer, it ceased to be a nonroad engine when it was
placed in that location.
    (2) It is otherwise regulated by a federal New Source Performance
Standard promulgated under section 111 of the Act (42 U.S.C. 7411).
    (f) A nonroad engine ceases to be a nonroad engine if it is used to
propel a motor vehicle, an aircraft, or equipment used solely for
competition. See 40 CFR part 86 for requirements applicable to motor
vehicles and motor vehicle engines. See 40 CFR part 87 for requirements
applicable to aircraft and aircraft engines. See Sec.  1068.235 for
requirements applicable to equipment used solely for competition.

Subpart B--[Amended]

    145. Section 1068.101 is revised to read as follows:

Sec.  1068.101  What general actions does this regulation prohibit?

    This section specifies actions that are prohibited and the maximum
civil penalties that we can assess for each violation. The maximum
penalty values listed in paragraphs (a) and (b) of this section are
shown for calendar year 2004. As described in paragraph (e) of this
section, maximum penalty limits for later years are set forth in 40 CFR
part 19.
    (a) The following prohibitions and requirements apply to
manufacturers of new engines, manufacturers of equipment containing
these engines, and manufacturers of new equipment, except as described
in subparts C and D of this part:
    (1) Introduction into commerce. You may not sell, offer for sale,
or introduce or deliver into commerce in the United States or import
into the United States any new engine/equipment after emission
standards take effect for the engine/equipment, unless it is covered by
a valid certificate of conformity for its model year and has the
required label or tag. You also may not take any of the actions listed
in the previous sentence with respect to any equipment containing an
engine subject to this part's provisions, unless the engine is covered
by a valid and appropriate certificate of conformity and has the
required engine label or tag. We may assess a civil penalty up to
$32,500 for each engine or piece of equipment in violation.
    (i) For purposes of this paragraph (a)(1), an appropriate
certificate of conformity is one that applies for the same model year
as the model year of the equipment (except as allowed by Sec.
1068.105(a)), covers the appropriate category of engines/equipment
(such as locomotive or Marine SI), and conforms to all requirements
specified for equipment in the standard-setting part. Engines/equipment
are considered not covered by a certificate unless they are in a
configuration described in the application for certification.
    (ii) The requirements of this paragraph (a)(1) also cover new
engines you produce to replace an older engine in a piece of equipment,
unless the engine qualifies for the replacement-engine exemption in
Sec.  1068.240.
    (iii) For engines used in equipment subject to equipment-based
standards, you may not sell, offer for sale, or introduce or deliver
into commerce in the United States or import into the United States any
new engine, unless it is covered by a valid certificate of conformity
for its model year and has the required label or tag. See the standard-
setting part for more information about how this prohibition applies.
    (2) Reporting and recordkeeping. This chapter requires you to
record certain types of information to show that you meet our
standards. You must comply with these requirements to make and maintain
required records (including those described in Sec.  1068.501). You may
not deny us access to your records or the ability to copy your records
if we have the authority to see or copy them. Also, you must give us
complete and accurate reports and information without delay, as
required under this chapter. Failure to comply with the requirements of
this paragraph is prohibited. We may assess a civil penalty up to
$32,500 for each day you are in violation. In addition, knowingly
submitting false information is a violation of 18 U.S.C. 1001, which
may involve criminal penalties and up to five years imprisonment.
    (3) Testing and access to facilities. You may not keep us from
entering your facility to test engines/equipment or inspect if we are
authorized to do so. Also, you must perform the tests we require (or
have the tests done for you). Failure to perform this testing is
prohibited. We may assess a civil penalty up to $32,500 for each day
you are in violation.
    (b) The following prohibitions apply to everyone with respect to
the engines and equipment to which this part applies:
    (1) Tampering. You may not remove, disable, or render inoperative a
device or element of design that may affect an engine's or piece of
equipment's emission levels. This includes, for example, operating an
engine without a supply of appropriate quality urea if the emissions
control system relies on urea to reduce NOX emissions or the
use of incorrect fuel or engine oil that renders the emissions control
system inoperative. This restriction applies before and after the
engine or equipment is placed in service. Section 1068.120 describes
how this applies to rebuilding engines. See the standard-setting part,
which may include additional provisions regarding actions prohibited by
this requirement. For a manufacturer or dealer, we may assess a civil
penalty up to $32,500 for each engine or piece of equipment in
violation. For anyone else, we may assess a civil penalty up to $2,750
for each day an engine or piece of equipment is operated in violation.
This prohibition does not apply in any of the following situations:
    (i) You need to repair the engine/equipment and you restore it to
proper functioning when the repair is complete.
    (ii) You need to modify the engine/equipment to respond to a
temporary emergency and you restore it to proper functioning as soon as
possible.
    (iii) You modify new engines/equipment that another manufacturer
has already certified to meet emission standards and recertify them
under your own family. In this case you must tell the original
manufacturer not to include the modified engines/equipment in the
original family.
    (2) Defeat devices. You may not knowingly manufacture, sell, offer
to sell, or install, any part that bypasses, impairs, defeats, or
disables the control the emissions of any pollutant. See the standard-
setting part, which may include additional provisions regarding actions
prohibited by this requirement. We may assess a civil penalty up to
$2,750 for each part in violation.
    (3) Stationary engines. For an engine that is excluded from any
requirements of this chapter because it is a stationary engine, you may
not move it or install it in any mobile equipment, except as allowed by
the provisions of this chapter. You may not circumvent or attempt to
circumvent the residence-time requirements of paragraph (2)(iii) of the
nonroad engine definition in Sec.  1068.30. We may assess a civil
penalty up to $32,500 for each day you are in violation.
    (4) Competition engines/equipment. For uncertified engines/
equipment that are excluded or exempted from any requirements of this
chapter because they are to be used solely for competition, you may not
use any of them in a manner that is inconsistent with use solely for
competition. We may

assess a civil penalty up to $32,500 for each day you are in violation.
    (5) Importation. You may not import an uncertified engine or piece
of equipment if it is defined to be new in the standard-setting part
and it is built after emission standards start to apply in the United
States. We may assess a civil penalty up to $32,500 for each day you
are in violation. Note the following:
    (i) The definition of new is broad for imported engines/equipment;
uncertified engines and equipment (including used engines and
equipment) are generally considered to be new when imported.
    (ii) Engines/equipment that were originally manufactured before
applicable EPA standards were in effect are generally not subject to
emission standards.
    (6) Warranty and recall. You must meet your obligation to honor
your emission-related warranty under Sec.  1068.115, including any
commitments you identify in your application for certification. You
must also fulfill all applicable requirements under subpart F of this
part related to emission-related defects and recalls. Failure to meet
these obligations is prohibited. Also, except as specifically provided
by regulation, you are prohibited from directly or indirectly
communicating to the ultimate purchaser or a later purchaser that the
emission-related warranty is valid only if the owner has service
performed at authorized facilities, or only if the owner uses
authorized parts, components, or systems. We may assess a civil penalty
up to $32,500 for each engine or piece of equipment in violation.
    (c) [Reserved]
    (d) Exemptions from these prohibitions are described in subparts C
and D of this part and in the standard-setting part.
    (e) The standard-setting parts describe more requirements and
prohibitions that apply to manufacturers (including importers) and
others under this chapter.
    (f) [Reserved]
    (g) The maximum penalty values listed in paragraphs (a) and (b) of
this section are shown for calendar year 2004. Maximum penalty limits
for later years may be adjusted based on the Consumer Price Index. The
specific regulatory provisions for changing the maximum penalties,
published in 40 CFR part 19, reference the applicable U.S. Code
citation on which the prohibited action is based. The following table
is shown here for informational purposes:

  Table 1 to Sec.   1068.101.--Legal Citation for Specific Prohibitions for Determining Maximum Penalty Amounts
----------------------------------------------------------------------------------------------------------------
   Part 1068 regulatory citation of        General description of        U.S. Code citation for clean air act
          prohibited action                     prohibition                            authority
----------------------------------------------------------------------------------------------------------------
Sec.   1068.101(a)(1)................  Introduction into U.S.         42 U.S.C. 7522(a)(1).
                                        commerce of an uncertified
                                        source.
Sec.   1068.101(a)(2)................  Failure to provide             42 U.S.C. 7522(a)(2).
                                        information.
Sec.   1068.101(a)(3)................  Denying access to facilities.  42 U.S.C. 7522(a)(2).
Sec.   1068.101(b)(1)................  Tampering with emission        42 U.S.C. 7522(a)(3).
                                        controls by a manufacturer
                                        or dealer.
                                       Tampering with emission        ..........................................
                                        controls by someone other
                                        than a manufacturer or
                                        dealer.
Sec.   1068.101(b)(2)................  Sale or use of a defeat        42 U.S.C. 7522(a)(3).
                                        device.
Sec.   1068.101(b)(3)................  Mobile use of a stationary     42 U.S.C. 7522(a)(1).
                                        engine.
Sec.   1068.101(b)(4)................  Noncompetitive use of          42 U.S.C. 7522(a)(1).
                                        uncertified engines/
                                        equipment that is exempted
                                        for competition.
Sec.   1068.101(b)(5)................  Importation of an uncertified  42 U.S.C. 7522(a)(1).
                                        source.
----------------------------------------------------------------------------------------------------------------

    146. Section 1068.105 is revised to read as follows:

Sec.  1068.105  What other provisions apply to me specifically if I
manufacture equipment needing certified engines?

    This section describes general provisions that apply to equipment
manufacturers for sources subject to engine-based standards. See the
standard-setting part for any requirements that apply for certain
applications.
    (a) Transitioning to new engine-based standards. If new engine-
based emission standards apply in a given model year, your equipment in
that model year must have engines that are certified to the new
standards, except that you may continue to use up your normal inventory
of earlier engines that were built before the date of the new or
changed standards. For example, if your normal inventory practice is to
keep on hand a one-month supply of engines based on your upcoming
production schedules, and a new tier of standard starts to apply for
the 2015 model year, you may order engines based on your normal
inventory requirements late in the engine manufacturer's 2014 model
year and install those engines in your equipment, regardless of the
date of installation. Also, if your model year starts before the end of
the calendar year preceding new standards, you may use engines from the
previous model year for those units you produce before January 1 of the
year that new standards apply. If emission standards for the engine do
not change in a given model year, you may continue to install engines
from the previous model year without restriction. You may not
circumvent the provisions of Sec.  1068.101(a)(1) by stockpiling
engines that were built before new or changed standards take effect.
Note that this allowance does not apply for equipment subject to
equipment-based standards.
    (b) Installing engines or certified components. You must follow the
engine manufacturer's emission-related installation instructions. For
example, you may need to constrain where you place an exhaust
aftertreatment device or integrate into your equipment models a device
for sending visual or audible signals to the operator. Similarly, you
must follow the emission-related installation instructions from the
manufacturer of a component that has been certified for controlling
evaporative emissions under 40 CFR part 1060. Not meeting the
manufacturer's emission-related installation instructions is a
violation of Sec.  1068.101(b)(1).
    (c) Attaching a duplicate label. If you obscure the engine's label,
you must do four things to avoid violating Sec.  1068.101(a)(1):
    (1) Send a request for duplicate labels in writing with your
company's letterhead to the engine manufacturer. Include the following
information in your request:
    (i) Identify the type of equipment and the specific engine and
equipment models needing duplicate labels.
    (ii) Identify the family (from the original engine label).

    (iii) State the reason that you need a duplicate label for each
equipment model.
    (iv) Identify the number of duplicate labels you will need.
    (2) Permanently attach the duplicate label to your equipment by
securing it to a part needed for normal operation and not normally
requiring replacement. Make sure an average person can easily read it.
    (3) Destroy any unused duplicate labels if you find that you will
not need them.
    (4) Keep the following records for at least eight years after the
end of the model year identified on the engine label:
    (i) Keep a copy of your written request.
    (ii) Keep drawings or descriptions that show how you apply the
duplicate labels to your equipment.
    (iii) Maintain a count of those duplicate labels you use and those
you destroy.
    147. Section 1068.110 is revised to read as follows:

Sec.  1068.110  What other provisions apply to engines/equipment in
service?

    (a) Aftermarket parts and service. As the certifying manufacturer,
you may not require anyone to use your parts or service to maintain or
repair an engine or piece of equipment, unless we approve this in your
application for certification. It is a violation of the Act for anyone
to manufacture any part if one of its main effects is to reduce the
effectiveness of the emission controls. See Sec.  1068.101(b)(2).
    (b) Certifying aftermarket parts. As the manufacturer or rebuilder
of an aftermarket engine or equipment part, you may--but are not
required to--certify according to 40 CFR part 85, subpart V, that using
the part will not cause engines/equipment to fail to meet emission
standards. Whether you certify or not, you must keep any information
showing how your parts or service affect emissions.
    (c) Compliance with standards. We may test engines and equipment to
investigate compliance with emission standards and other requirements.
We may also require the manufacturer to do this testing.
    (d) Defeat devices. We may test engines and equipment to
investigate potential defeat devices. We may also require the
manufacturer to do this testing. If we choose to investigate one of
your designs, we may require you to show us that it does not have a
defeat device. To do this, you may have to share with us information
regarding test programs, engineering evaluations, design
specifications, calibrations, on-board computer algorithms, and design
strategies. It is a violation of the Act for anyone to make, install or
use defeat devices. See Sec.  1068.101(b)(2) and the standard-setting
part.
    (e) Warranty and maintenance. Owners are responsible for properly
maintaining their engines/equipment; however, owners may make warranty
claims against the manufacturer for all expenses related to diagnosing
and repairing or replacing emission-related parts, as described in
Sec.  1068.115. The warranty period begins when the equipment is first
placed into service. See the standard-setting part for specific
requirements. It is a violation of the Act for anyone to disable
emission controls; see Sec.  1068.101(b)(1) and the standard-setting
part.
    148. Section 1068.115 is revised to read as follows:

Sec.  1068.115  When must manufacturers honor emission-related warranty
claims?

    Section 207(a) of the Clean Air Act (42 U.S.C. 7541(a)) requires
certifying manufacturers to warrant to purchasers that their engines/
equipment are designed, built, and equipped to conform at the time of
sale to the applicable regulations for their full useful life,
including a warranty that the engines/equipment are free from defects
in materials and workmanship that would cause any engine/equipment to
fail to conform to the applicable regulations during the specified
warranty period. This section codifies the warranty requirements of
section 207(a) without intending to limit these requirements.
    (a) As a certifying manufacturer, you may deny warranty claims only
for failures that have been caused by the owner's or operator's
improper maintenance or use, by accidents for which you have no
responsibility, or by acts of God. For example, you would not need to
honor warranty claims for failures that have been directly caused by
the operator's abuse of the engine/equipment or the operator's use of
the engine/equipment in a manner for which it was not designed, and are
not attributable to you in any way.
    (b) As a certifying manufacturer, you may not deny emission-related
warranty claims based on any of the following:
    (1) Maintenance or other service you or your authorized facilities
performed.
    (2) Engine/equipment repair work that an operator performed to
correct an unsafe, emergency condition attributable to you, as long as
the operator tries to restore the engine/equipment to its proper
configuration as soon as possible.
    (3) Any action or inaction by the operator unrelated to the
warranty claim.
    (4) Maintenance that was performed more frequently than you
specify.
    (5) Anything that is your fault or responsibility.
    (6) The use of any fuel that is commonly available where the
equipment operates, unless your written maintenance instructions state
that this fuel would harm the equipment's emission control system and
operators can readily find the proper fuel.
    149. Section 1068.120 is revised to read as follows:

Sec.  1068.120  What requirements must I follow to rebuild engines?

    (a) This section describes the steps to take when rebuilding
engines to avoid violating the tampering prohibition in Sec.
1068.101(b)(1). These requirements apply to anyone rebuilding an engine
subject to this part, but the recordkeeping requirements in paragraphs
(j) and (k) of this section apply only to businesses. For maintenance
or service that is not rebuilding, including any maintenance related to
evaporative emission controls, you may not make changes that might
increase emissions of any pollutant, but you do not need to keep any
records.
    (b) The term ``rebuilding'' refers to a rebuild of an engine or
engine system, including a major overhaul in which you replace the
engine's pistons or power assemblies or make other changes that
significantly increase the service life of the engine. It also includes
replacing or rebuilding an engine's turbocharger or aftercooler or the
engine's systems for fuel metering or electronic control so that it
significantly increases the service life of the engine. For these
provisions, rebuilding may or may not involve removing the engine from
the equipment. Rebuilding does not normally include the following:
    (1) Scheduled emission-related maintenance that the standard-
setting part allows during the useful life period (such as replacing
fuel injectors).
    (2) Unscheduled maintenance that occurs commonly within the useful
life period. For example, replacing a water pump is not rebuilding an
engine.
    (c) [Reserved]
    (d) If you rebuild an engine or engine system, you must have a
reasonable technical basis for knowing that the rebuilt engine's
emission control system performs as well as, or better than, it
performs in its certified configuration. Identify the model year of the
resulting engine configuration. You have a reasonable basis if you meet
two main conditions:

    (1) Install parts--new, used, or rebuilt--so a person familiar with
engine design and function would reasonably believe that the engine
with those parts will control emissions of all pollutants at least to
the same degree as with the original parts. For example, it would be
reasonable to believe that parts performing the same function as the
original parts (and to the same degree) would control emissions to the
same degree as the original parts.
    (2) Adjust parameters or change design elements only according to
the original engine manufacturer's instructions. Or, if you differ from
these instructions, you must have data or some other technical basis to
show you should not expect in-use emissions to increase.
    (e) If the rebuilt engine remains installed or is reinstalled in
the same piece of equipment, you must rebuild it to the original
configuration or another certified configuration of the same or later
model year.
    (f) If the rebuilt engine replaces another certified engine in a
piece of equipment, you must rebuild it to a certified configuration of
the same model year as, or a later model year than, the engine you are
replacing.
    (g) Do not erase or reset emission-related codes or signals from
onboard monitoring systems without diagnosing and responding
appropriately to any diagnostic codes. This requirement applies
regardless of the manufacturer's reason for installing the monitoring
system and regardless of its form or interface. Clear any codes from
diagnostic systems when you return the rebuilt engine to service. Do
not disable a diagnostic signal without addressing its cause.
    (h) When you rebuild an engine, check, clean, adjust, repair, or
replace all emission-related components (listed in Appendix I of this
part) as needed according to the original manufacturer's recommended
practice. In particular, replace oxygen sensors, replace the catalyst
if there is evidence of malfunction, clean gaseous fuel-system
components, and replace fuel injectors (if applicable), unless you have
a reasonable technical basis for believing any of these components do
not need replacement.
    (i) If you are installing an engine that someone else has rebuilt,
check all emission-related components listed in Appendix I of this part
as needed according to the original manufacturer's recommended
practice.
    (j) Keep at least the following records:
    (1) Identify the hours of operation (or mileage, as appropriate) at
time of rebuild.
    (2) Identify the work done on the engine or any emission-related
control components, including a listing of parts and components you
used.
    (3) Describe any engine parameter adjustments.
    (4) Identify any emission-related codes or signals you responded to
and reset.
    (k) You must show us or send us your records if we ask for them.
Keep records for at least two years after rebuilding an engine. Keep
them in any format that allows us to readily review them.
    (1) You do not need to keep information that is not reasonably
available through normal business practices. We do not expect you to
have information that you cannot reasonably access.
    (2) You do not need to keep records of what other companies do.
    (3) You may keep records based on families rather than individual
engines if that is the way you normally do business.

Subpart C--[Amended]

    150. Section 1068.201 is revised to read as follows:

Sec.  1068.201  Does EPA exempt or exclude any engines/equipment from
the prohibited acts?

    We may exempt new engines/equipment from some or all of the
prohibited acts or requirements of this part under provisions described
in this subpart. We may exempt engines/equipment already placed in
service in the United States from the prohibition in Sec.
1068.101(b)(1) if the exemption for engines/equipment used solely for
competition applies (see Sec.  1068.235). In addition, see Sec.  1068.1
and the standard-setting parts to determine if other engines/equipment
are excluded from some or all of the regulations in this chapter.
    (a) This subpart identifies which engines/equipment qualify for
exemptions and what information we need. We may ask for more
information.
    (b) If you violate any of the terms, conditions, instructions, or
requirements to qualify for an exemption, we may void, revoke, or
suspend the exemption.
    (c) If you use an exemption under this subpart, we may require you
to add a permanent label to your exempted engines/equipment. You may
ask us to modify these labeling requirements if it is appropriate for
your engine/equipment.
    (d) If you produce engines/equipment we exempt under this subpart,
we may require you to make and keep records, perform tests, make
reports and provide information as needed to reasonably evaluate the
validity of the exemption.
    (e) If you own or operate engines/equipment we exempt under this
subpart, we may require you to provide information as needed to
reasonably evaluate the validity of the exemption.
    (f) Subpart D of this part describes how we apply these exemptions
to engines/equipment you import (or intend to import).
    (g) If you want to ask for an exemption or need more information,
write to the Designated Officer.
    (h) You may ask us to modify the administrative requirements for
the exemptions described in this subpart. We may approve your request
if we determine that such approval is consistent with the intent of
this part. For example, waivable administrative requirements might
include some reporting requirements, but would not include any
eligibility requirements or use restrictions.
    (i) If you want to take an action with respect to an exempted or
excluded engine/equipment that is prohibited by the exemption or
exclusion, such as selling it, you need to certify the engine/
equipment. We will issue a certificate of conformity if you send us an
application for certification showing that you meet all the applicable
requirements from the standard-setting part and pay the appropriate
fee. Also, in some cases, we may allow manufacturers to modify the
engines/equipment as needed to make it identical to engines/equipment
already covered by a certificate. We would base such an approval on our
review of any appropriate documentation. These engines/equipment must
have emission control information labels that accurately describe their
status.
    151. Section 1068.210 is revised to read as follows:

Sec.  1068.210  What are the provisions for exempting test engines/
equipment?

    (a) We may exempt engines/equipment that are not exempted under
other sections of this part that you will use for research,
investigations, studies, demonstrations, or training.
    (b) Anyone may ask for a testing exemption.
    (c) If you are a certificate holder, you may request an exemption
for engines/equipment you intend to include in test programs over a
two-year period.
    (1) In your request, tell us the maximum number of engines/
equipment involved and describe how you will make sure exempted
engines/equipment are used only for this testing.
    (2) Give us the information described in paragraph (d) of this
section if we ask for it.

    (d) If you are not a certificate holder do all of the following:
    (1) Show that the proposed test program has a valid purpose under
paragraph (a) of this section.
    (2) Show you need an exemption to achieve the purpose of the test
program (time constraints may be a basis for needing an exemption, but
the cost of certification alone is not).
    (3) Estimate the duration of the proposed test program and the
number of engines/equipment involved.
    (4) Allow us to monitor the testing.
    (5) Describe how you will ensure that you stay within this
exemption's purposes. Address at least the following things:
    (i) The technical nature of the test.
    (ii) The test site.
    (iii) The duration and accumulated engine/equipment operation
associated with the test.
    (iv) Ownership and control of the engines/equipment involved in the
test.
    (v) The intended final disposition of the engines/equipment.
    (vi) How you will identify, record, and make available the engine/
equipment identification numbers.
    (vii) The means or procedure for recording test results.
    (e) If we approve your request for a testing exemption, we will
send you a letter or a memorandum for your signature describing the
basis and scope of the exemption. The exemption does not take effect
until we receive the signed letter or memorandum from you. It will also
include any necessary terms and conditions, which normally require you
to do the following:
    (1) Stay within the scope of the exemption.
    (2) Create and maintain adequate records that we may inspect.
    (3) Add a permanent, legible label, written in English, to a
readily visible part of all exempted engines/equipment. This label must
include at least the following items:
    (i) The label heading ``EMISSION CONTROL INFORMATION''.
    (ii) Your corporate name and trademark.
    (iii) Engine displacement, family identification, and model year of
the engine/equipment (as applicable); or whom to contact for further
information.
    (iv) One of these statements (as applicable)
    (A) ``THIS ENGINE IS EXEMPT UNDER 40 CFR 1068.210 OR 1068.215 FROM
EMISSION STANDARDS AND RELATED REQUIREMENTS.''.
    (B) ``THIS EQUIPMENT IS EXEMPT UNDER 40 CFR 1068.210 OR 1068.215
FROM EMISSION STANDARDS AND RELATED REQUIREMENTS.''.
    (4) Tell us when the test program is finished.
    (5) Tell us the final disposition of the engines/equipment.
    (6) Send us a written confirmation that you meet the terms and
conditions of this exemption.
    152. Section 1068.215 is revised to read as follows:

Sec.  1068.215  What are the provisions for exempting manufacturer-
owned engines/equipment?

    (a) You are eligible for the exemption for manufacturer-owned
engines/equipment only if you are a certificate holder.
    (b) Engines/equipment may be exempt without a request if they are
nonconforming engines/equipment under your ownership and control and
you operate them to develop products, assess production methods, or
promote your engines/equipment in the marketplace. You may not loan,
lease, sell, or use the engine/equipment to generate revenue, either by
itself or for an engine installed in a piece of equipment.
    (c) To use this exemption, you must do three things:
    (1) Establish, maintain, and keep adequately organized and indexed
information on all exempted engines/equipment, including the engine/
equipment identification number, the use of the engine/equipment on
exempt status, and the final disposition of any engine/equipment
removed from exempt status.
    (2) Let us access these records, as described in Sec.  1068.20.
    (3) Add a permanent, legible label, written in English, to a
readily visible part of all exempted engines/equipment. This label must
include at least the following items:
    (i) The label heading ``EMISSION CONTROL INFORMATION''.
    (ii) Your corporate name and trademark.
    (iii) Engine displacement, family identification, and model year of
the engine/equipment (as applicable); or whom to contact for further
information.
    (iv) One of these statements (as applicable)
    (A) ``THIS ENGINE IS EXEMPT UNDER 40 CFR 1068.210 OR 1068.215 FROM
EMISSION STANDARDS AND RELATED REQUIREMENTS.''.
    (B) ``THIS EQUIPMENT IS EXEMPT UNDER 40 CFR 1068.210 OR 1068.215
FROM EMISSION STANDARDS AND RELATED REQUIREMENTS.''.
    153. Section 1068.220 is revised to read as follows:

Sec.  1068.220  What are the provisions for exempting display engines/
equipment?

    (a) Anyone may request an exemption for display engines/equipment.
    (b) Nonconforming display engines/equipment will be exempted if
they are used only for displays in the interest of a business or the
general public. This exemption does not apply to engines/equipment
displayed for private use, private collections, or any other purpose we
determine is inappropriate for a display exemption.
    (c) You may operate the exempted engine/equipment, but only if we
approve specific operation that is part of the display.
    (d) You may sell or lease the exempted engine/equipment only with
our advance approval; you may not use it to generate revenue.
    (e) To use this exemption, you must add a permanent, legible label,
written in English, to a readily visible part of all exempted engines/
equipment. This label must include at least the following items:
    (1) The label heading ``EMISSION CONTROL INFORMATION''.
    (2) Your corporate name and trademark.
    (3) Engine displacement, family identification, and model year of
the engine/equipment, (as applicable) or whom to contact for further
information.
    (4) One of these statements (as applicable):
    (i) ``THIS ENGINE IS EXEMPT UNDER 40 CFR 1068.220 FROM EMISSION
STANDARDS AND RELATED REQUIREMENTS.''.
    (ii) ``THIS EQUIPMENT IS EXEMPT UNDER 40 CFR 1068.220 FROM EMISSION
STANDARDS AND RELATED REQUIREMENTS.''.
    (f) We may set other conditions for approval of this exemption.
    154. Section 1068.225 is revised to read as follows:

Sec.  1068.225  What are the provisions for exempting engines/equipment
for national security?

    (a) You are eligible for the exemption for national security only
if you are a manufacturer.
    (b) Your engine/equipment is exempt without a request if it will be
used or owned by an agency of the federal government responsible for
national defense, where the equipment has armor, permanently attached
weaponry, or other substantial features typical of military combat.
    (c) You may request a national security exemption for engines/
equipment not meeting the conditions of paragraph (b) of this section,
as long as your request is endorsed by an

agency of the federal government responsible for national defense. In
your request, explain why you need the exemption.
    (d) Add a legible label, written in English, to all engines/
equipment exempted under this section. The label must be permanently
secured to a readily visible part of the engine/equipment needed for
normal operation and not normally requiring replacement, such as the
engine block. This label must include at least the following items:
    (1) The label heading ``EMISSION CONTROL INFORMATION''.
    (2) Your corporate name and trademark.
    (3) Engine displacement, family identification, and model year of
the engine/equipment, (as applicable), or whom to contact for further
information.
    (4) One of these statements (as applicable):
    (i) ``THIS ENGINE HAS AN EXEMPTION FOR NATIONAL SECURITY UNDER 40
CFR 1068.225.''.
    (ii) ``THIS EQUIPMENT HAS AN EXEMPTION FOR NATIONAL SECURITY UNDER
40 CFR 1068.225.''.
    155. Section 1068.230 is revised to read as follows:

Sec.  1068.230  What are the provisions for exempting engines/equipment
for export?

    (a) If you export a new engine or new piece of equipment to a
country with emission standards identical to ours, we will not exempt
it. These engines/equipment must comply with our certification
requirements.
    (b) If you export engines/equipment to a country with different
emission standards or no emission standards, they are exempt from the
prohibited acts in this part without a request. If you produce exempt
engines/equipment for export and any are sold or offered for sale to
someone in the United States (except for export), we will void the
exemption.
    (c) Label all exempted engines/equipment and shipping containers
with a label or tag showing the engines/equipment are not certified for
sale or use in the United States. These labels need not be permanently
attached to the engines/equipment. The label must include at least one
of these statements (as applicable):
    (1) ``THIS ENGINE IS SOLELY FOR EXPORT AND IS THEREFORE EXEMPT
UNDER 40 CFR 1068.230 FROM U.S. EMISSION STANDARDS AND RELATED
REQUIREMENTS.''.
    (2) ``THIS EQUIPMENT IS SOLELY FOR EXPORT AND IS THEREFORE EXEMPT
UNDER 40 CFR 1068.230 FROM U.S. EMISSION STANDARDS AND RELATED
REQUIREMENTS.''.
    156. Section 1068.235 is revised to read as follows:

Sec.  1068.235  What are the provisions for exempting engines/equipment
used solely for competition?

    (a) New engines/equipment you produce that are used solely for
competition are generally excluded from emission standards. See the
standard-setting parts for specific provisions where applicable.
    (b) If you modify any engines/equipment after they have been placed
into service in the United States so they will be used solely for
competition, they are exempt without request. This exemption applies
only to the prohibition in Sec.  1068.101(b)(1) and is valid only as
long as the engine/equipment is used solely for competition.
    (c) If you modify any engines/equipment under paragraph (b) of this
section, you must destroy the original emission labels. If you loan,
lease, sell, or give any of these engines/equipment to someone else,
you must tell the new owner (or operator, if applicable) in writing
that they may be used only for competition.
    157. Section 1068.240 is amended by revising paragraphs (a),
(b)(2), (b)(5), and (e) and adding paragraph (f) to read as follows:

Sec.  1068.240  What are the provisions for exempting new replacement
engines?

    (a) You are eligible for the exemption for new replacement engines
only if you are a certificate holder. Note that this exemption does not
apply for locomotives (40 CFR 1033.601) and that unique provisions
apply to marine compression-ignition engines (40 CFR 1042.615).
    (b) * * *
    (2) The engine being replaced was not originally subject to
emission standards, or was originally subject to less stringent
emission standards than those that would otherwise apply to the new
engine.
* * * * *
    (5) You make the replacement engine in a configuration identical in
all material respects to the engine being replaced (or that of another
certified engine of the same or later model year) and meet all the
requirements of Sec.  1068.265. This requirement applies only if the
old engine was subject to emission standards less stringent than those
in effect when you produce the replacement engine.
* * * * *
    (e) Replacement engines exempted under this section may not
generate or use emission credits under the standard-setting part, nor
be part of any associated credit calculations.
    (f) The provisions of this section may not be used to circumvent
emission standards that apply to new engines under the standard-setting
part.
    158. Section 1068.245 is amended by revising paragraphs (a) and (f)
to read as follows:

Sec.  1068.245  What temporary provisions address hardship due to
unusual circumstances?

    (a) After considering the circumstances, we may permit you to
introduce into U.S. commerce engines/equipment that do not comply with
emission-related requirements for a limited time if all the following
conditions apply:
    (1) Unusual circumstances that are clearly outside your control and
that could not have been avoided with reasonable discretion prevent you
from meeting requirements from this chapter.
    (2) You exercised prudent planning and were not able to avoid the
violation; you have taken all reasonable steps to minimize the extent
of the nonconformity.
    (3) Not having the exemption will jeopardize the solvency of your
company.
    (4) No other allowances are available under the regulations in this
chapter to avoid the impending violation, including the provisions of
Sec.  1068.250.
* * * * *
    (f) Add a permanent, legible label, written in English, to a
readily visible part of all engines/equipment exempted under this
section. This label must include at least the following items:
    (1) The label heading ``EMISSION CONTROL INFORMATION''.
    (2) Your corporate name and trademark.
    (3) Engine displacement (in liters), rated power, and model year of
the engine/equipment, (as applicable) or whom to contact for further
information.
    (4) One of the following statements:
    (i) If the engine/equipment does not meet any emission standards:
    (A) ``THIS ENGINE IS EXEMPT UNDER 40 CFR 1068.245 FROM EMISSION
STANDARDS AND RELATED REQUIREMENTS.''; or
    (B) ``THIS EQUIPMENT IS EXEMPT UNDER 40 CFR 1068.245 FROM EMISSION
STANDARDS AND RELATED REQUIREMENTS.''.
    (ii) If the engines/equipment meet alternate emission standards as
a condition of an exemption under this section, we may specify a
different statement to identify the alternate emission standards.
    159. Section 1068.250 is amended by revising the section heading
and

paragraphs (b), (c)(1)(i), (d)(5), (j), and (k) to read as follows:

Sec.  1068.250  What are the provisions for extending compliance
deadlines for small businesses under hardship?

* * * * *
    (b) To be eligible for this exemption, you must be a small
business.
    (c) * * *
    (1) * * *
    (i) In the case of importers of engines/equipment produced by other
companies, show that you attempted to find a manufacturer capable of
supplying complying products as soon as you became aware of the
applicable requirements, but were unable to do so.
* * * * *
    (d) * * *
    (5) Identify the level of compliance you can achieve. For example,
you may be able to produce engines/equipment that meet a somewhat less
stringent emission standard than the regulations in this chapter
require.
* * * * *
    (j) We may approve extensions of the compliance deadlines as
reasonable under the circumstances up to one model year at a time, and
up to three years total.
    (k) Add a permanent, legible label, written in English, to a
readily visible part of all engines/equipment exempted under this
section. This label must include at least the following items:
    (1) The label heading ``EMISSION CONTROL INFORMATION''.
    (2) Your corporate name and trademark.
    (3) Engine displacement (in liters), rated power, and model year of
the engine/equipment or whom to contact for further information.
    (4) One of the following statements:
    (i) If the engine/equipment does not meet any emission standards:
    (A) ``THIS ENGINE IS EXEMPT UNDER 40 CFR 1068.250 FROM EMISSION
STANDARDS AND RELATED REQUIREMENTS.'', or
    (B) ``THIS EQUIPMENT IS EXEMPT UNDER 40 CFR 1068.250 FROM EMISSION
STANDARDS AND RELATED REQUIREMENTS.''.
    (ii) If the engine/equipment meets alternate emission standards as
a condition of an exemption under this section, we may specify a
different statement to identify the alternate emission standards.
    160. Section 1068.255 is revised to read as follows:

Sec.  1068.255  What are the provisions for exempting engines and fuel-
system components for hardship for equipment manufacturers and
secondary engine manufacturers?

    This section describes how, in unusual circumstances, we may
approve an exemption to prevent hardship to an equipment manufacturer
or a secondary engine manufacturer. This section does not apply to
products that are subject to equipment-based exhaust emission
standards.
    (a) Equipment exemption. As an equipment manufacturer, you may ask
for approval to produce exempted equipment for up to 12 months. We will
generally limit this to the first year that new or revised emission
standards apply. Send the Designated Officer a written request for an
exemption before you are in violation. In your request, you must show
you are not at fault for the impending violation and that you would
face serious economic hardship if we do not grant the exemption. This
exemption is not available under this paragraph (a) if you manufacture
the engine or fuel-system components you need for your own equipment or
if complying engines or fuel-system components are available from other
manufacturers that could be used in your equipment, unless we allow it
elsewhere in this chapter. We may impose other conditions, including
provisions to use products meeting less stringent emission standards or
to recover the lost environmental benefit. In determining whether to
grant the exemptions, we will consider all relevant factors, including
the following:
    (1) The number of engines or fuel-system components involved.
    (2) The size of your company and your ability to endure the
hardship.
    (3) The amount of time you had to redesign your equipment to
accommodate complying products.
    (4) Whether there was any breach of contract by a supplier.
    (5) The potential for market disruption.
    (b) Engine and fuel-system component exemption. As an engine
manufacturer or fuel-system component manufacturer, you may produce
nonconforming products for the equipment we exempt in paragraph (a) of
this section. You do not have to request this exemption, but you must
have written assurance from equipment manufacturers that they need a
certain number of exempted products under this section. Label engines
or fuel-system components as follows:
    (1) Engines. Add a permanent, legible label, written in English, to
a readily visible part of each exempted engine. This label must include
at least the following items:
    (i) The label heading ``EMISSION CONTROL INFORMATION''.
    (ii) Your corporate name and trademark.
    (iii) Engine displacement (in liters), rated power, and model year
of the engine or whom to contact for further information.
    (iv) If the engine does not meet any emission standards: ``THIS
ENGINE IS EXEMPT UNDER 40 CFR 1068.255 FROM EMISSION STANDARDS AND
RELATED REQUIREMENTS.''. If the engine meets alternate emission
standards as a condition of an exemption under this section, we may
specify a different statement to identify the alternate emission
standards.
    (2) Fuel-system components. Add a permanent, legible label, written
in English, to a readily visible part of each fuel-system component
exempted under this section. This label must prominently include at
least the following items:
    (i) Your corporate name and trademark.
    (ii) The statement ``EXEMPT UNDER 40 CFR 1068.255.''.
    (c) Secondary engine manufacturers. As a secondary engine
manufacturer, you may ask for approval to produce exempted engines
under this section for up to 12 months. We may require you to certify
your engines to compliance levels above the emission standards that
apply. For example, the in the case of multiple tiers of emission
standards, we may require you to meet the standards from the previous
tier.
    (1) The provisions in paragraph (a) of this section that apply to
equipment manufacturers requesting an exemption apply equally to you,
except that you may manufacture the engines. Before we approve an
exemption under this section, we will generally require that you commit
to a plan to make up the lost environmental benefit.
    (i) If you produce uncertified engines under this exemption, we
will calculate the lost environmental benefit based on our best
estimate of uncontrolled emission rates for your engines.
    (ii) If you produce engines under this exemption that are certified
to a compliance level less stringent than the emission standards that
would otherwise apply, we will calculate the lost environmental benefit
based on the compliance level you select for your engines.
    (2) The labeling requirements in paragraph (b) of this section
apply to your exempted engines; however, if you certify engines to
specific compliance

levels, state on the label the compliance levels that apply to each
engine.
    161. Section 1068.260 is revised to read as follows:

Sec.  1068.260  What provisions apply for selling or shipping certified
engines that are not yet in the certified configuration?

    The provisions of Sec.  1068.101(a)(1) generally require that all
new engines be in their certified configuration before being introduced
into U.S. commerce. All emission-related components generally need to
be installed on an engine for such an engine to be in its certified
configuration. This section specifies exceptions to these requirements
for engines. This section does not apply to equipment subject to
equipment-based standards. (Note: See Sec.  1068.262 for provisions
related to manufacturers introducing into U.S. commerce partially
complete engines for which someone else holds the certificate of
conformity.)
    (a) Shipping an engine separately from an aftertreatment component
that you have specified as part of its certified configuration will not
be a violation of the prohibitions in Sec.  1068.101(a)(1) if you
follow the provisions of paragraph (b) or (c) of this section. Note
that the standard-setting parts allows this exemption for delegated
final assembly only for the following engines:
    (1) Stationary compression-ignition engines (see 40 CFR part 60,
subpart IIII).
    (2) Stationary spark-ignition engines (see 40 CFR part 60, subpart
JJJJ).
    (3) Land-based nonroad compression-ignition engines (see 40 CFR
part 1039).
    (4) Marine spark-ignition engines (see 40 CFR part 1045).
    (5) Marine compression-ignition engines (see 40 CFR part 1042).
    (6) Large nonroad spark-ignition engines (see 40 CFR part 1048).
    (b) If you do not manufacture the equipment in which the engine
will be installed, you must meet all the following conditions to ship
engines without aftertreatment components specified in your application
for certification:
    (1) Apply for and receive a certificate of conformity for the
engine and its emission control system before shipment.
    (2) Provide installation instructions in enough detail to ensure
that the engine will be in its certified configuration if someone
follows these instructions.
    (3) Have a contractual agreement with each equipment manufacturer
obligating the equipment manufacturer to complete the final assembly of
the engine so it is in its certified configuration when installed in
the equipment. This agreement must also obligate the equipment
manufacturer to provide the affidavits and cooperate with the audits
required under paragraph (b)(6) of this section.
    (4) Include the cost of all aftertreatment components in the cost
of the engine. For purposes of importation, you may itemize your
invoice to separately identify the cost of aftertreatment components
that will be shipped separately. A copy of your invoice from the
aftertreatment manufacturer may be needed to avoid payment of
importation duties that include the value of aftertreatment components.
    (5) Ship the aftertreatment components directly to the equipment
manufacturer, or arrange for separate shipment by the component
manufacturer to the equipment manufacturer.
    (6) Take appropriate additional steps to ensure that all engines
will be in their certified configuration when installed by the
equipment manufacturer. At a minimum do the following:
    (i) Obtain annual affidavits from every equipment manufacturer to
whom you sell engines under this section. Include engines that you sell
through distributors or dealers. The affidavits must list the part
numbers of the aftertreatment devices that equipment manufacturers
install on each engine they purchase from you under this section.
    (ii) If you sell engines to 16 or more equipment manufacturers
under the provisions of this section, you must annually audit four
equipment manufacturers to whom you sell engines under this section. To
select individual equipment manufacturers, divide all the affected
equipment manufacturers into quartiles based on the number of engines
they buy from you; select a single equipment manufacturer from each
quartile each model year. Vary the equipment manufacturers you audit
from year to year, though you may repeat an audit in a later model year
if you find or suspect that a particular equipment manufacturer is not
properly installing aftertreatment devices. If you sell engines to
fewer than 16 equipment manufacturers under the provisions of this
section, you may instead set up a plan to audit each equipment
manufacturer on average once every four model years. Audits must
involve the assembling companies' facilities, procedures, and
production records to monitor their compliance with your instructions,
must include investigation of some assembled engines, and must confirm
that the number of aftertreatment devices shipped were sufficient for
the number of engines produced. You must keep records of these audits
for five years after the end of the model year and provide a report to
us describing any uninstalled or improperly installed aftertreatment
components. Send us these reports within 90 days of the audit, except
as specified in paragraph (e) of this section.
    (iii) If you sell engines to fewer than 16 equipment manufacturers
under the provisions of this section, you must conduct audits as
described in paragraph (b)(6)(ii) of this section or propose an
alternative plan for ensuring that equipment manufacturers properly
install aftertreatment devices.
    (7) Describe the following things in your application for
certification:
    (i) How you plan to use the provisions of this section.
    (ii) A detailed plan for auditing equipment manufacturers, as
described in paragraph (b)(6) of this section.
    (iii) All other steps you plan to take under paragraph (b)(6) of
this section.
    (8) Keep records to document how many engines you produce under
this exemption. Also, keep records to document your contractual
agreements under paragraph (b)(3) of this section. Keep all these
records for five years after the end of the model year and make them
available to us upon request.
    (9) Make sure the engine has the emission control information label
we require under the standard-setting part. Apply an additional
temporary label or tag in a way that makes it unlikely that the engine
will be installed in equipment other than in its certified
configuration. The label or tag must identify the engine as incomplete
and include a clear statement that failing to install the
aftertreatment device, or otherwise bring the engine into its certified
configuration, is a violation of federal law subject to civil penalty.
    (10) You must keep a supply of aftertreatment devices available at
your production facility so you can test production-line engines as
specified in the standard-setting part or in subpart E of this part.
Use a new catalyst with each tested engine, following the specified
procedures for stabilizing emission levels. Keep records showing how
you randomly selected these catalysts, consistent with applicable
requirements.
    (c) If you manufacture engines and install them in equipment you
also produce, you must take steps to ensure that your facilities,
procedures, and production records are set up to ensure that equipment
and engines are assembled in their proper certified configurations. You
may demonstrate

compliance with this requirement by maintaining a database showing how
you pair aftertreatment components with the appropriate engines.
    (d) Once the equipment manufacturer takes possession of an engine
exempted under this section and the engine reaches the point of final
equipment assembly, the exemption expires and the engine is subject to
all the prohibitions in Sec.  1068.101.
    (e) You must notify us within 15 days if you find from an audit or
another source that an equipment manufacturer has failed to meet its
obligations under this section.
    (f) We may suspend, revoke, or void an exemption under this
section, as follows:
    (1) We may suspend or revoke your exemption for the entire family
if we determine that any of the engines are not in their certified
configuration after installation in the equipment, or if you fail to
comply with the requirements of this section. If we suspend or revoke
the exemption for any of your families under this paragraph (f), this
exemption will not apply for future certificates unless you demonstrate
that the factors causing the nonconformity do not apply to the other
families. We may suspend or revoke the exemption for shipments to a
single facility where final assembly occurs.
    (2) We may void your exemption for the entire family if you
intentionally submit false or incomplete information or fail to keep
and provide to EPA the records required by this section. We may
suspend, revoke, or void an exemption under this section, as follows:
    (g) You are liable for the in-use compliance of any engine that is
exempt under this section.
    (h) It is a violation of the Act for any person to introduce into
U.S. commerce a previously exempted engine, including as part of a
piece of equipment, without complying fully with the installation
instructions.
    (i) [Reserved]
    (j) In certain circumstances you may ship engines with emission-
related components that are not yet assembled to the engine. This
allowance is limited to situations where the final assembly depends on
equipment design parameters and we determine that shipment of the fully
assembled engine is impractical. For example, you may generally ship
aftertreatment devices along with engines rather than installing them
on the engine before shipment. You do not need an exemption to ship an
engine under this paragraph (j).
    (k) You do not need an exemption to ship engines without specific
components if they are not emission-related components identified in
Appendix I of this part. For example, you may generally ship engines
without radiators needed to cool the engine. You may ask us at the time
of certification to allow you to ship your engines without other
equipment-related components (such as a vehicle speed sensor) that are
described in your application for certification. If we allow it, we may
specify conditions that we determine are needed to ensure that shipping
the engine without such components will not result in the engine being
operated outside of its certified configuration.
    (l) You may ask us to provide a temporary exemption to allow you to
complete production of your engines at different facilities, as long as
you maintain control of the engines until they are in their certified
configuration. We may require you to take specific steps to ensure that
such engines are in their certified configuration before reaching the
ultimate purchaser. You may request an exemption under this paragraph
(l) in your application for certification, or in a separate submission
to the Designated Compliance Officer.
    162. A new Sec.  1068.262 is added to read as follows:

Sec.  1068.262  What are the provisions for temporarily exempting
engines for shipment to secondary engine manufacturers?

    Except as specified in paragraph (f) of this section, all new
engines in the United States are presumed to be subject to the
prohibitions of Sec.  1068.101. This section specifies when
manufacturers may introduce into U.S. commerce partially complete
engines that have a certificate of conformity held by a secondary
engine manufacturer and are not yet in their certified configuration.
(Note: See Sec.  1068.260 for provisions related to manufacturers
introducing into U.S. commerce partially complete engines for which
they hold the certificate of conformity.) This exemption is temporary,
as described in paragraph (e) of this section.
    (a) Manufacturers may introduce into U.S. commerce partially
complete engines as described in this section if they have a written
request for such engines from a secondary manufacturer that has
certified the engine and will finish the engine assembly. The original
engine manufacturer must apply a temporary label to each engine to make
clear that the engine is not yet in its certified configuration. The
temporary label must include the corporate names of both the original
and certifying manufacturers and the engine family name for the engine.
The original engine manufacturer may not apply a permanent emission
control information label identifying the engine's eventual
certification status.
    (b) The provisions of this section apply only where the secondary
engine manufacturer has substantial control over the design and
assembly of emission controls. In determining whether a manufacturer
has substantial control over the design and assembly of emission
controls, we would consider the degree to which the secondary
manufacturer would be able to ensure that the engine will conform to
the regulations in its final configuration. Such secondary
manufacturers may finish assembly of partially complete engines in the
following cases:
    (1) You obtain an engine that is not fully assembled, with the
intent to manufacture a complete engine.
    (2) You obtain an engine with the intent to modify it before it
reaches the ultimate purchaser.
    (3) You obtain an engine with the intent to install it in equipment
that will be subject to equipment-based standards.
    (c) The manufacturer that will hold the certificate must include
the following information in its application for certification:
    (1) Identify the original engine manufacturer of the partially
complete engine or of the complete engine you will modify.
    (2) Describe briefly how and where final assembly will be
completed. Specify how you have the ability to ensure that the engines
will conform to the regulations in their final configuration. (Note:
Paragraph (b) of this section prohibits using the provisions of this
section unless you have substantial control over the design and
assembly of emission controls.)
    (3) State unconditionally that the engines will comply with all
applicable regulations in their final configuration.
    (d) [Reserved]
    (e) These provisions are intended only to allow you to obtain
engines in the specific circumstances identified in this section, so
any exemption under this section expires when you complete the assembly
of the engine/equipment in its final configuration.
    (f) Reduced-scale hobby engines are not presumed to be engines
subject to the prohibitions of Sec.  1068.101. Hobby engines are
compression-ignition engines with a per-cylinder displacement of less
than 50 cubic centimeters or spark-ignition engines installed in
reduced-scale models of vehicles that are not capable of transporting a
person. Other engines

that do not have a valid certificate of conformity or exemption when
introduced into U.S. commerce are presumed to be engines subject to the
prohibitions of Sec.  1068.101 unless we determine that such engines
are excluded from the prohibitions of Sec.  1068.101.
    (g) For purposes of this section, an allowance to introduce engines
into U.S. commerce includes a conditional allowance to sell, introduce,
or deliver such partially complete engines into commerce in the United
States or import them into the United States. It does not include a
general allowance to offer such partially complete engines for sale
because this exemption is intended to apply only for cases in which the
certificate holder already has an arrangement to purchase the engines
from the original engine manufacturer. This exemption does not allow
the original engine manufacturer to subsequently offer the engines for
sale to a different manufacturer who will hold the certificate unless
that second manufacturer has also complied with the requirements of
this part.
    (h) No exemption is needed to import equipment that does not
include an engine. No exemption is available under this section for
equipment subject to equipment-based standards if the engine has been
installed.
    163. Section 1068.265 is revised to read as follows:

Sec.  1068.265  What provisions apply to engines/equipment that are
conditionally exempted from certification?

    Engines produced under an exemption for replacement engines (Sec.
1068.240) or engines/equipment produced under an exemption for hardship
(Sec.  1068.245, Sec.  1068.250, or Sec.  1068.255) may need to meet