(d) You must apply a permanent label as specified in this paragraph (d) for engines/equipment certified under paragraph (a) of this section.  You may apply a permanent label as specified in this paragraph (d) instead of the label specified in paragraph (c) of this section for exempted engines/equipment.  Add a permanent label meeting the requirements of the destination country and include in the bill of lading a statement that the engines/equipment must be exported to avoid violating EPA regulations.  We may modify applicable labeling requirements to align with the labeling requirements that apply for the destination country.
(e) We may set other reasonable conditions to ensure that engines/equipment exempted under this section are not placed into service in the United States.
(f) Exemptions under this section expire once engines are no longer in the United States.  Therefore exemptions under this section do not allow engines to be imported back into the United States.

§1068.235  Exempting nonroad engines/equipment used solely for competition.
The following provisions apply for nonroad engines/equipment, but not for motor vehicles:
(a) New nonroad engines/equipment you produce that are used solely for competition are excluded from emission standards.  We may exempt (rather than exclude) new nonroad engines/equipment you produce that you intend to be used solely for competition, where we determine that such engines/equipment are unlikely to be used contrary to your intent.  See the standard-setting parts for specific provisions where applicable.  Note that the definitions in the standard-setting part may deem uncertified engines/equipment to be new upon importation.
(b) If you modify any nonroad 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 prohibitions in §1068.101(b)(1) and (2) and are valid only as long as the engine/equipment is used solely for competition. You may not use the provisions of this paragraph (b) to circumvent the requirements that apply to the sale of new competition engines under the standard-setting part.
(c) If you modify any nonroad 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.

§1068.240  Exempting new replacement engines.
The prohibitions in § 1068.101(a)(1) do not apply to a new engine if it is exempt under this section as a replacement engine.  For purposes of this section, a replacement engine is a new engine that is used to replace an engine that has already been placed into service (whether the previous engine is replaced in whole or in part with a new engine).
(a) General provisions. 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).
   (1) Paragraphs (b), (c), and (d) of this section describe different approaches for exempting new replacement engines where the engines are specially built to correspond to an engine model from an earlier model year that was subject to less stringent standards than those that apply for current production (or is no longer covered by a certificate of conformity).  You must comply with the requirements of paragraph (b) of this section for any number of replacement engines you produce in excess of what we allow under paragraph (c) of this section.  You must designate engines you produce under this section as tracked engines under paragraph (b) of this section or untracked engines under paragraph (c) of this section by the deadline for the report specified in paragraph (c)(3) of this section.
   (2) Paragraph (e) of this section describes a simpler approach for exempting partially complete new replacement engines that are built under a certificate of conformity that is valid for producing engines for the current model year.
   (3) For all the different approaches described in paragraphs (b) through (e) of this section, the exemption applies only for equipment that is 40 years old or less at the time of installation.
(b) Previous-tier replacement engines with tracking. You may produce any number of new engines to replace an engine already placed into service in a piece of equipment, as follows:
   (1) The engine being replaced must have been either not originally subject to emission standards or originally subject to less stringent emission standards than those that apply to a new engine meeting current standards.  The provisions of this paragraph (b) also apply for engines that were originally certified to the same standards that apply for the current model year if you no longer have a certificate of conformity to continue producing that engine configuration.
   (2) The following requirements and conditions apply for engines exempted under this paragraph (b):
      (i) You must determine that you do not produce an engine certified to meet current requirements that has the appropriate physical or performance characteristics to repower the equipment. If the engine being replaced was made by a different company, you must make this determination also for engines produced by this other company.
      (ii) In the case of premature engine failure, if the old engine was subject to emission standards, you must make the new replacement engine in a configuration identical in all material respects to the old engine and meet the requirements of § 1068.265. You may alternatively make the new replacement engine in a configuration identical in all material respects to another certified engine of the same or later model year as long as the engine is not certified with a family emission limit higher than that of the old engine.
      (iii) For cases not involving premature engine failure, you must make a separate determination for your own product line addressing every tier of emission standards that is more stringent than the emission standards for the engine being replaced. For example, if the engine being replaced was built before the Tier 1 standards started to apply and engines of that power category are currently subject to Tier 3 standards, you must also consider whether any Tier 1 or Tier 2 engines that you produce have the appropriate physical and performance characteristics for replacing the old engine; if you produce a Tier 2 engine with the appropriate physical and performance characteristics, you must use it as the replacement engine.
      (iv) You must keep records to document your basis for making the determinations in paragraphs (b)(2)(i) and (iii) of this section.
   (3) An old engine block replaced by a new engine exempted under this paragraph (b) may be reintroduced into U.S. commerce as part of an engine that meets either the current standards for new engines, the provisions for new replacement engines in this section, or another valid exemption.  Otherwise, you must destroy the old engine block or confirm that it has been destroyed.
   (4) If the old engine was subject to emission standards, the replacement engine must meet the appropriate emission standards as specified in § 1068.265.  This generally means you must make the new replacement engine in a previously certified configuration.
   (5) Except as specified in paragraph (d) of this section, you must add a permanent label, consistent with § 1068.45, with your corporate name and trademark and the following additional information:
   (i)  Add the following statement if the new engine may only be used to replace an engine that was not subject to any emission standards under this chapter:
      THIS REPLACEMENT ENGINE IS EXEMPT UNDER 40 CFR 1068.240.  SELLING OR INSTALLING THIS ENGINE FOR ANY PURPOSE OTHER THAN TO REPLACE AN UNREGULATED ENGINE MAY BE A VIOLATION OF FEDERAL LAW SUBJECT TO CIVIL PENALTY.  THIS ENGINE MAY NOT BE INSTALLED IN EQUIPMENT THAT IS MORE THAN 40 YEARS OLD AT THE TIME OF INSTALLATION.
   (ii) Add the following statement if the new engine may replace an engine that was subject to emission standards:
      THIS ENGINE COMPLIES WITH U.S. EPA EMISSION REQUIREMENTS FOR [Identify the appropriate emission standards (by model year, tier, or emission levels) for the replaced engine] ENGINES UNDER 40 CFR 1068.240.  SELLING OR INSTALLING THIS ENGINE FOR ANY PURPOSE OTHER THAN TO REPLACE A [Identify the appropriate emission standards for the replaced engine, by model year(s), tier(s), or emission levels)] ENGINE MAY BE A VIOLATION OF FEDERAL LAW SUBJECT TO CIVIL PENALTY.  THIS ENGINE MAY NOT BE INSTALLED IN EQUIPMENT THAT IS MORE THAN 40 YEARS OLD AT THE TIME OF INSTALLATION.
   (6) Engines exempt under this paragraph (b) may not be introduced into U.S. commerce before you make the determinations under paragraph (b)(2) of this section, except as specified in this paragraph (b)(6).  We may waive this restriction for engines excluded under paragraph (c)(5) of this section that you ship to a distributor.  Where we waive this restriction, you must take steps to ensure that the engine is installed consistent with the requirements of this paragraph (b).  For example, at a minimum you must report to us annually whether engines we allowed you to ship to a distributor under this paragraph (b)(6) have been placed into service or remain in inventory.  After an engine is placed into service, your report must describe how the engine was installed consistent with the requirements of this paragraph (b).  Send these reports to the Designated Compliance Officer by the deadlines we specify.
(c) Previous-tier replacement engines without tracking. You may produce a limited number of new replacement engines that are not from a currently certified engine family under the provisions of this paragraph (c). If you produce new engines under this paragraph (c) to replace engines subject to emission standards, the new replacement engine must be in a configuration identical in all material respects to the old engine and meet the requirements of § 1068.265. You may make the new replacement engine in a configuration identical in all material respects to another certified engine of the same or later model year as long as the engine is not certified with a family emission limit higher than that of the old engine.  The provisions of this paragraph (c) also apply for engines that were originally certified to the same standards that apply for the current model year if you no longer have a certificate of conformity to continue producing that engine configuration.  This would apply, for example, for engine configurations that were certified in an earlier model year but are no longer covered by a certificate of conformity. The following provisions apply to engines exempted under this paragraph (c):
   (1) You may produce a limited number of replacement engines under this paragraph (c) representing 0.5 percent of your annual production volumes for each category and subcategory of engines identified in Table 1 to this section (1.0 percent through 2013).  Calculate this number by multiplying your annual U.S.-directed production volume by 0.005 (or 0.01 through 2013) and rounding to the nearest whole number.  Determine the appropriate production volume by identifying the highest total annual U.S.-directed production volume of engines from the previous three model years for all your certified engines from each category or subcategory identified in Table 1 to this section, as applicable.  In unusual circumstances, you may ask us to base your production limits on U.S.-directed production volume for a model year more than three years prior.  You may include stationary engines and exempted engines as part of your U.S.-directed production volume.  Include U.S.-directed engines produced by any parent or subsidiary companies and those from any other companies you license to produce engines for you.
   (2) Count every exempted new replacement engine from your total U.S.-directed production volume that you produce in a given calendar year under this paragraph (c), including partially complete engines, except for the following:
      (i) Engines built to specifications for an earlier model year under paragraph (b) of this section.
      (ii) Partially complete engines exempted under paragraph (e) of this section.
   (3) Send the Designated Compliance Officer a report by September 30 of the year following any year in which you produced exempted replacement engines under this paragraph (c).  In your report include the total number of replacement engines you produce under this paragraph (c) for each category or subcategory, as appropriate, and the corresponding total production volumes determined under paragraph (c)(1) of this section.  If you send us a report under this paragraph (c)(3), you must also include the total number of replacement engines you produced under paragraphs (b), (d), and (e) of this section.  Count exempt engines as tracked under paragraph (b) of this section only if you meet all the requirements and conditions that apply under paragraph (b) of this section by the due date for the annual report.  You may include the information required under this paragraph (c)(3) in production reports required under the standard-setting part.
   (4) Add a permanent label as specified in paragraph (b)(5) of this section. For partially complete engines, you may alternatively add a permanent or removable label as specified in paragraph (d) of this section.
   (5) You may not use the provisions of this paragraph (c) for any engines in the following engine categories or subcategories:
      (i) Land-based nonroad compression-ignition engines we regulate under 40 CFR part 1039 with a per-cylinder displacement at or above 7.0 liters.
      (ii) Marine compression-ignition engines we regulate under 40 CFR part 1042 with a per-cylinder displacement at or above 7.0 liters.
      (iii) Locomotive engines we regulate under 40 CFR part 1033.
(d) Partially complete engines.  The following requirements apply if you ship a partially complete replacement engine under this section:
   (1) Provide instructions specifying how to complete the engine assembly such that the resulting engine conforms to the applicable certificate of conformity or the specifications of § 1068.265.  Where a partially complete engine can be built into multiple different configurations, you must be able to identify all the engine models and model years for which the partially complete engine may properly be used for replacement purposes.  Your instructions must make clear how the final assembler can determine which configurations are appropriate for the engine they receive.
   (2) You must label the engine as follows:
      (i) If you have a reasonable basis to believe that the fully assembled engine will include the original emission control information label, you may add a removable label to the engine with your corporate name and trademark and the statement: "This replacement engine is exempt under 40 CFR 1068.240."  This would generally apply if all the engine models that are compatible with the replacement engine were covered by a certificate of conformity and they were labeled in a position on the engine or equipment that is not included as part of the partially complete engine being shipped for replacement purposes.  Removable labels must meet the requirements specified in § 1068.45.
      (ii) If you do not qualify for using a removable label in paragraph (d)(1) of this section, you must add a permanent label in a readily visible location, though it may be obscured after installation in a piece of equipment.  Include on the permanent label your corporate name and trademark, the engine's part number (or other identifying information), and the statement: "THIS REPLACEMENT ENGINE IS EXEMPT UNDER 40 CFR 1068.240. THIS ENGINE MAY NOT BE INSTALLED IN EQUIPMENT THAT IS MORE THAN 40 YEARS OLD AT THE TIME OF INSTALLATION."  If there is not enough space for this statement, you may alternatively add: "REPLACEMENT" or "SERVICE ENGINE".   For purposes of this paragraph (d)(2), engine part numbers permanently stamped or engraved on the engine are considered to be included on the label.
(e) Partially complete current-tier replacement engines. The provisions of paragraph (d) of this section apply for engines you produce from a current line of certified engines or vehicles if you ship them as partially complete engines for replacement purposes.  This applies for engine-based and equipment-based standards as follows:
   (1) Where engine-based standards apply, you may introduce into U.S. commerce short blocks or other partially complete engines from a currently certified engine family as replacement components for in-use equipment powered by engines you originally produced.  You must be able to identify all the engine models and model years for which the partially complete engine may properly be used for replacement purposes.
   (2) Where equipment-based standards apply, you may introduce into U.S. commerce engines that are identical to engines covered by a current certificate of conformity by demonstrating compliance with currently applicable standards where the engines will be installed as replacement engines.  These engines might be fully assembled, but we would consider them to be partially complete engines because they are not yet installed in the equipment.
(f) Emission credits. 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.

         Table 1 to § 1068.240 -- Engine categories and subcategories
            for new replacement engines exempted without tracking
Engine category
                           Standard-setting part[1]
                             Engine subcategories
Highway CI
                                40 CFR part 86
                             disp. < 0.6 L/cyl

                         0.6 < disp. < 1.2 L/cyl

                             disp. > 1.2 L/cyl
Nonroad CI, Stationary CI, and Marine CI
                             40 CFR part 1039, or
                               40 CFR part 1042
                             disp. < 0.6 L/cyl

                         0.6 < disp. < 1.2 L/cyl

                         1.2 < disp. < 2.5 L/cyl

                         2.5 < disp. < 7.0 L/cyl
Marine SI
                               40 CFR part 1045
                                   outboard

                              personal watercraft
Large SI, Stationary SI, and Marine SI (sterndrive/ inboard only)
                              40 CFR part 1048 or
                               40 CFR part 1045
                                  all engines
Recreational vehicles
                               40 CFR part 1051
                            off-highway motorcycle

                              all-terrain vehicle

                                  snowmobile
Small SI and Stationary SI
                               40 CFR part 1054
                                   handheld

                                    Class I

                                   Class II
[1] Include an engine as being subject to the identified standard-setting part if it will eventually be subject to emission standards under that part.  For example, if you certify marine compression-ignition engines under part 94, count those as if they were already subject to part 1042.

§1068.245  Temporary provisions addressing 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 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) No other allowances are available under the regulations in this chapter to avoid the impending violation, including the provisions of §1068.250.
   (4) Not having the exemption will jeopardize the solvency of your company
(b) If your unusual circumstances are only related to compliance with the model-year provisions of §1068.103(f), we may grant hardship under this section without a demonstration that the solvency of your company is in jeopardy as follows:
   (1) You must demonstrate that the conditions specified in paragraphs (a)(1) through (3) of this section apply.
   (2) Your engines/equipment must comply with standards and other requirements that would have applied if assembly were completed on schedule.
   (3) You may generally request this exemption only for engines/equipment for which assembly has been substantially completed; you may not begin assembly of any additional engines/equipment under this exemption after the cause for delay has occurred.  We may make an exception to this general restriction for secondary engine manufacturers.
   (4) As an example, if your normal production process involves purchase of partially complete engines and a supplier fails to deliver all the ordered engines in time for your assembly according to your previously established schedule as a result of a fire at its factory, you may request that we treat those engine as if they had been completed on the original schedule.  Note that we would grant relief only for those engines where you had a reasonable basis for expecting the engines to be delivered on time based on past performance and terms of purchase.
(c) To apply for an exemption, you must send the Designated Compliance Officer a written request as soon as possible before you are in violation.  In your request, show that you meet all the conditions and requirements in paragraph (a) of this section.
(d) Include in your request a plan showing how you will meet all the applicable requirements as quickly as possible.
(e) You must give us other relevant information if we ask for it.
(f) We may include reasonable additional conditions on an approval granted under this section, including provisions to recover or otherwise address the lost environmental benefit or paying fees to offset any economic gain resulting from the exemption.  For example, in the case of multiple tiers of emission standards, we may require that you meet the standards from the previous tier whether or not your hardship is granted under paragraph (b) of this section.
(g) Add a permanent label to all engines/equipment exempted under this section, consistent with §1068.45, with at least the following items:
   (1) The label heading "EMISSION CONTROL INFORMATION".
   (2) Your corporate name and trademark.
   (3) Engine displacement (in liters or cubic centimeters), and model year of the engine/equipment, (as applicable); or whom to contact for further information.  We may also require that you include maximum engine power.
   (4) A statement describing the engine's status as an exempted engine:
      (i) If the engine/equipment does not meet any emission standards, add the following statement:"THIS [engine, equipment, vehicle, etc.] 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.

§1068.250 Extending compliance deadlines for small businesses under hardship.
(a)  After considering the circumstances, we may extend the compliance deadline for you to meet new or revised emission standards as long as you meet all the conditions and requirements in this section.
(b)  You must be a small business to be eligible for this exemption.
(c) Send the Designated Compliance Officer a written request for an extension as soon as possible before you are in violation.  In your request, show that all the following conditions and requirements apply:
   (1)  You have taken all possible business, technical, and economic steps to comply.
      (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.
      (ii) For all other manufacturers, show that the burden of compliance costs prevents you from meeting the requirements of this chapter.
   (2)  Not having the exemption will jeopardize the solvency of your company.
   (3)  No other allowances are available under the regulations in this chapter to avoid the impending violation.
(d) In describing the steps you have taken to comply under paragraph (c)(1) of this section, include at least the following information:
   (1)  Describe your business plan, showing the range of projects active or under consideration.
   (2) Describe your current and projected financial status, with and without the burden of complying fully with the applicable regulations in this chapter.
   (3)  Describe your efforts to raise capital to comply with regulations in this chapter (this may not apply for importers).
   (4) Identify the engineering and technical steps you have taken or those you plan to take to comply with regulations in this chapter.
   (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.
(e)  Include in your request a plan showing how you will meet all the applicable requirements as quickly as possible.
(f)  You must give us other relevant information if we ask for it.
(g)  An authorized representative of your company must sign the request and include the statement: "All the information in this request is true and accurate to the best of my knowledge."
(h) [Reserved]
(i)  We may include reasonable requirements on an approval granted under this section, including provisions to recover or otherwise address the lost environmental benefit.  For example, we may require that you meet a less stringent emission standard or buy and use available emission credits.
(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 label to all engines/equipment exempted under this section, consistent with §1068.45, with at least the following items:
   (1) The label heading "EMISSION CONTROL INFORMATION".
   (2) Your corporate name and trademark.
   (3) Engine displacement (in liters or cubic centimeters), and model year of the engine/equipment (as applicable); or whom to contact for further information.  We may also require that you include maximum engine power.
   (4) A statement describing the engine's status as an exempted engine:
      (i) If the engine/equipment does not meet any emission standards, add the following statement:"THIS [engine, equipment, vehicle, etc.] 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.

§1068.255  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 a single interval up to 12 months in the first year that new or revised emission standards apply.  Exemptions under this section are not limited to small businesses.  Send the Designated Compliance 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, consistent with §1068.45:
   (1) Engines. Add a permanent label to all engines/equipment exempted under this section with at least the following items:
      (i) The label heading "EMISSION CONTROL INFORMATION".
      (ii) Your corporate name and trademark.
      (iii) Engine displacement (in liters or cubic centimeters) and model year of the engine, or whom to contact for further information.  We may also require that you include maximum engine power.
      (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 label to all engines/equipment exempted under this section with 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, 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.

§1068.260  General provisions for selling or shipping engines that are not yet in their certified configuration.
Except as specified in paragraph (e) of this section, all new engines in the United States are presumed to be subject to the prohibitions of §1068.101, which generally require that all new engines be in a certified configuration before being sold, offered for sale, or introduced or delivered into commerce in the United States or imported into the United States.  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 clarifications and exemptions related to these requirements for engines.  Except for paragraph (c) of this section, the provisions of this section generally apply for engine-based standards but not for equipment-based standards.
(a) The provisions of this paragraph (a) apply for emission-related components that cannot practically be assembled before shipment because they depend on equipment design parameters.
   (1) You do not need an exemption to ship an engine that does not include installation or assembly of certain emission-related components, if those components are shipped along with the engine. For example, you may generally ship aftertreatment devices along with engines rather than installing them on the engine before shipment. We may require you to describe how you plan to use this provision.
   (2) You may ask us at the time of certification for an exemption to allow you to ship your engines without emission-related components.  If we allow this, 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.  You must identify unshipped parts by specific part numbers if they cannot be properly characterized by performance specification.  For example, electronic control units, turbochargers, and EGR coolers must generally be identified by part number.  Parts that we believe can be properly characterized by performance specification include air filters, noncatalyzed mufflers, and charge air coolers.  See paragraph (d) of this section for additional provisions that apply in certain circumstances.
(b) 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 the following parts:
   (1) Radiators needed to cool the engine.
   (2) Exhaust piping between the engine and an aftertreatment device, between two aftertreatment devices, or downstream of the last aftertreatment device.
(c) If you are a certificate holder, partially complete engines shipped between two of your facilities are exempt, subject to the provisions of this paragraph (c), as long as you maintain ownership and control of the engines until they reach their destination. We may also allow this where you do not maintain actual ownership and control of the engines (such as hiring a shipping company to transport the engines) but only if you demonstrate that the engines will be transported only according to your specifications. See §1068.261(b) for the provisions that apply instead of this paragraph (c) for the special case of integrated manufacturers using the delegated-assembly exemption. Notify us of your intent to use this exemption in your application for certification, if applicable.  Your exemption is effective when we grant your certificate. You may alternatively request an exemption in a separate submission; for example, this would be necessary if you will not be the certificate holder for the engines in question. We may require you to take specific steps to ensure that such engines are in a certified configuration before reaching the ultimate purchaser. Note that since this is a temporary exemption, it does not allow you to sell or otherwise distribute to ultimate purchasers an engine in an uncertified configuration. Note also that the exempted engine remains new and subject to emission standards (see definition of "exempted" in §1068.30) until its title is transferred to the ultimate purchaser or it otherwise ceases to be new.
(d) See §1068.261 for delegated-assembly provisions in which certificate-holding manufacturers ship engines that are not yet equipped with certain emission-related components.  See §1068.262 for provisions related to manufacturers shipping partially complete engines for which a secondary engine manufacturer holds the certificate of conformity.
(e) Engines used in hobby vehicles are not presumed to be engines subject to the prohibitions of §1068.101. Hobby vehicles are reduced-scale models of vehicles that are not capable of transporting a person.  Some gas turbine engines are subject to the prohibitions of §1068.101, but we do not presume that all gas turbine engines are subject to these prohibitions.  Other engines that do not have a valid certificate of conformity or exemption when sold, offered for sale, or introduced or delivered into commerce in the United States or imported into the United States are presumed to be engines subject to the prohibitions of §1068.101 unless we determine that such engines are excluded from the prohibitions of §1068.101.
(f) While we presume that new non-hobby engines are subject to the prohibitions of §1068.101, we may determine that a specific engine is not subject to these prohibitions based on information you provide or other information that is available to us.  For example, the provisions of this part 1068 and the standard-setting parts provide for exemptions in certain circumstances.  Also, some engines may be subject to separate prohibitions under subchapter C instead of the prohibitions of §1068.101.

§1068.261   Delegated assembly and other provisions related to engines not yet in the certified configuration.
This section describes an exemption that allows certificate holders to sell or ship engines that are missing certain emission-related components if those components will be installed by an equipment manufacturer.  This section does not apply to equipment subject to equipment-based standards.  See the standard-setting part to determine whether and how the provisions of this section apply.  (Note: See §1068.262 for provisions related to manufacturers introducing into U.S. commerce partially complete engines for which someone else holds the certificate of conformity.)  This exemption is temporary as described in paragraph (f) of this section.
(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 §1068.101(a)(1) subject to the provisions in this section.
(b) 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.  For example, you may demonstrate compliance with the requirements of this section by maintaining a database showing how you pair aftertreatment components with the appropriate engines such that the final product is in its certified configuration.
(c) If you include the price of all aftertreatment components in the price of the engine and ship the aftertreatment components directly to the equipment manufacturer, or arrange for separate shipment by the component manufacturer to the equipment manufacturer, all the following conditions apply:
   (1) Apply for and receive a certificate of conformity for the engine and its emission control system before shipment as described in the standard-setting part.  For an existing certificate of conformity, amend the application for certification by describing your plans to use the provisions of this section as described in paragraph (c)(8) of this section.
   (2) Provide installation instructions in enough detail to ensure that the engine will be in its certified configuration if someone follows these instructions.  Provide the installation instructions in a timely manner, generally directly after you receive an order for shipping engines or earlier.  If you apply removable labels as described in paragraph (c)(7)(i) of this section, include an instruction for the equipment manufacturer to remove the label after installing the appropriate aftertreatment component.
   (3) Have a contractual agreement with the equipment manufacturer obligating the equipment manufacturer to complete the final assembly of the engine so it is in its certified configuration when final assembly is complete.  This agreement must also obligate the equipment manufacturer to provide the affidavits required under paragraph (c)(4) of this section.
   (4) Take appropriate additional steps to ensure that all engines will be in a certified configuration when installed by the equipment manufacturer.  At a minimum, you must obtain annual affidavits from every equipment manufacturer to which you sell engines under this section. Include engines that you sell to 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 and include confirmation that the number of aftertreatment devices received were sufficient for the number of engines involved.
   (5) [Reserved]
   (6) Keep records to document how many engines you produce under this exemption.  Also, keep records to document your contractual agreements under paragraph (c)(3) of this section. Keep all these records for five years after the end of the applicable model year and make them available to us upon request.
   (7) Make sure the engine has the emission control information label we require under the standard-setting part.  Include additional labeling using one of the following approaches:
      (i) Apply an additional removable label in a way that makes it unlikely that the engine will be installed in equipment other than in its certified configuration. The label must identify the engine as incomplete and include a clear statement that failing to install the aftertreatment device, or otherwise failing to bring the engine into its certified configuration, is a violation of federal law subject to civil penalty.
      (ii) Add the statement "DELEGATED ASSEMBLY" to the permanent emission control information label.  You may alternatively add the abbreviated statement "DEL ASSY" if there is not enough room on the label.
   (8) 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 (d)(3) of this section, if applicable.
      (iii) All other steps you plan to take under paragraph (c)(4) of this section.
   (9) If one of your engines produced under this section is selected for production-line testing or a selective enforcement audit, you must arrange to get a randomly selected aftertreatment component from either the equipment manufacturer or the equipment manufacturer's supplier.  You may keep an inventory of these randomly selected parts, consistent with good engineering judgment and the intent of this section.  You may obtain such aftertreatment components from any point in the normal distribution from the aftertreatment component manufacturer to the equipment manufacturer.  Keep records describing how you randomly selected these aftertreatment components, consistent with the requirements specified in the standard-setting part.
   (10) Note that for purposes of importation, you may itemize your invoice to identify separate costs for engines and 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 for the engine that also include the value of aftertreatment components.
(d) If you do not include the price of all aftertreatment components in the price of the engine, you must meet all the conditions described in paragraphs (c)(1) through (9) of this section, with the following additional provisions:
   (1) The contractual agreement described in paragraph (c)(3) of this section must include a commitment that the equipment manufacturer will do the following things:
      (i) Purchase the aftertreatment components you have specified in your application for certification and keep records to document these purchases.
      (ii) Cooperate with the audits described in paragraph (d)(3) of this section.
   (2) You must have written confirmation that the equipment manufacturer has ordered the appropriate type of aftertreatment components for an initial shipment of engines under this section.  For the purpose of this paragraph (d)(2), initial shipment means the first shipment of engines that are subject to new or more stringent emissions standard (or the first shipment of engines using the provisions of this section) to a given equipment manufacturer for a given engine family.  For the purpose of this paragraph (d)(2), you may treat as a single engine family those engine families from different model years that differ only with respect to model year or other characteristics unrelated to emissions.  You must receive the written confirmation within 30 days after shipment.  If you do not receive written confirmation within 30 days, you may not ship any more engines from that engine family to that equipment manufacturer until you have the written confirmation.  Note that it may be appropriate to obtain subsequent written confirmations to ensure compliance with this section, as described in paragraph (c)(4) of this section.
   (3) You must perform or arrange for audits of equipment manufacturers as follows:
      (i) If you sell engines to 16 or more equipment manufacturers under the provisions of this section, you must annually perform or arrange for audits of 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 selected for auditing 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.
      (ii) If you sell engines to fewer than 16 equipment manufacturers under the provisions of this section, set up a plan to perform or arrange for audits of each equipment manufacturer on average once every four model years.
      (iii) Starting with the 2019 model year, if you sell engines to fewer than 40 equipment manufacturers under the provisions of this section, you may ask us to approve a reduced auditing rate. We may approve an alternate plan that involves audits of each equipment manufacturer on average once every ten model years as long as you show that you have met the auditing requirements in preceding years without finding noncompliance or improper procedures.
      (iv) To meet these audit requirements, you or your agent must at a minimum inspect the assembling companies' procedures and production records to monitor their compliance with your instructions, investigate some assembled engines, and confirm that the number of aftertreatment devices shipped were sufficient for the number of engines produced.
      (v) You must keep records of these audits for five years after the end of the applicable model year.
(e) The following provisions apply if you ship engines without air filters or other portions of the air intake system that are specifically identified by part number (or other specific part reference) in the application for certification such that the shipped engine is not in its certified configuration.  You do not need an exemption under this section to ship engines without air intake system components if you instead describe in your installation instructions how equipment manufacturers should use components meeting certain functional specifications.
   (1) If you are using the provisions of this section to ship an engine without aftertreatment, apply all the provisions of this section to ensure that each engine, including its intake system, is in its certified configuration before it reaches the ultimate purchaser.
   (2) If you are not using the provisions of this section to ship an engine without aftertreatment, shipping an engine without air-intake components that you have specified as part of its certified configuration will not be a violation of the prohibitions in §1068.101(a) if you follow the provisions specified in paragraph (b) or paragraphs (c)(1) through (9) of this section.  If we find there is a problem, we may require you to perform audits as specified in paragraph (d)(3) of this section.
(f) 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 §1068.101.  Note that the engine's model year does not change based on the date the equipment manufacturer adds the aftertreatment device and/or air filter under this section.
(g) You may use the provisions of this section for engines you sell to a distributor as described in this paragraph (g) using one of the following approaches:
   (1) You may sell engines through a distributor if you comply with the provisions of paragraph (d) of this section with respect to the equipment manufacturer.
   (2) You may treat the distributor as the equipment manufacturer as described in this paragraph (g)(2) for all applicable requirements and prohibitions.  Such distributors must bring engines into their final certified configuration.  This may include shipping the engine with the appropriate aftertreatment device and/or air filter, but without completing the assembly with all the components.  The exemptions expire for such engines when the distributor no longer has control of them.
(h) You must notify us within 15 days if you find from an audit or another source that engines produced under this section are not in a certified configuration at the point of final assembly or that an equipment manufacturer has otherwise failed to meet its obligations under this section.  If this occurs, send us a report describing the circumstances related to the noncompliance within 75 days after you notify us.
(i) We may suspend, revoke, or void an exemption under this section, as follows:
   (1) We may suspend or revoke your exemption for a specific equipment manufacturer if any of the engines are not in a certified configuration after installation in that manufacturer's equipment, or if we determine that the equipment manufacturer has otherwise failed to comply with the requirements of this section.  We may also suspend or revoke your exemption for other engine families with respect to the equipment manufacturer unless you demonstrate that the noncompliance is limited to a specific engine family.  You may not use this exemption for future shipments to the affected equipment manufacturer without taking action beyond the minimum steps specified in this section, such as performing on-site audits.  We will approve further use of this exemption only if you convince us that you have adequately addressed the factors causing the noncompliance.
   (2) We may suspend or revoke your exemption for the entire engine family if we determine that you have failed to comply with the requirements of this section.  If we make an adverse decision with respect to the exemption for any of your engine families under this paragraph (i), this exemption will not apply for future certificates unless you convince us that the factors causing the noncompliance do not apply to the other engine families.  We may also set additional conditions beyond the provisions specified in this section.
   (3) We may void your exemption for the entire engine family if you intentionally submit false or incomplete information or fail to keep and provide to EPA the records required by this section.  Note that all records and reports required under this section (whether generated by the engine manufacturer, equipment manufacturer, or others) are subject to the prohibition in §1068.101(a)(2), which prohibits the submission of false or incomplete information.  For example, the affidavits required by this section are considered a submission.
(j) You are liable for the in-use compliance of any engine that is exempt under this section.
(k) It is a violation of §1068.101(a)(1) 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.

§1068.262  Shipment of engines to secondary engine manufacturers.
This section specifies how manufacturers may introduce into U.S. commerce partially complete engines that have an exemption or a certificate of conformity held by a secondary engine manufacturer and are not yet in a certified configuration.  See the standard-setting part to determine whether and how the provisions of this section apply. (Note: See §1068.261 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 (g) of this section.
(a) The provisions of this section apply 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 engine manufacturer would be able to ensure that the engine will conform to the regulations in its final configuration.  Such secondary engine 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.
(b) 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 engine manufacturer that has certified the engine and will finish the engine assembly.  The written request must include a statement that the secondary engine manufacturer has a certificate of conformity for the engine and identify a valid engine family name associated with each engine model ordered (or the basis for an exemption if applicable, as specified in paragraph (e) of this section).  The original engine manufacturer must apply a removable label meeting the requirements of §1068.45 that identifies the corporate name of the original manufacturer and states that the engine is exempt under the provisions of §1068.262.  The name of the certifying manufacturer must also be on the label or, alternatively, on the bill of lading that accompanies the engines during shipment.  The original engine manufacturer may not apply a permanent emission control information label identifying the engine's eventual status as a certified engine.
(c) If you are the secondary engine manufacturer and you will hold the certificate, you must include the following information in your 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 (a) 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 you will not distribute the engines without conforming to all applicable regulations.
(d) If you are a secondary engine manufacturer and you are already a certificate holder for other families, you may receive shipment of partially complete engines after you apply for a certificate of conformity but before the certificate's effective date.  In this case, all the provisions of §1068.103(c)(1) through (3) apply.  This exemption allows the original manufacturer to ship engines after you have applied for a certificate of conformity.  Manufacturers may introduce into U.S. commerce partially complete engines as described in this paragraph (d) if they have a written request for such engines from a secondary engine manufacturer stating that the application for certification has been submitted (instead of the information we specify in paragraph (b) of this section).  We may set additional conditions under this paragraph (d) to prevent circumvention of regulatory requirements.  Consistent with §1068.103(c), we may also revoke an exemption under this paragraph (d) if we have reason to believe that the application for certification will not be approved or that the engines will otherwise not reach a certified configuration before reaching the ultimate purchaser. This may require that you export the engines.
(e) The provisions of this section also apply for shipping partially complete engines if the engine is covered by a valid exemption and there is no valid engine family name that could be used to represent the engine model.  Unless we approve otherwise in advance, you may do this only when shipping engines to secondary engine manufacturers that are certificate holders.  In this case, the secondary engine manufacturer must identify the regulatory cite identifying the applicable exemption instead of a valid engine family name when ordering engines from the original engine manufacturer.
(f) If secondary engine manufacturers determine after receiving an engine under this section that the engine will not be covered by a certificate or exemption as planned, they may ask us to allow for shipment of the engines back to the original engine manufacturer or to another secondary engine manufacturer.  This might occur in the case of an incorrect shipment or excess inventory.  We may modify the provisions of this section as appropriate to address these cases.
(g) Both original and secondary engine manufacturers must keep the records described in this section for at least five years, including the written request for engines and the bill of lading for each shipment (if applicable).  The written request is deemed to be a submission to EPA and is thus subject to the reporting requirements of 40 CFR 1068.101(a)(2).
(h) These provisions are intended only to allow secondary engine manufacturers to obtain or transport engines in the specific circumstances identified in this section so any exemption under this section expires when the engine reaches the point of final assembly identified in paragraph (c)(2) of this section.
(i) For purposes of this section, an allowance to introduce partially complete engines into U.S. commerce includes a conditional allowance to sell, introduce, or deliver such 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.  The exemption does not apply for any individual engines that are not labeled as specified in this section or which are shipped to someone who is not a certificate holder.
(j) We may suspend, revoke, or void an exemption under this section, as follows:
   (1) We may suspend or revoke your exemption if you fail to meet the requirements of this section.  We may suspend or revoke an exemption related to a specific secondary engine manufacturer if that manufacturer sells engines that are in not in a certified configuration in violation of the regulations.  We may disallow this exemption for future shipments to the affected secondary engine manufacturer or set additional conditions to ensure that engines will be assembled in the certified configuration.
   (2) We may void an exemption for all the affected engines if you intentionally submit false or incomplete information or fail to keep and provide to EPA the records required by this section.
   (3) The exemption is void for an engine that is shipped to a company that is not a certificate holder or for an engine that is shipped to a secondary engine manufacturer that is not in compliance with the requirements of this section.
   (4) The secondary engine manufacturer may be liable for causing a prohibited act if voiding the exemption is due to its own actions.
(k) 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.

§1068.265  Provisions for engines/equipment conditionally exempted from certification.
In some cases, exempted engines may need to meet alternate emission standards as a condition of the exemption.  For example, replacement engines exempted under §1068.240 in many cases need to meet the same standards as the engines they are replacing.  The standard-setting part may similarly exempt engines/equipment from all certification requirements, or allow us to exempt engines/equipment from all certification requirements for certain cases, but require the engines/equipment to meet alternate standards.  In these cases, all the following provisions apply:
(a) Your engines/equipment must meet the alternate standards we specify in (or pursuant to) the exemption section, and all other requirements applicable to engines/equipment that are subject to such standards.
(b) You need not apply for and receive a certificate for the exempt engines/equipment.  However, you must comply with all the requirements and obligations that would apply to the engines/equipment if you had received a certificate of conformity for them unless we specifically waive certain requirements.
(c) You must have emission data from test engines/equipment using the appropriate procedures that demonstrate compliance with the alternate standards unless the engines/equipment are identical in all material respects to engines/equipment that you have previously certified to standards that are the same as, or more stringent than, the alternate standards.  Note that "engines/equipment that you have previously certified" does not include any engines/equipment initially covered by a certificate that was later voided or otherwise invalidated, or engines/equipment that we have determined did not fully conform to the regulations.
(d) See the provisions of the applicable exemption for labeling instructions, including those related to the compliance statement and other modifications to the label otherwise required in the standard-setting part.  If we do not identify specific labeling requirements for an exempted engine, you must meet the labeling requirements in the standard-setting part, with the following exceptions:
   (1) Modify the family designation by eliminating the character that identifies the model year.
   (2) We may also specify alternative language to replace the compliance statement otherwise required in the standard-setting part.
(e) You may not generate emission credits for averaging, banking, or trading with engines/equipment meeting requirements under the provisions of this section.
(f) Keep records to show that you meet the alternate standards as follows:
   (1) If your exempted engines/equipment are identical to previously certified engines/equipment, keep your most recent application for certification for the certified family.
   (2) If you previously certified a similar family, but have modified the exempted engines/equipment in a way that changes them from their previously certified configuration, keep your most recent application for certification for the certified family, a description of the relevant changes, and any test data or engineering evaluations that support your conclusions.
   (3) If you have not previously certified a similar family, keep all the records we specify for the application for certification and any additional records the standard-setting part requires you to keep.
(g) We may require you to send us an annual report of the engines/equipment you produce under this section.
Subpart D -- Imports

§1068.301  General provisions for importing engines/equipment.
(a) This subpart applies to you if you import into the United States engines or equipment subject to EPA emission standards or equipment containing engines subject to EPA emission standards.
(b) In general, engines/equipment that you import must be covered by a certificate of conformity unless they were built before emission standards started to apply.  This subpart describes the limited cases where we allow importation of exempt or excluded engines/equipment.  If an engine has an exemption from exhaust emission standards, this allows you to import the equipment under the same exemption.
(c) U.S. Customs and Border Protection may prevent you from importing engines or equipment if you do not meet the requirements of this subpart.  In addition, U.S. Customs and Border Protection regulations may contain other requirements for engines/equipment imported into the United States (see 19 CFR Chapter I).
(d) Complete the appropriate EPA declaration form before importing any engines or equipment.  These forms are available on the Internet at http://www.epa.gov/otaq/importshttp://www.epa.gov/OTAQ/imports/ or by phone at<PHONE_NUMBER>.  Importers must keep the forms for five years and make them available promptly upon request.
(e) The standard-setting part may defines uncertified engines/equipment to be "new" upon importation, whether or not they have already been placed into service.  This may affect how the provisions of this subpart apply for your engines/equipment.  (See the definition of "new" and other relevant terms in the standard-setting part.)

§1068.305  How do I get an exemption or exclusion for imported engines/equipment?
(a) You must meet the requirements of the specific exemption or exclusion you intend to use, including any labeling requirements that apply, and complete the appropriate declaration form described in §1068.301(d).
(b) If we ask for it, prepare a written request in which you do the following:
   (1) Give your name, address, and telephone number.
   (2) Give the engine/equipment owner's name, address, and telephone number.
   (3) Identify the make, model, identification number, and original production year of all engines/equipment.
   (4) Identify which exemption or exclusion in this subpart allows you to import nonconforming engines/equipment and describe how your engine/equipment qualifies.
   (5) Tell us where you will keep your engines/equipment if you might need to store them until we approve your request.
   (6) Authorize us to inspect or test your engines/equipment as the Clean Air Act allows.
(c) We may ask for more information.
(d) You may import the nonconforming engines/equipment you identify in your request if you get prior written approval from us.  U.S. Customs and Border Protection may require you to present the approval letter.  We may temporarily or permanently approve the exemptions or exclusions, as described in this subpart.

§1068.310  Exclusions for imported engines/equipment.
If you show us that your engines/equipment qualify under one of the paragraphs of this section, we will approve your request to import such excluded engines/equipment.  You must have our approval before importing engines/equipment under paragraph (a) of this section.  You may, but are not required to request our approval to import the engines/equipment under paragraph (b) through (c) of this section.  The following engines/equipment are excluded:
(a) Engines/equipment used solely for competition.  Engines/equipment that you demonstrate will be used solely for competition are excluded from the restrictions on imports in §1068.301(b), but only if they are properly labeled.  See the standard-setting part for provisions related to this demonstration that may apply.  Section 1068.101(b)(4) prohibits anyone from using these excluded engines/equipment for purposes other than competition.  We may waive the labeling requirement or allow a removable label for engines/equipment that are being temporarily imported for one or more specific competition events.
(b) Stationary engines. The definition of nonroad engine in §1068.30 does not include certain engines used in stationary applications.  Such engines (and equipment containing such engines) may be subject to the standards of 40 CFR part 60.  Engines that are excluded from the definition of nonroad engine in this part and are not required to be certified to standards under 40 CFR part 60 are not subject to the restrictions on imports in §1068.301(b), but only if they are properly labeled and there is clear and convincing evidence that each engine will be used in a stationary application (see paragraph (2)(iii) of the definition of "Nonroad engine").  Section 1068.101 restricts the use of stationary engines for non-stationary purposes unless they are certified under 40 CFR part 60 to the same standards that would apply to nonroad engines for the same model year.
(c) Hobby engines.  The standard-setting parts exclude engines used in reduced-scale models of vehicles that are not capable of transporting a person.
(d) Other engines/equipment.  The standard-setting parts may exclude engines/equipment used in certain applications.  For example, engines used in aircraft are generally excluded.  Engines/equipment used in underground mining are excluded if they are regulated by the Mine Safety and Health Administration.
(e) Labeling.  For engines/equipment imported under paragraph (a) or (b) of this section, you must add a permanent label, consistent with §1068.45, with at least the following items unless the standard-setting part includes other specific labeling requirements or we approve alternate label language that is more accurate for your engine/equipment:
   (1) Include the heading "EMISSION CONTROL INFORMATION".
   (2) Include your full corporate name and trademark.
   (3) State the engine displacement (in liters or cubic centimeters).  We may also require that you include maximum engine power.   If the engine's power is not established, state the approximate power.
   (4) State: "THIS ENGINE IS EXEMPT FROM THE REQUIREMENTS OF [identify the part referenced in §1068.1(a) that would otherwise apply], AS PROVIDED IN [identify the paragraph authorizing the exemption (for example, "40 CFR 1068.315(a)")].  INSTALLING THIS ENGINE IN ANY DIFFERENT APPLICATION MAY BE A VIOLATION OF FEDERAL LAW SUBJECT TO CIVIL PENALTY."

§1068.315  Permanent exemptions for imported engines/equipment.
We may approve a permanent exemption from the restrictions on imports under §1068.301(b) under the following conditions:
(a) National security exemption. You may import an engine or piece of equipment under the national security exemption in §1068.225, but only if it is properly labeled.
(b) Manufacturer-owned engine/equipment exemption. You may import manufacturer-owned engines/equipment, as described in §1068.215.
(c) Replacement engine exemption.  You may import a nonconforming replacement engine as described in §1068.240.  To use this exemption, you must be a certificate holder for a family we regulate under the same part as the replacement engine.
(d) Extraordinary circumstances exemption. You may import a nonconforming engine or piece of equipment if we grant hardship relief as described in §1068.245.
(e) Small-volume manufacturer exemption. You may import a nonconforming engine or piece of equipment if we grant hardship relief for a small-volume manufacturer, as described in §1068.250.
(f) Equipment-manufacturer hardship exemption. You may import a nonconforming engine if we grant an exemption for the transition to new or revised emission standards, as described in §1068.255.
(g) [Reserved]
(h) Identical configuration exemption.  Unless specified otherwise in the standard-setting part, you may import nonconforming engines/equipment if they are identical to certified engines/equipment produced by the same manufacturer, subject to the following provisions:
   (1) You must meet all the following criteria:
      (i) You have owned the engines/equipment for at least six months.
      (ii)  You agree not to sell, lease, donate, trade, or otherwise transfer ownership of the engines/equipment for at least five years.  During this period, the only acceptable way to dispose of the engines/equipment is to destroy or export them.
      (iii) You use data or evidence sufficient to show that the engines/equipment are in a configuration that is identical to engines/equipment the original manufacturer has certified to meet emission standards that apply at the time the manufacturer finished assembling or modifying the engines/equipment in question.  If you modify the engines/equipment to make them identical, you must completely follow the original manufacturer's written instructions.
   (2)  We will tell you in writing if we find the information insufficient to show that the engines/equipment are eligible for this exemption.  In this case, we will not consider your request further until you address our concerns.
(i) Ancient engine/equipment exemption.  If you are not the original engine/equipment manufacturer, you may import nonconforming engines/equipment that are subject to a standard-setting part and were first manufactured at least 21 years earlier, as long as they are still substantially in their original configurations.

§1068.325  Temporary exemptions for imported engines/equipment.
You may import engines/equipment under certain temporary exemptions, subject to the conditions in this section.  We may ask U.S. Customs and Border Protection to require a specific bond amount to make sure you comply with the requirements of this subpart.  You may not sell or lease one of these engines/equipment while it is in the United States except as specified in this section or §1068.201(i).  You must eventually export the engine/equipment as we describe in this section unless it conforms to a certificate of conformity or it qualifies for one of the permanent exemptions in §1068.315 or the standard-setting part.
(a) Exemption for repairs or alterations.   You may temporarily import nonconforming engines/equipment under bond solely for repair or alteration, subject to our advance approval as described in paragraph (j) of this section.  You may operate the engine/equipment in the United States only as necessary to repair it, alter it, or ship it to or from the service location.  Export the engine/equipment directly after servicing is complete, or confirm that it has been destroyed.
(b) Testing exemption.   You may temporarily import nonconforming engines/equipment under bond for testing if you follow the requirements of §1068.210, subject to our advance approval as described in paragraph (j) of this section.  You may operate the engines/equipment in the United States only as needed to perform tests.  This exemption expires one year after you import the engine/equipment unless we approve an extension.  The engine/equipment must be exported before the exemption expires.  You may sell or lease the engines/equipment consistent with the provisions of §1068.210.
(c) Display exemption.  You may temporarily import nonconforming engines/equipment under bond for display if you follow the requirements of §1068.220, subject to our advance approval as described in paragraph (j) of this section.  This exemption expires one year after you import the engine/equipment, unless we approve your request for an extension.  The engine/equipment must be exported (or destroyed) by the time the exemption expires or directly after the display concludes, whichever comes first.
(d) Export exemption.  You may temporarily import nonconforming engines/equipment to export them, as described in §1068.230.  Label the engine/equipment as described in §1068.230.  You may sell or lease the engines/equipment for operation outside the United States consistent with the provisions of §1068.230.
(e) Diplomatic or military exemption.  You may temporarily import nonconforming engines/equipment without bond if you represent a foreign government in a diplomatic or military capacity.  In your request to the Designated Compliance Officer (see §1068.305), include either written confirmation from the U.S. State Department that you qualify for this exemption or a copy of your orders for military duty in the United States.  We will rely on the State Department or your military orders to determine when your diplomatic or military status expires, at which time you must export your exempt engines/equipment.
(f) Delegated-assembly exemption.  You may import a nonconforming engine for final assembly under the provisions of §1068.261.  You may sell or lease the engines/equipment consistent with the provisions of §1068.261.
(g) Exemption for partially complete engines. You may import an engine if another company already has a certificate of conformity and will be modifying the engine to be in its final certified configuration or a final exempt configuration under the provisions of §1068.262.  You may also import a partially complete engine by shipping it from one of your facilities to another under the provisions of §1068.260(c).  If you are importing a used engine that becomes new as a result of importation, you must meet all the requirements that apply to original engine manufacturers under §1068.262.  You may sell or lease the engines consistent with the provisions of §1068.262.
(h) [Reserved]
(i) [Reserved]
(j) Approvals.  For the exemptions in this section requiring our approval, you must send a request to the Designated Compliance Officer before importing the engines/equipment.  We will approve your request if you meet all the applicable requirements and conditions.  If another section separately requires that you request approval for the exemption, you may combine the information requirements in a single request.  Include the following information in your request:
   (1) Identify the importer of the engine/equipment and the applicable postal address, e-mail address, and telephone number.
   (2) Identify the engine/equipment owner and the applicable postal address, e-mail address, and telephone number.
   (3) Identify the engine/equipment by model number (or name), serial number, and original production year.
   (4) Identify the specific regulatory provision under which you are seeking an exemption.
   (5) Acknowledge that EPA enforcement officers may conduct inspections or testing as allowed under the Clean Air Act.
   (6) Include any additional information we specify for demonstrating that you qualify for the exemption.

§1068.335  Penalties for violations.
(a)  All imported engines/equipment.  Unless you comply with the provisions of this subpart, importation of nonconforming engines/equipment violates sections 203 and 213(d) of the Clean Air Act (42 U.S.C. 7522 and 7547(d)).  You may then have to export the engines/equipment, pay civil penalties, or both.  U.S. Customs and Border Protection may seize unlawfully imported engines and equipment.
(b) Temporarily imported engines/equipment.  If you do not comply with the provisions of this subpart for a temporary exemption under §1068.325, you may forfeit the total amount of the bond in addition to the sanctions we identify in paragraph (a) of this section.  We will consider an engine or piece of equipment to be exported if it has been destroyed or delivered to U.S. Customs and Border Protection for export or other disposition under applicable Customs laws and regulations.  EPA or U.S. Customs and Border Protection may offer you a grace period to allow you to export temporarily exempted engines/equipment without penalty after the exemption expires.

§1068.360 Restrictions for assigning a model year to imported engines and equipment.
This section includes limitations on assigning a model year to engines and equipment that are imported in a year later than the model year in which they were manufactured, except as specified in paragraph (e) of this section.
(a) The term "model year" is defined in each of the standard-setting parts.  These definitions may vary slightly to address the different categories of engines and equipment.  Except as specified in paragraphs (b) and (c) of this section, the emission standards and other emission-related requirements that apply for an imported engine or piece of equipment are determined by the model year as defined in the applicable standard-setting part and the provisions of 40 CFR 1068.105(a).
(b) This paragraph (b) applies for the importation of engines and  equipment that have not been placed into service, where the importation occurs in any calendar year that is more than one year after the named model year of the engine or equipment when emission control requirements applying to current engines are different than for engines or equipment in the named model year, unless they are imported under special provisions for Independent Commercial Importers as allowed under the standard-setting part.  Regardless of what other provisions of this subchapter U specify for the model year of the engine or equipment, such engines and equipment are deemed to have an applicable model year no more than one year earlier than the calendar year in which they are imported.  For example, a new engine identified as a 2007 model-year product that is imported on January 31, 2010 will be treated as a 2009 model-year engine; the same engine will be treated as a 2010 model-year engine if it is imported any time in calendar year 2011.
(c) If you claim that an engine or piece of equipment is not subject to standards -- or is subject to standards less stringent than those currently in place -- based on its original manufacture date because it has already been placed into service, you must provide clear and convincing evidence that it has already been placed into service.  Such evidence must generally include, but not be limited to, documentary evidence of purchase and maintenance history and visible wear that is consistent with the reported manufacture date.  Importing products for resale or importing more than one engine or piece of equipment at a time would generally require a greater degree of evidence under this paragraph (c).  If you do not satisfactorily demonstrate that the engine or equipment has already been placed into service, the provisions of paragraph (b) of this section apply.
(d) Nothing in this section should be interpreted to allow circumvention of the requirements of this part by mis-stating or mis-labeling the model year of engines or equipment.  For example, this section does not permit engines imported in the same year that they are manufactured to be treated as an engine manufactured in the previous year.  To verify compliance with the provisions of this section, we may require you to verify the original manufacture date of the engine or equipment based on manufacturing records, title-transfer documents, service records, or other documentation.
(e) If all the current emission control requirements are the same as in the named model year, the provisions of this section do not apply.
Subpart E -- Selective Enforcement Auditing

§1068.401  What is a selective enforcement audit?
(a) We may conduct or require you as a certificate holder to conduct emission tests on production engines/equipment in a selective enforcement audit.  This requirement is independent of any requirement for you to routinely test production-line engines/equipment.  Where there are multiple entities meeting the definition of manufacturer, we may require manufacturers other than the certificate holder to conduct or participate in the audit as necessary.  For products subject to equipment-based standards, but tested using engine-based test procedures, this subpart applies to the engines and/or the equipment, as applicable.  Otherwise this subpart applies to engines for products subject to engine-based standards and to equipment for products subject to equipment-based standards.
(b) If we send you a signed test order, you must follow its directions and the provisions of this subpart.  We may tell you where to test the engines/equipment.  This may be where you produce the engines/equipment or any other emission testing facility.  You are responsible for all testing costs whether the testing is conducted at your facility or another facility.
(c) If we select one or more of your families for a selective enforcement audit, we will send the test order to the person who signed the application for certification or we will deliver it in person.
(d) If we do not select a testing facility, notify the Designated Compliance Officer within one working day of receiving the test order where you will test your engines/equipment.
--------------------------------------------------------------------------------
(e) You must do everything we require in the audit without delay. We may suspend or revoke your certificate of conformity for the affected engine families if you do not fulfill your obligations under this subpart.

§1068.405  What is in a test order?
(a) In the test order, we will specify the following things:
   (1)  The family we have identified for testing. We may also specify individual configurations.
   (2)  The engine/equipment assembly plant, storage facility, or (if you import the engines/equipment) port facility from which you must select engines/equipment.
   (3)  The procedure for selecting engines/equipment for testing, including a selection rate.
   (4)  The test procedures, duty cycles, and test points, as appropriate, for testing the engines/equipment to show that they meet emission standards.
(b) We may state that we will select the test engines/equipment.
(c) We may identify alternate families or configurations for testing in case we determine the intended engines/equipment are not available for testing or if you do not produce enough engines/equipment to meet the minimum rate for selecting test engines/equipment.
(d) We may include other directions or information in the test order.
(e)  We may ask you to show us that you meet any additional requirements that apply to your engines/equipment (closed crankcases, for example).
(f) In anticipation of a potential audit, you may give us a list of your preferred families and the corresponding assembly plants, storage facilities, or (if you import the engines/equipment) port facilities from which we should select engines/equipment for testing.  The information would apply only for a single model year so it would be best to include this information in your application for certification.  If you give us this list before we issue a test order, we will consider your recommendations, but we may select different engines/equipment.
(g) If you also do routine production-line testing with the selected family in the same time period, the test order will tell you what changes you might need to make in your production-line testing schedule.

§1068.410  How must I select and prepare my engines/equipment?
(a)  Selecting engines/equipment.  Select engines/equipment as described in the test order.  If you are unable to select test engines/equipment this way, you may ask us to approve an alternate plan as long as you make the request before you start selecting engines/equipment.
(b)  Assembling engines/equipment.  Produce and assemble test engines/equipment using your normal production and assembly process for that family.
   (1) Notify us directly if you make any change in your production, assembly, or quality control processes that might affect emissions between the time you receive the test order and the time you finish selecting test engines/equipment.
   (2) If you do not fully assemble engines/equipment at the specified location, we will describe in the test order how to select components to finish assembling the engines/equipment.  Assemble these components onto the test engines/equipment using your documented assembly and quality control procedures.
(c) Modifying engines/equipment.  Once an engine or piece of equipment is selected for testing, you may adjust, repair, prepare, or modify it or check its emissions only if one of the following is true:
   (1)  You document the need for doing so in your procedures for assembling and inspecting all your production engines/equipment and make the action routine for all the engines/equipment in the family.
   (2)  This subpart otherwise allows your action.
   (3)  We approve your action in advance.
(d)  Engine/equipment malfunction.  If an engine/equipment malfunction prevents further emission testing, ask us to approve your decision to either repair the engine or delete it from the test sequence.
(e)   Setting adjustable parameters.  Before any test, we may adjust or require you to adjust any adjustable parameter to any setting within its physically adjustable range.
   (1) [Reserved]
   (2)  We may make or specify adjustments within the physically adjustable range by considering their effect on emission levels.  We may also consider how likely it is that someone will make such an adjustment with in-use engines/equipment.
(f)   Stabilizing emission levels.  (1) Before you test production-line engines/equipment for exhaust emission, you may operate the engine/equipment to stabilize the exhaust emission levels.  Using good engineering judgment, operate your engines/equipment in a way that represents the way production engines/equipment will be used.  You may operate each engine or piece of equipment for no more than the greater of two periods:
      (i)  50 hours.
      (ii)  The number of hours you operated your emission-data engine/equipment for certifying the family (see 40 CFR part 1065, subpart E).
   (2) Use good engineering judgment and follow the standard-setting part to stabilize equipment for evaporative emissions, where appropriate.
(g)  Damage during shipment.  If shipping the engine/equipment to a remote facility for testing under a selective enforcement audit makes necessary an adjustment or repair, you must wait until after the initial emission test to do this work.  We may waive this requirement if the test would be impossible or unsafe or if it would permanently damage the engine/equipment.  Report to us, in your written report under §1068.450, all adjustments or repairs you make on test engines/equipment before each test.
(h)  Shipping engines/equipment.  If you need to ship engines/equipment to another facility for testing, make sure the test engines/equipment arrive at the test facility within 24 hours after being selected.  You may ask that we allow more time if you are unable to do this.
(i)  Retesting after invalid tests. You may retest an engine or piece of equipment if you determine an emission test is invalid under the standard-setting part.  Explain in your written report reasons for invalidating any test and the emission results from all tests.  If you retest an engine or piece of equipment and, within ten days after testing, ask to substitute results of the new tests for the original ones, we will answer within ten days after we receive your information.
(j) Retesting after reaching a fail decision. You may retest your engines/equipment once a fail decision for the audit has been reached based on the first test on each engine or piece of equipment under §1068.420(c).  You may test each engine or piece of equipment up to a total of three times, but you must perform the same number of tests on each engine or piece of equipment.  You may further operate the engine/equipment to stabilize emission levels before testing, subject to the provisions of paragraph (f) of this section.  We may approve retesting at other times if you send us a request with satisfactory justification.

§1068.415  How do I test my engines/equipment?
(a) Use the test procedures specified in the standard-setting part for showing that your engines/equipment meet emission standards.  The test order will give further testing instructions.
(b) If no test cells are available at a given facility, you may make alternate testing arrangements with our approval.
(c) Test at least two engines/equipment in each 24-hour period (including void tests). However, for engines with maximum engine power above 560 kW, you may test one engine per 24-hour period. If you request and justify it, we may approve a lower testing rate.
(d) For exhaust emissions, accumulate service on test engines/equipment at a minimum rate of 6 hours per engine or piece of equipment during each 24-hour period; however, service accumulation to stabilize an engine's emission levels may not take longer than eight days.  The first 24-hour period for service accumulation begins when you finish preparing an engine or piece of equipment for testing.  The minimum service accumulation rate does not apply on weekends or holidays.  We may approve a longer stabilization period or a lower service accumulation rate if you request and justify it.  We may require you to accumulate hours more rapidly than the minimum rate, as appropriate.  Plan your service accumulation to allow testing at the rate specified in paragraph (c) of this section.  Select operation for accumulating operating hours on your test engines/equipment to represent normal in-use operation for the family.
(e) Test engines/equipment in the same order you select them.

§1068.420  How do I know when my engine family fails an SEA?
(a)  A failed engine or piece of equipment is one whose final deteriorated test results exceed an applicable emission standard for any regulated pollutant.
(b)  Continue testing engines/equipment until you reach a pass decision for all pollutants or a fail decision for one pollutant, as described in paragraph (c) of this section.
(c)  You reach a pass decision for the SEA requirements when the number of failed engines/equipment is less than or equal to the pass decision number in Appendix A to this subpart for the total number of engines/equipment tested.  You reach a fail decision for the SEA requirements when the number of failed engines/equipment is greater than or equal to the fail decision number in Appendix A to this subpart for the total number of engines/equipment you test.  An acceptable quality level of 40 percent is the basis for the pass or fail decision.
(d)  Consider test results in the same order as the engine/equipment testing sequence.
(e)  If you reach a pass decision for one pollutant, but need to continue testing for another pollutant, we will not use these later test results for the pollutant with the pass decision as part of the SEA.
(f)  Appendix A to this subpart lists multiple sampling plans.  Use the sampling plan for the projected sales volume you reported in your application for the audited family.
(g)  We may choose to stop testing after any number of tests.
(h)  If we test some of your engines/equipment in addition to your own testing, we may decide not to include your test results as official data for those engines/equipment if there is substantial disagreement between your testing and our testing.  We will reinstate your data as valid if you show us that we made an error and your data are correct.
(i)  If we rely on our test data instead of yours, we will notify you in writing of our decision and the reasons we believe your facility is not appropriate for doing the tests we require under this subpart. You may request in writing that we consider your test results from the same facility for future testing if you show us that you have made changes to resolve the problem.

§1068.425  What happens if one of my production-line engines/equipment exceeds the emission standards?
(a) If one of your production-line engines/equipment fails to meet one or more emission standards (see §1068.420), the certificate of conformity is automatically suspended for that engine or piece of equipment.  You must take the following actions before your certificate of conformity can cover that engine or piece of equipment:
   (1) Correct the problem and retest the engine/equipment to show it complies with all emission standards.
   (2) Include in your written report a description of the test results and the remedy for each engine or piece of equipment (see §1068.450).
(b) You may ask for a hearing relative to the suspended certificate of conformity for the failing engine/equipment as specified in subpart G of this part.

§1068.430  What happens if a family fails an SEA?
(a)  We may suspend your certificate of conformity for a family if it fails the SEA under §1068.420.  The suspension may apply to all facilities producing engines/equipment from a family even if you find noncompliant engines/equipment only at one facility.
(b)  We will tell you in writing if we suspend your certificate in whole or in part.  We will not suspend a certificate until at least 15 days after the family fails the SEA.  The suspension is effective when you receive our notice.
(c)  You may ask for a hearing as described in subpart G of this part up to 15 days after we suspend the certificate for a family.  If we agree that we used erroneous information in deciding to suspend the certificate before a hearing is held, we will reinstate the certificate.

§1068.435  May I sell engines/equipment from a family with a suspended certificate of conformity?
You may sell engines/equipment that you produce after we suspend the family's certificate of conformity only if one of the following occurs:
(a)  You test each engine or piece of equipment you produce and show it complies with emission standards that apply.
(b)  We conditionally reinstate the certificate for the family.  We may do so if you agree to recall all the affected engines/equipment and remedy any noncompliance at no expense to the owner if later testing shows that engines/equipment in the family still do not comply.

§1068.440  How do I ask EPA to reinstate my suspended certificate?
(a) Send us a written report asking us to reinstate your suspended certificate.  In your report, identify the reason for the SEA failure, propose a remedy, and commit to a date for carrying it out.  In your proposed remedy include any quality control measures you propose to keep the problem from happening again.
(b) Give us test data from production engines/equipment showing that engines/equipment in the remedied family comply with all the emission standards that apply.

§1068.445  When may EPA revoke my certificate under this subpart and how may I sell these engines/equipment again?
(a)  We may revoke your certificate for a family in the following cases:
   (1)  You do not meet the reporting requirements under this subpart.
   (2)  Your family fails an SEA and your proposed remedy to address a suspended certificate is inadequate to solve the problem or requires you to change the engine/equipment's design or emission control system.
(b)  To sell engines/equipment from a family with a revoked certificate of conformity, you must modify the family and then show it complies with the applicable requirements.
   (1)  If we determine your proposed design change may not control emissions for the engine/equipment's full useful life, we will tell you within five working days after receiving your report.  In this case we will decide whether production-line testing will be enough for us to evaluate the change or whether you need to do more testing.
   (2)  Unless we require more testing, you may show compliance by testing production-line engines/equipment as described in this subpart.
   (3)  We will issue a new or updated certificate of conformity when you have met these requirements.

§1068.450  What records must I send to EPA?
(a)  Within 30 days of the end of each audit, send us a report with the following information:
   (1) Describe any facility used to test production-line engines/equipment and state its location.
   (2) State the total U.S.-directed production volume and number of tests for each family.
   (3) Describe your test engines/equipment, including the family's identification and the engine/equipment's model year, build date, model number, identification number, and number of hours of operation before testing for each test engine or piece of equipment.
   (4)  Identify where you accumulated hours of operation on the engines/equipment and describe the procedure and schedule you used.
   (5)  Provide the test number; the date, time and duration of testing; test procedure; initial test results before and after rounding; final test results; and final deteriorated test results for all tests.  Provide the emission figures for all measured pollutants.  Include information for both valid and invalid tests and the reason for any invalidation.
   (6)  Describe completely and justify any nonroutine adjustment, modification, repair, preparation, maintenance, or test for the test engine/equipment if you did not report it separately under this subpart.  Include the results of any emission measurements, regardless of the procedure or type of equipment.
   (7)  Report on each failed engine or piece of equipment as described in §1068.425.
(b)  We may ask you to add information to your written report, so we can determine whether your new engines/equipment conform to the requirements of this subpart.
(c)  An authorized representative of your company must sign the following statement:
   We submit this report under Sections 208 and 213 of the Clean Air Act.  Our testing conformed completely with the requirements of 40 CFR part 1068.  We have not changed production processes or quality-control procedures for the family in a way that might affect the emission control from production engines/equipment.  All the information in this report is true and accurate to the best of my knowledge.  I know of the penalties for violating the Clean Air Act and the regulations.  (Authorized Company Representative)
(d)  Send reports of your testing to the Designated Compliance Officer using an approved information format.  If you want to use a different format, send us a written request with justification for a waiver.
(e) We may post test results on publicly accessible databases and we will send copies of your reports to anyone from the public who asks for them.  We will not release information about your sales or production volumes, which is all we will consider confidential.

§1068.455  What records must I keep?
(a) We may review your records at any time so it is important to keep required information readily available.  Organize and maintain your records as described in this section.
(b)  Keep paper records for testing under this subpart for one full year after you complete all the testing required for the selective enforcement audit.  For additional storage, you may use any format or media.
(c)  Keep a copy of the written reports described in §1068.450.
(d)  Keep the following additional records:
   (1)  The names of supervisors involved in each test.
   (2)  The name of anyone who authorizes adjusting, repairing, preparing, or modifying a test engine/equipment and the names of all supervisors who oversee this work.
   (3)  If you shipped the engine/equipment for testing, the date you shipped it, the associated storage or port facility, and the date the engine/equipment arrived at the testing facility.
   (4)  Any records related to your audit that are not in the written report.
   (5)  A brief description of any significant events during testing not otherwise described in the written report or in this section.
(e)  If we ask, you must give us projected or actual production for a family.  Include each assembly plant if you produce engines/equipment at more than one plant.
(f)  We may ask you to keep or send other information necessary to implement this subpart.

Appendix A to Subpart E of Part 1068 -- Plans for Selective Enforcement Auditing

	The following tables describe sampling plans for selective enforcement audits, as described in §1068.420:
Table A-1 -- Sampling Plan Code Letter
                            Projected Family Sales
                                Code letter[1]
                            Minimum Number of Tests
                            Maximum Number of Tests

                                    To Pass
                                    To Fail

                                    20 - 50
                                      AA
                                       3
                                       5
                                      20
                                    20 - 99
                                       A
                                       4
                                       6
                                      30
                                   100 - 299
                                       B
                                       5
                                       6
                                      40
                                   300 - 499
                                       C
                                       5
                                       6
                                      50
                                     500 +
                                       D
                                       5
                                       6
                                      60
[1]  A manufacturer may optionally use either the sampling plan for code letter "AA" or sampling plan for code letter "A" for Selective Enforcement Audits of families with annual sales between 20 and 50 engines/equipment.  Additionally, the manufacturer may switch between these plans during the audit.

Table A-2 -- Sampling Plans for Different Engine Family Sales Volumes

                                   Stage[a]
                                     [AA]
                                      [A]
                                      [B]
                                      [C]
                                      [D]

                                   [Pass #]
                                   [Fail #]
                                   [Pass #]
                                   [Fail #]
                                   [Pass #]
                                   [Fail #]
                                   [Pass #]
                                   [Fail #]
                                   [Pass #]
                                   [Fail #]
                                      [1]

                                      [2]

                                      [3]
                                      [0]

                                      [4]
                                      [0]

                                      [0]

                                      [5]
                                      [1]
                                      [5]
                                      [0]

                                      [0]

                                      [0]

                                      [0]

                                      [6]
                                      [1]
                                      [6]
                                      [1]
                                      [6]
                                      [1]
                                      [6]
                                      [0]
                                      [6]
                                      [0]
                                      [6]
                                      [7]
                                      [2]
                                      [6]
                                      [1]
                                      [7]
                                      [1]
                                      [7]
                                      [1]
                                      [7]
                                      [1]
                                      [7]
                                      [8]
                                      [2]
                                      [7]
                                      [2]
                                      [7]
                                      [2]
                                      [7]
                                      [2]
                                      [7]
                                      [2]
                                      [8]
                                      [9]
                                      [3]
                                      [7]
                                      [2]
                                      [8]
                                      [2]
                                      [8]
                                      [2]
                                      [8]
                                      [2]
                                      [8]
                                     [10]
                                      [3]
                                      [8]
                                      [3]
                                      [8]
                                      [3]
                                      [8]
                                      [3]
                                      [9]
                                      [3]
                                      [9]
                                     [11]
                                      [4]
                                      [8]
                                      [3]
                                      [8]
                                      [3]
                                      [9]
                                      [3]
                                      [9]
                                      [3]
                                      [9]
                                     [12]
                                      [4]
                                      [9]
                                      [4]
                                      [9]
                                      [4]
                                      [9]
                                      [4]
                                     [10]
                                      [4]
                                     [10]
                                     [13]
                                      [5]
                                      [9]
                                      [5]
                                     [10]
                                      [4]
                                     [10]
                                      [4]
                                     [10]
                                      [4]
                                     [10]
                                     [14]
                                      [5]
                                     [10]
                                      [5]
                                     [10]
                                      [5]
                                     [10]
                                      [5]
                                     [11]
                                      [5]
                                     [11]
                                     [15]
                                      [6]
                                     [10]
                                      [6]
                                     [11]
                                      [5]
                                     [11]
                                      [5]
                                     [11]
                                      [5]
                                     [11]
                                     [16]
                                      [6]
                                     [10]
                                      [6]
                                     [11]
                                      [6]
                                     [12]
                                      [6]
                                     [12]
                                      [6]
                                     [12]
                                     [17]
                                      [7]
                                     [10]
                                      [7]
                                     [12]
                                      [6]
                                     [12]
                                      [6]
                                     [12]
                                      [6]
                                     [12]
                                     [18]
                                      [8]
                                     [10]
                                      [7]
                                     [12]
                                      [7]
                                     [13]
                                      [7]
                                     [13]
                                      [7]
                                     [13]
                                      19
                                      [8]
                                     [10]
                                      [8]
                                     [13]
                                      [8]
                                     [13]
                                      [7]
                                     [13]
                                      [7]
                                     [13]
                                     [20]
                                      [9]
                                     [10]
                                      [8]
                                     [13]
                                      [8]
                                     [14]
                                      [8]
                                     [14]
                                      [8]
                                     [14]
                                     [21]

                                      [9]
                                     [14]
                                      [9]
                                     [14]
                                      [8]
                                     [14]
                                      [8]
                                     [14]
                                     [22]

                                     [10]
                                     [14]
                                      [9]
                                     [15]
                                      [9]
                                     [15]
                                      [9]
                                     [15]
                                     [23]

                                     [10]
                                     [15]
                                     [10]
                                     [15]
                                     [10]
                                     [15]
                                      [9]
                                     [15]
                                     [24]

                                     [11]
                                     [15]
                                     [10]
                                     [16]
                                     [10]
                                     [16]
                                     [10]
                                     [16]
                                     [25]

                                     [11]
                                     [16]
                                     [11]
                                     [16]
                                     [11]
                                     [16]
                                     [11]
                                     [16]
                                     [26]

                                     [12]
                                     [16]
                                     [11]
                                     [17]
                                     [11]
                                     [17]
                                     [11]
                                     [17]
                                     [27]

                                     [12]
                                     [17]
                                     [12]
                                     [17]
                                     [12]
                                     [17]
                                     [12]
                                     [17]
                                     [28]

                                     [13]
                                     [17]
                                     [12]
                                     [18]
                                     [12]
                                     [18]
                                     [12]
                                     [18]
                                     [29]

                                     [14]
                                     [17]
                                     [13]
                                     [18]
                                     [13]
                                     [18]
                                     [13]
                                     [19]
                                     [30]

                                     [16]
                                     [17]
                                     [13]
                                     [19]
                                     [13]
                                     [19]
                                     [13]
                                     [19]
                                     [31]

                                     [14]
                                     [19]
                                     [14]
                                     [19]
                                     [14]
                                     [20]
                                     [32]

                                     [14]
                                     [20]
                                     [14]
                                     [20]
                                     [14]
                                     [20]
                                     [33]

                                     [15]
                                     [20]
                                     [15]
                                     [20]
                                     [15]
                                     [21]
                                     [34]

                                     [16]
                                     [21]
                                     [15]
                                     [21]
                                     [15]
                                     [21]
                                     [35]

                                     [16]
                                     [21]
                                     [16]
                                     [21]
                                     [16]
                                     [22]
                                     [36]

                                     [17]
                                     [22]
                                     [16]
                                     [22]
                                     [16]
                                     [22]
                                     [37]

                                     [17]
                                     [22]
                                     [17]
                                     [22]
                                     [17]
                                     [23]
                                     [38]

                                     [18]
                                     [22]
                                     [18]
                                     [23]
                                     [17]
                                     [23]
                                     [39]

                                     [18]
                                     [22]
                                     [18]
                                     [23]
                                     [18]
                                     [24]
                                     [40]

                                     [21]
                                     [22]
                                     [19]
                                     [24]
                                     [18]
                                     [24]
                                     [41]

                                     [19]
                                     [24]
                                     [19]