Transportation may address under its enforcement role as described in
section 232 of the CAA.
    The current regulations also provide for permanent exemptions for
newly-manufactured engines based on consideration of the certain
factors specified in section 87.7(c). We are replacing these provisions
with new regulatory text generally consistent with the ETM that would
provide for permanent exemptions or exceptions \83\ for newly
manufactured engines used on new aircraft and spare engines used for
maintenance or replacement purposes. These are summarized below. (See
Sec.  87.50 of the regulations for additional details on these
exemptions/exceptions.)
---------------------------------------------------------------------------

    \83\ As used in 40 CFR part 87, as a practical matter the
meanings of ``exception'' and ``exemption'' are essentially
equivalent. However, under FAA regulations, the meanings of these
terms are distinct, especially with respect to the manner in which
they are administered.
---------------------------------------------------------------------------

a. New Provisions for Spare Engines
    We are revising the regulations to allow the sale of a newly-
manufactured engine for installation on an in-service aircraft, i.e., a
spare engine that does not conform to the applicable emissions
standards at the time it was produced. It does not allow for installing
such an engine on a new aircraft. Spare engines are produced from time
to time in order to keep an aircraft in revenue service when the
existing in-service engine must be removed for maintenance or
replacement purposes as needed. Otherwise removing these aircraft from
active service would be very expensive and logistically difficult.
    As we explained in the proposal, explicitly allowing for the
production of spare engines is not addressed in the existing
regulations because there is no production cutoff for the current Tier
4 NOX standards. Thus manufacturers have been allowed to
continue production of older engine designs under type certificates
first issued before the Tier 4 standards took effect (e.g., Tier 2).
However, final regulations now apply a Tier 6 NOX production
cutoff to all newly- manufactured engines. This means that if we did
not also adopt a provision for the continued production of spare
engines, manufacturers would be prohibited from producing Tier 4
engines under the existing type certificates for this purpose. We see
no reason to change our policy of allowing manufacturers to

produce new engines for use as spares. Therefore, the final regulatory
provisions allow this practice to continue.
    To ensure there would be no adverse environmental effect from
allowing the use of a spare engine as a direct replacement for an
existing engine, we proposed that the spare could be used only when the
emissions for all pollutants of that engine were equal to or lower than
those of the engine it replaced. This proposed requirement was
consistent with the ETM, which also contains this allowance. We
received a joint comment from AIA and GAMA stating that this is
impractical because, while unlikely, a spare engine might have a
different emissions profile for some pollutants than the engine it
would replace. As an example, they stated that the two engines could
have somewhat different combustion systems that might make one engine
lower in NOX but higher in CO. They also suggested that EPA
should consider the totality of the emissions in the decision, or
delete the requirement in the final rule.
    These comments are surprising because this ETM provision, as well
as the exception provisions, was subject to significant discussions
within CAEP that included the engine manufacturers as well as a
representative from AIA. Nonetheless, in this instance we believe the
proposed provision should be modified to accommodate the potential for
unusual circumstances as explained by the commenter.
    As noted above, AIA and GAMA suggested that EPA consider of the
totality of emissions relative to their environmental effects as the
basis for evaluating spare engine exemptions. This would entail
understanding and comparing the environmental consequences of the
different pollutants. We find that could be very complicated because
different pollutants have different health and welfare end points and
consequences. For example, in the illustration offered by the
commenters, the effects of LTO NOX and CO are largely
unrelated to one another.
    We think a preferred option to evaluating total environmental
effects, or even dropping the provision entirely, is to incorporate an
anti-backsliding requirement which ensures that at a minimum the
excepted spare engine at least meets the same emission standards that
are applicable to the engine it is replacing. For this reason, in
response to the AIA and GAMA comment, we are modifying this provision
in the final rule to allow an excepted spare engine to have different
emission levels compared to the engine it replaces as long as it
remains compliant with each of the applicable emission standards and
any other requirements of its type certificate. Given the limited
number of spare engines in the fleet, we expect allowing these engines
to have somewhat different emissions profile from engines they are
replacing will have no significant adverse environmental effect. This
is especially true given that we expect the emissions of an excepted
spare engine will be equal or better than the engine it is replacing in
most cases in accordance with the basic tenant of the ETM.
    We are not requiring engine manufacturers to obtain FAA or EPA
approval before producing spare engines. However, they must submit
information about the production of spare engines in an annual report
to EPA (see section III. D for more on the annual report). We proposed
that because manufacturers are not required to seek or obtain formal
approval to produce spare engines, this allowance was referred to as an
``exception'' rather than an ``exemption''. This terminology would be
consistent with current FAA regulations. Furthermore, we proposed that
the permanent record for each engine excepted under this provision
would need to indicate that the engine is an excepted spare engine and
the engine itself would need to be labeled as ``EXCEPTED SPARE.'' in
accordance with FAA marking requirements of 14 CFR.
    We received comments relating to allowing spare engines to be
produced without requiring prior approval and the use of the terms
``exceptions'' or ``excepted.'' The Air Transport Association (ATA)
\84\ appreciated that there would be no case-by-case approval, noting
that it simplifies administering the provision for FAA without
compromising the structure of the exemptions program set forth in the
ETM. Regarding the terminology, AIA and GAMA noted that the terminology
was inconsistent with current engine name plate labeling practices.
They stated that engines are currently either marked ``COMPLY'' or
``EXEMPT'' for emissions. Both organizations generally felt the change
in terminology for spare engines might be concerning to the operators
holding an engine with a plate reading ``EXCEPTED.'' They concluded
that the name plate for spare engines should continue to use
``exempt.'' The ATA appeared to give at least tacit approval to the new
terminology by acknowledging without objection that spare engines would
be labeled accordingly.
---------------------------------------------------------------------------

    \84\ The Air Transport Association has changed its name to
Airlines for America (A4A).
---------------------------------------------------------------------------

    First, we are puzzled that operators with a spare engine labeled as
``excepted spare'' rather than ``exempt'' may have a concern, because
AIA and GAMA did not elaborate on just what the concern might be.
Without at least an example, we are unable to discern the nature of the
concern and respond directly to it. We also find it puzzling that the
two organizations that represent aerospace manufacturers expressed a
concern regarding operators of aircraft and aircraft engines when the
actual organization representing those companies, ATA, did not express
such a concern.
    Second, regarding the terminology, the Tier 6 production cutoff
does not apply to the continued production of engines that are
designated spares. Spare engines are produced to replace a similar
engine already in service that was removed from service for maintenance
purposes. Accordingly, the production of a spare engine is not
restricted by the production cutoff, and the regulation does not apply
to these engines. The non-applicability of the cutoff eliminates the
need to process an exemption for continued production of these engines
beyond December 31, 2012.
    Conversely, engines that are intended to be produced for new
installations (i.e. not replacing an engine already in service) are
subject to the production cutoff regulation and the continued
production of such engines beyond the cutoff date would require a grant
of exemption. Since the production of spare engines is not subject to
the new cutoff regulations, the FAA proposed and the EPA accepted the
idea that referring to these engines as exceptions to the regulation
was more appropriate than requiring case-by-case consideration of
exemptions when the regulation did not apply.
    Moreover, the word ``exemption'' is a meaningful regulatory term.
It is used by the FAA in 14 CFR Part 11 to mean that an applicant is
subject to a particular regulation and is requesting time-limited
relief under a specific set of criteria. It is a specialized form of
rulemaking. When an entity or its product is specifically left out of a
regulatory provision, it is considered ``excepted''. Any regulation
adopted by the FAA would use these terms consistently.
    As already mentioned, assuming incorporation of these provisions by
the FAA, engines meeting the requirements for spare engines could be
produced and entered into commerce without prior approval from EPA or
FAA. It is

important to note that while spare engines would be excepted from the
Tier 6 NOX standards being promulgated today, they still
need to be produced under an FAA type certificate. (This FAA oversight
would serve the same role as the exemption approval step envisioned by
ICAO in its ETM language for spare engines.) We also expect minimal
additional burden for manufacturers, since we are not establishing new
restrictions, monitoring, recordkeeping, or reporting requirements
other than the end of year report.
b. New Provisions for Engines Installed in New Aircraft
    The primary purpose of allowing limited continued production of
Tier 4 engines is to provide for an orderly implementation of the Tier
6 NOX production cutoff. It addresses engines reaching the
end of their production cycles in the time frame when new emission
standards take effect. The typical production cycle would have annual
production volumes ramp up quickly, remain at relatively large volumes
for several or many years, and then fall off over a few more years.
When new emission standards are adopted in the middle of a production
cycle to take effect a few years later, manufacturers generally devote
technical resources to bring into compliance those engine models
expected to be produced in large numbers in the time frame when the new
standards are in effect. In contrast, they may plan not to invest in
upgrading the emissions of engine models that would be very near the
end of their normal production cycles when compliance with the new
standards becomes required. The actual length and shape of this tail of
production volumes can be affected by factors not fully within the
engine manufacturers' control, e.g., unexpected market demand. Thus,
exemptions may be justified if a manufacturer does not complete the
production cycle before the production cutoff date and projected
production volumes are not adequate to justify investing the necessary
resources to reduce emissions or there are other technological issues.
    Furthermore, in certain exceptional circumstances exemptions may
also be appropriate. These are ``hardship'' situations that may arise
as a result of unforeseen technical or economic circumstances or events
beyond control of the manufacturer. For example, this could vary from
unexpected problems with technology upgrade programs to labor
disruptions or natural events disrupting production or parts
availability.
    Our regulations currently address these kinds of situations in
section 87.7(c), entitled, ``Exemptions for New Engines in Other
Categories.'' We are replacing this provision with a new set of
provisions addressing exemptions for new engines.
i. Time Frame and Scope
    The final regulations allow engine manufacturers to request an
exemption for newly-manufactured engines not meeting the Tier 6
NOX standards so they may be installed in new aircraft. If
granted, manufacturers may produce a limited number of these newly-
manufactured engines in a four year time period beginning after
December 31, 2012 and going through December 31, 2016. This four-year
time period is consistent with the ETM. The period for any given
approved exemption could be shorter depending on the specifics of the
application, but it could not be longer. This exemption limits
NOX emissions from engines that are covered by a valid type
certificate issued by FAA. The engines must meet all other applicable
requirements. More specifically, an engine exempted from the Tier 6
NOX standards must be covered by a previously issued type
certificate showing compliance with the Tier 4 NOX
standards,\85\ as well as the current HC, CO, fuel venting, and smoke
standards.
---------------------------------------------------------------------------

    \85\ Engines certified only for compliance with earlier Tier 2
NOX standards would not be eligible for exemptions. This
is also consistent with the exemption language in the ICAO ETM. Note
that where such engines have emissions actually meeting the Tier 4
NOX standard, they may be recertified to the Tier 4
standards, but only before the effective date of the regulations.
---------------------------------------------------------------------------

    As explained above, the scope of the exemption provisions are
limited to newly-manufactured engines that do not comply with the Tier
6 NOX standards. No need has been identified to apply such
exemption language to the other regulated exhaust pollutants, i.e.,
smoke, hydrocarbons and carbon monoxide. The emission standards for
those pollutant species have remained unchanged for nearly three
decades and present no technical issues for modern turbofan
engines.\86\ If new emission standards for these pollutants are
considered in the future, the potential need for exemption provisions
will also be assessed at that time.
---------------------------------------------------------------------------

    \86\ For example, the hydrocarbon exhaust emission standards
were adopted on December 30, 1982. See 47 FR 58462.
---------------------------------------------------------------------------

    We received comments requesting that exemptions be available for
newly-certified engines in addition to newly-manufactured engines.
General Electric Aviation (GE) stated that unforeseen circumstances may
arise during the lengthy aircraft engine development process that
necessitates a change in design, and that may affect the ability of
that engine model to meet the prevailing Tier emission standard at
certification. For that reason, GE concluded that exemptions for newly-
certified engine would be beneficial. The AIA and GAMA jointly stated
that the existing 40 CFR 87.7(c) not only provides the flexibility to
exempt newly-manufactured engines from a production cutoff, but also
for newly-certificated engine models subject to any emission standards,
e.g., the Tier 8 NOX standards. They requested that this
flexibility should be retained.
    Regarding the availability of exemptions for newly-certified engine
models, the proposed regulatory text made clear that the exemption
provisions would only apply to newly-manufactured engines.
Specifically, the intent was to establish provisions for newly-
manufactured engines to address the potential technology and economic
adversities that may arise as part of adopting the Tier 6 production
cutoff. The ICAO ETM provisions are clearly intended for that same
purpose. Also, the original intent of EPA's current exemption
provisions in Sec.  87.7(c), which we are modifying in this rulemaking,
is clear from the proposed rulemaking and final rulemaking that
resulted in those provisions. The March 24, 1978 proposal described the
concern as ``* * * engines which are nearly [at] the end of their
production life would be terminated prematurely because there would be
insufficient future sales to justify incorporating emission controls.''
(See 43 FR 12619, March 24, 1978.) The December 30, 1982 final rule
referenced ``* * * the removal of an engine model from the market
because of its failure to comply.'' (See 47 FR 58468, December 30,
1982.) Obviously, the intent of the existing exemption provision cited
by AIA and GAMA was to make it apply only to newly-manufactured
engines.
    As a general matter, we believe an exemption from the Tier 6
standard, or any other standard, for newly-certified engine models is
speculative at this time and would undermine the goal of regulatory
compliance by new engine designs. In any event, neither the current
ICAO Annex 16, Volume II provisions nor the ETM provide for newly-
certified engine exemptions. We believe that such would be a
fundamental shift from Annex 16 and the ETM should be explored within
the framework of ICAO/CAEP. Furthermore, engine manufacturers already
have

significant leadtime between the date CAEP adopts a new emission
standard and the standard's effective date, e.g., usually 3-5 years.
Finally, engine manufacturers historically design new engine models to
comply with the most stringent future standard that also provides for a
longer development time horizon. Therefore, we are promulgating the
exemption provisions for newly-manufactured engines as proposed.
ii. Production Limit
    As proposed, Sec.  87.5 of the final regulations reflect the
essence of the general exemption language for exhaust emission
standards regarding how to determine the number of allowable exemptions
that is embodied in existing Sec.  87.7(c) of the regulations. That
provision generally that the FAA, with EPA's concurrence, may grant
exemptions to exhaust emission standards based on factors such as
adverse economic impact on the engine manufacturer, aircraft
manufacturer, or airline industry; in addition to the effects on public
health and welfare.
    As a result, Sec.  87.5 does not specify a nominal number of
exemptions. Rather, each request for exemption would be evaluated on a
case-by-case basis, using the information provided by the applicant and
any other relevant information that is available to FAA and EPA at the
time. Any approved exemption would include a specific limit on the
number of such engines based on that information and is not defined on
a basis such as type certificate. (See section III.B.b.iii for a
description of what the request must contain.) The intent, of course,
would be to exempt the minimum number of engines that can be clearly
justified, including a consideration of the public health and welfare
effect associated with the exemptions.
    In the proposal, we acknowledged that our approach to determining
limits on the number of exempt engines differs from the language
contained in the current ICAO ETM guidance. The ETM states that ``[t]he
number of engines exempted would normally not exceed 75 per engine type
* * *.'' \87\ We chose not to propose adopting this language on the
nominal number of engines based on a single type certificate. Our
reasons for this deviation were detailed in the. The interested reader
is referred to the proposed rule for more detail. (See 76 FR 45012.
July 27. 2011.) We also want to emphasize that the exemption provisions
as proposed and promulgated in this notice are not necessarily limited
to the Tier 6 NOX production cut-off, but could in fact be
applied to future aircraft engine emission standards if a similar
production cut-off was adopted. Therefore, we believe our approach is
preferable because it more clearly leaves the number of exemptions that
might be granted open, not limited to either more or less than 75 per
engine type, and subject to the justification supplied by the engine
manufacturer, both for the Tier 6 production cut-off and the future.
---------------------------------------------------------------------------

    \87\ CAEP/8--WP/18, Environmental Technical Manual (ETM), Vol.
II on the Use of Procedures in the Emission Certification of
Aircraft Engines, Appendix ``ICAO Emissions Environmental Technical
Manual''.
---------------------------------------------------------------------------

    We received several comments focusing primarily on the number of
exemptions and the underlying process that is embodied in the ETM and
our proposal. General Electric Aviation (GE) maintained that
harmonization with the international community is not only required by
the Chicago Convention, but also provides streamlined processes and
procedures within the regulated industry. They contended that any
purported benefits to EPA's unique exemption scheme were outweighed by
setting up a conflict with the remainder of the world. They also
suggested that if EPA wants a different approach for evaluating
exemptions, it would be more appropriate to work inside the ICAO/CAEP
process toward that end.
    The ATA commented that EPA's case-by-case approach to determining
the number of engines is a rejection of the ICAO/ETM provisions that
limit ``* * * the number of exemptions * * * to 75 engines per type
certificate * * *.'' They argued that this would create a serious
discontinuity between the U.S. and the rest of the world, undermining
ICAO's objective of international uniformity. The ATA also argued that
the ICAO exemption limits are intended to be coordinated among
international aviation authorities, and that differing rules would make
this impracticable. As evidence of this problem, ATA cited the European
Aviation Safety Agency's (EASA) proposed rulemaking, which they noted
was based on the assumption that the ICAO proposals will be adopted
unaltered by other aviation authorities of the world. The ATA also
stated that the ICAO ETM guidance document supplements the official
standards of Annex 16, Vol. II and, therefore, the ETM provides
technical elaboration on the implementation of Annex 16. From this ATA
concluded that differing practices in this regard are counter to the
Chicago Convention.
    Regarding consistency with the Chicago Convention, our proposal
thoroughly explained that the ETM is guidance material; not an ICAO
standard or regulation of any type. While consistency is desirable, it
is not compelled when a deviation is justified. Therefore, we disagree
with the commenters on this point, and specifically with ATA's comment
that the ICAO guidance is effectively the equivalent of an ICAO Annex
16 standard.
    Turning to ATA's comment regarding the ETM cap of 75 engines per
type certificate, we first want to point out that this is not a maximum
limit on the number of potential exemptions per type certificate nor is
it an implied entitlement. Rather the ETM provision is an expectation
that ``[T]he number of engines exempted would normally not exceed 75
per engine type certificate * * *.'' as stated in the document. With
this perspective both the ETM and our approach are similar in that the
maximum number of exempted engines is based on a consideration of the
petitioner's justification for such exemptions.
    Finally, we disagree with the comment that the differences with the
ETM make international coordination unworkable. In fact, one of the
proposed justification elements, i.e., how many affected aircraft will
be registered in the U.S. and other countries (estimate allowed), was
described in the preamble for the proposal as being aimed at helping to
facilitate consultation and coordination. Also, as noted above, the
ETM's expectation and our approach are similar in that the maximum
number of exempted engines under both approaches is based on a
consideration of the petitioner's justification for such exemptions. We
do not think coordination with foreign aviation authorities, with these
few differences, should pose any problems. After considering the above
comments on the number of exemptions and the underlying process
embodied in the ETM and our approach, we are promulgating the
provisions relating to the comments as originally proposed.
iii. Exemption Requests
    We are establishing a process for requesting exemptions (for
engines used on new aircraft) that would be more formal and structured
than the current process. We are requiring manufacturers submit their
request to the FAA, as currently required. The FAA will then share the
submittal with EPA and execute the consultation process.
    To ensure that we have the information necessary to evaluate
exemption requests in this specific manner, the requests need to
include the following details to describe the specific engine model for
which the manufacturer is requesting the

exemption. The final provisions contained in Sec.  87.50, which are
summarized below, are consistent with and in some areas expand on the
provisions in the ETM:
General Information
     Corporate name and an authorized representative's contact
information (including a signed statement verifying the information);
     Description of the engines for which you are requesting
the exemption, including the engine model and sub-model names;
     The number of engines that you would produce under the
exemption and the period during which you would produce them;
     Identify the authorizing type certificate (type
certificate number and date);
     Information about the aircraft in which the engines will
be installed, including the airframe models and expected first
purchasers/users of the aircraft, and the countries in which you expect
the aircraft to be registered (including an estimate of how many will
be registered in the U.S.); and
     List of other certificating authorities from which you
have requested (or expect to request) exemptions, and a summary of each
request.
Justification and Impacts Assessment
     A detailed description and assessment of the environmental
impact of granting the exemption;
     Technical issues, from an environmental and airworthiness
perspective, which may have caused a delay in compliance with a
production cutoff, if any;
     Any economic impacts on the manufacturer, operator(s), and
aviation industry at large; and
     Projected future production volumes and plans for
producing a compliant version of the engine model in question.
Other Factors
     Hardship: Impact of unforeseen technical circumstances,
business events, or other natural or manmade calamities beyond your
control, and
     Equity issues in administering the production cutoff among
economically competing parties.
    It is important that any action on a potential exemption request be
in the public interest; the fairly comprehensive list of application
information in the regulations is intended to gather the information
needed for this assessment. We would expect to take a broad perspective
in evaluating what is or is not in the public interest. This is why a
manufacturer's justification needs to include a quantified description
of the environmental effects of granting the exemption, as well as
discussion of economic and technical issues related to bringing the
engine into compliance. The analysis of environmental impacts needs to
specify by how much the exempted engines would exceed the standards,
the in-use effects in terms of lifetime tons of NOX, and
estimate the emissions rates of engines/aircraft that could potentially
be used if the exemption was not granted. Since exemptions granted
under the regulations apply only to NOX emissions, the
analysis could also include possible benefits regarding noise levels or
reduced emissions of pollutants other than NOX. Relevant
economic impacts could include effects on the engine manufacturer,
airframe manufacturer, airline(s), and the general public.
    As we detailed in the proposal, some manufacturers have requested
exemptions in the past based on the largest number of engines they
hoped to continue manufacturing without knowing how many they would
actually be able to produce or who would purchase them. The new
exemption language calls for manufacturers to target their requests
more specifically based on likely production needs and time periods.
While we expect a manufacturer to have this specific information when
they submit a request, the final regulations allow us to process
exemption requests with somewhat less specific information. However, we
expect this to apply only for unusual circumstances. Manufacturers also
are being required to notify the FAA if they determine after submitting
a request that the information is not accurate, either from an error or
from changing circumstances.
    The final regulations also allow manufacturers to revise their
requests to justify covering additional engines at any time before
approval. We would then review the revised request. Similarly, for
exemptions that are already approved, manufacturers could request that
additional engines be added after providing the justification for the
increase.
    We received comments on the level of detail required in a request
for exemption and the time needed to add more engines to such a request
or an already approved exemption. First, ATA was concerned that
requesting an increased amount of engine exemptions can take a
significant amount of time. They stated that there may be insufficient
time for a manufacturer to receive approval for additional engine
exemptions if necessary to meet previously unknown market demands.
    In response, we find it unfortunate that the comment does not
provide a specific example or other information that may illustrate
this concern. As a general response, given the long leadtime between
the initiation of discussions among aircraft purchasers and aircraft
manufacturers, and actual orders and final deliveries, we expect that
manufacturers will have enough time to request additional engine
exemptions, and if appropriate, for the FAA and EPA to approve such a
request. We expect that amending an already approved exemption would
take less time to act upon than the original petition. Also, engine
manufacturers may request an expedited review from the FAA, and by
association the EPA, if circumstances warrant. Finally, to the extent
that an engine manufacturer has specific concerns in this area, they
could be ameliorated by improving the lines of communication with air
frame manufacturers to increase the manufacturer's awareness of market
interest in potential new orders. Accordingly, we are promulgating the
exemption provision relating to this comment as proposed.
    Second, ATA commented negatively that the exemption request for
each individual engine be justified, ``* * * including the exact
number, initial purchasers/users, countries of registry and plans for
bringing the product into compliance.'' They claimed that this
knowledge may not be known at the time of the exemption request because
of market leadtime. As an example, ATA cited the 1998 Rolls Royce (RR)
exemption request from the CAEP/2 cutoff for 150 engines that was not
based on that type of certainty, but was a prospective exemption for
two years as protection against the uncertainties of technical
development. They stated that RR did not know when the development
process would be completed, and hence did not know the exact number of
non-compliant engines that airlines would purchase. The ATA also added
that the three affected airlines worked with RR to provide
documentation of the financial and operational hardship that they would
suffer based on their aircraft delivery schedules.
    In response to ATA's second comment, we simply want to note that
the information we would normally expect to be contained in the
exemption application is actually not much different than the
justification envisioned by the ETM. That guidance document explains
that the petitioner should, to the extent possible, provide
quantitative support to justify the

exemptions. Specifically, the ETM states that it ``* * * provides
guidelines on the process and criteria for issuing exemptions * * *.''
These include some of the same elements as contained in our proposal
and referenced above, i.e., the exact number of exemptions being
requested, to whom the engines will be originally delivered, and plans
for producing a compliant product. Therefore, the ETM envisions a
consideration of specific information as part of the exemption request,
in a similar fashion as EPA's approach, in order to decide on the exact
number of exemptions to grant. We are simply being more explicit in
some areas concerning the type of information that should be included
in any exemption request. We also note ATA's comment that ``[T]he
airlines worked with Rolls Royce to provide documentation of the
financial and operational hardship that they would suffer if there were
an interruption in the supply of ICAO-compliant engines during their
aircraft delivery schedules.''
    Given the long lead times generally associated with new aircraft
orders and deliveries, we expect aircraft operators will work closely
with aircraft manufacturers as their new aircraft needs are identified.
Engine manufacturers should in turn work with aircraft manufacturers to
stay aware of market interest in potential new orders. This appears to
be reflected in the commenter's example regarding the cooperation
between airlines and RR in fashioning the exemption justification.
Also, as explained in the proposed regulatory text, the petitioner
should include information on the ``expected'' first purchasers/users
of the aircraft. It also asked for information on the number of
aircraft that will be registered in the U.S. versus other countries and
that this may be estimated, if not known. Therefore, precise knowledge
is not needed for certain elements of the justification. The preamble
to the proposed requirements also stated that the regulations would
allow us to process exemption requests with somewhat less specific
information, although we expected that to apply only for unusual
circumstances. We have made this clearer in the final regulations.
    In order to allow us to oversee these exempted engines,
manufacturers are being required to also provide an annual report to
EPA on exempt engines similar to the information about spare excepted
engines. The permanent record for each engine exempted under this
provision must indicate that the engine is an exempted engine and the
engine itself must be labeled as ``EXEMPT NEW.''
iv. Coordination of Exemption Requests
    The limit on the number of potentially exempt engines as described
in the ETM is intended to apply to overall worldwide production. Toward
that end, the ETM envisions that certificating authorities and member
states should coordinate whenever any authority receives an exemption
request.
    Working with the FAA, we expect to consult with other aviation
authorities whenever we receive an exemption request. This would
include a consultation with other certificating authorities as well as
coordination with the appropriate civil aviation authority of any
country where the aircraft with the exempted engines will be
registered.
    To facilitate this coordination, we are asking that manufacturers
also include in their requests, a list of countries in which the
aircraft are expected to be registered. While not specifically listed
in the ETM, we believe that this information is consistent with the ETM
as it would be necessary to ensure proper coordination. The ETM appears
to presume that each member country will recognize exemptions granted
by other countries. This presumption seems reasonable assuming that the
exemption being granted is generally consistent with the guidelines of
the ETM and that the consultation and coordination called for in the
ETM was conducted in good faith. However, there should be no
presumption that EPA would agree to an exemption for an engine model if
the aforementioned collaboration, consultation, and coordination were
not conducted. The Clean Air Act (which provides EPA with its authority
to establish emission standards) includes no provisions that would
allow any foreign country or other certificating authority to exempt
subject aircraft engines, over the objection of FAA and EPA, from the
applicable standards EPA promulgates.\88\ Nevertheless, because our
final exemptions provisions are generally consistent with the
procedures called for in the ETM, assuming appropriate consultation and
coordination in accordance with the ETM and absent unforeseen
complications, it is reasonable to believe that FAA and EPA would not
object to exemptions for engines properly exempted by other countries
under those procedures. The FAA would still need to take the
certification action as called out in 14 CFR 91.203 and 14 CFR 21.183.
---------------------------------------------------------------------------

    \88\ It is possible that applications for exemptions by foreign
entities may be filed with their national certificating authorities
for engines manufactured after December 31, 2012 and could be
operated in the United States. The FAA has several international
bilateral agreements in place that include provisions and
obligations for technical assistance on environmental certification
matters. The FAA plans to continue to coordinate with those foreign
certificating authorities in their considering and granting
petitions for exemptions and, likewise, those that are filed with
the FAA and in consultation with EPA.
---------------------------------------------------------------------------

    This, however, raises the question as to how we would respond to an
exemption request when another certificating authority did not consult
or coordinate on a previous request for the same engine model. A
related concern arises if an FAA type certificate is sought under a
reciprocity agreement for an engine which was previously certificated
under an exemption by a foreign certificating authority, and the
original exemption was not coordinated with the United States. Such
requests would likely be viewed as new exemption requests if the
anticipated collaboration, consultation, and coordination had not
occurred.
    Thus to avoid these issues, in most cases, manufacturers may want
to work with all relevant certificating authorities at the same time as
well as the civil aviation authority of nation(s) where the aircraft
will be initially registered or operated if that nation requires a type
certificate issued under its own regulations to operate in its air
space consistent with international agreements.
v. Low-Volume, Time-Limited Transitional Exemption Program
    We received a comment from one manufacturer expressing concern that
once the final rule becomes effective additional time may be required
for EPA and FAA to establish and undertake procedures to review and act
upon exemption requests. They stated that the time needed for this
process could be very disruptive for engine manufacturers that have
already contracted to delivery engines during the period which FAA/EPA
would need to consider exemption requests. They also claimed it would
be harmful to airplane manufacturers and airlines. To avoid such an
undesirable outcome, the commenter suggested that EPA should grant a
one-time, interim block of perhaps 20 exemptions.
    Based on supplemental information we received from the
commenter,\89\ we find the concerns center on six engines for which
they have contract commitments to build and deliver within several
months of this final rule. These six engines belong to two engine
models, with four engines in one model

and two engines in the other. The first model consisting of four
engines is scheduled to begin shipping in January 2013, shortly after
the January 1, 2013 Tier 6 production cut off. These engines are
currently certificated to the Tier 4 NOX standards. The
commenter has stated, however, that the design of this engine model has
been technically modified to achieve the Tier 6 standards.
Unfortunately, compliance testing of this model to meet the Tier 6
standards cannot be performed until December of 2012 when the first
production version is built. Assuming that this testing is successful,
inadequate time remains for the FAA to formally recognize Tier 6
compliance based on those tests before the production cutoff becomes
effective.\90\ The two new aircraft using these engines are being built
and will be delivered to a foreign airline.
---------------------------------------------------------------------------

    \89\ Memoranda documenting this supplemental information are
located in docket number EPA-HQ-OAR-2010-0687.
    \90\ The FAA has stated to EPA that inadequate time exists for
the required formal compliance determination before the production
cutoff takes effect.
---------------------------------------------------------------------------

    The second model is comprised of two engines with a contracted
delivery date in May 2013. They are also certificated to the Tier 4
NOX standards. These engines are at the end of their
production life, i.e., no additional future deliveries for civilian
uses are anticipated beyond these two contracted engines. For this
reason, the commenter has stated that it is not economically feasible
to redesign this model to conform with the Tier 6 NOX
standards, even if it were technically feasible. The single new
aircraft using these engines is also being built for delivery to a
foreign airline.
    After assessing this concern, we are including an exception
provision in the regulations that permits any aircraft engine
manufacturer to produce and enter into commerce up to six newly-
manufactured engines with a date of manufacture, as defined in the
regulations, prior to August 31, 2013 that are not certificated to meet
Tier 6 emission requirements. We find that a considerable amount of
time will indeed be required between the time this final rule becomes
effective and completing any formal FAA action using the normal
exemption process as previously described in this notice. Specifically,
time is needed for: (1) The FAA to amend 14 CFR part 34 through
rulemaking to incorporate the production cutoff and procedures for
granting exemption from the new standards; (2) the manufacturer to
develop the information needed to support a request; (3) submitting the
request for review by FAA and EPA; (4) coordination with other
certificating authorities; and (5) EPA and FAA review and final action
on the request, i.e., approval or disapproval. Regarding this review
and final action, we note that FAA staff involved in reviewing the
manufacturers request may also be engaged in conducting the processes
to adopt this rule in 14 CFR part 34 and to review emission information
on current type certificates to confirm that they meet either Tier 6 or
Tier 8 requirements, as previously described. Therefore, we conclude
that inadequate time exists to act on an exemption request with
certainty for these six engines before their contract deliver dates.
Consequently, we conclude that a limited modification to the otherwise
universal effective date of the final Tier 6 compliance deadline is
appropriate to accommodate the commenter's situation and that for these
six specific engines additional lead time is needed due to cost and
technical feasibility factors.
    We also believe that disrupting the scheduled delivery dates of
these engines could risk subjecting the commenter to possible financial
penalties for late delivery, with possible follow-on effects for the
aircraft manufacturer and airlines. We also find that there is no
significant adverse effect on the environment in allowing these six
engines to be produced and sold as compliant with Tier 4 standards,
especially if four of the engines ultimately comply with the Tier 6
standards.
    For the above reasons, and in response to the comments and under
our authority under sections 231(a)(3) and (b) to issue final
regulations with such modifications to the proposal as the
Administrator deems appropriate and to make revised standards effective
after such period as the Administrator finds necessary to permit the
development and application or requisite technology, giving appropriate
consideration to the cost of compliance within such period, we are
including an exception provision in the regulations that permits any
aircraft engine manufacturer to produce and enter into commerce up to
six newly manufactured engines with a date of manufacture, as defined
in the regulations, prior to August 31, 2013 that are not certificated
to meet Tier 6 emission requirements. These engines must have a type
certificate which indicates that they meet the 40 CFR part 87
requirements last updated on October 30, 2009 (i.e., Tier 4). No formal
exemption request or approval will be required for these six engines.
These engines will be reported to EPA as part of the annual reporting
requirement as described above for exempt engines.
    We know of no other engine manufacturer that is in this situation
today, (i.e., contracted deliveries of engines not meeting the
production cut-off within several months of the production cut-off
date). However, as a matter of equity and to address situations which
we may not be informed of at this time, we are extending this
transitional flexibility to all manufacturers.
c. Voluntary Emission Offsets
    We requested comment on establishing a voluntary EPA program by
which manufacturers could receive emission credits for producing
cleaner engines, which they could use to offset higher emissions from
exempted engines. An example of such a program was summarized in a
memorandum to the docket.\91\ The types of programs we were considering
would be developed, promulgated, and administered by EPA.
---------------------------------------------------------------------------

    \91\ U.S. EPA, ``Draft Regulatory Text for Voluntary Offset
Program,'' Memorandum from Charles Moulis, Assessment and Standards
Division, Office of Air Quality and Transportation, June 2011. A
copy of this document is in docket number EPA-HQ-OAR-2010-0687.
---------------------------------------------------------------------------

    As described in the proposal and summarized here, we expected
manufacturers to be interested in generating offsets for one of three
purposes. First, manufacturers might choose to generate offsets as part
of their justifications for exemptions. Second, manufacturers might
choose to generate offsets as part of a justification for being allowed
to exceed the numerical limit that FAA and EPA are willing to approve
in an exemption request. Third, provided a provision was promulgated to
allow this, a manufacturer might also be interested in generating
offsets to bank for use for exemptions of engines to be produced after
the credit generating engines are produced, or possibly against a
future production cutoff.
    Under the proposed approach, generation of offsets would be
voluntary and would be open to all certifying engine manufacturers. One
concept was to allow credits to be generated only from engine models
that are introduced after this rule and that had characteristic levels
significantly below the otherwise applicable standard (e.g., at least
10 percent below). There was a separate question, however, regarding
how to calculate the credit. If we adopted, for example, a 10 percent
threshold for eligibility, we would probably also allow credits only to
the degree which the NOX characteristic level was more than
10 percent below the standard.

This would ensure a net improvement in emissions. Also, we could
reserve the right to restrict the use of credits so that they were used
in a manner that ensured there was no net adverse impact on air
quality. Such a program would need to ensure that emission benefits
from one aircraft model truly offset the higher emissions from another
model. Equivalency factors could be developed to account for
differences in the number of LTOs per year and the lifetime of the
aircraft.
    We received a number of comments on the possibility of implementing
a voluntary credit offset program. The ATA expressed significant doubt
that EPA had the legal authority to adopt a voluntary emissions offset
program. They argued that the standard setting authority under section
231 of the CAA does not appear to provide such authority. ATA further
stated that where offsets or emissions trading schemes exist for other
source categories, the authority is express. Examples cited were the
CAA authority for the trading program under the acid rain program, and
the Energy Independence and Security Act authorization for the offset
program used under the Corporate Average Fuel Efficiency Standards.
Pratt & Whitney provided comments very similar to ATA relative to the
lack of EPA's legal authority to create such a program.
    The ATA also commented that the voluntary offset program embodied
in the proposal would be unworkable in the context of aviation. They
noted that unlike cars or trucks, aircraft engine manufacturers have
relatively low production volumes and few frequently updated models for
generating credits. Also, some manufacturers have more models than
others and this could possibly lead to competitive distortions in the
market. The AIA and GAMA also raised concerns regarding potential
market disruptions. Further, ATA argued that opportunities for
generating offsets would be limited by the proposal's high thresholds
for generating those credits. In the context of using emission credits
for exemptions ATA added that each situation would be unique and it
would not be possible to match exemptions to credits, or to assess the
further complexities of the ``equivalency factors'' described in the
proposal. Finally, they stated that an airline's delivery schedule
would be held hostage to the manufacturer's ability to justify credits
based on some other engine that the airline is not buying. For these
reasons, ATA asked that no offset program be adopted.
    Pratt & Whitney stated that the EPA proposal assumes that an offset
program would create an incentive for manufacturers to build lower-
emissions engines. On the contrary they argued, manufacturers already
have that incentive because using the lowest-emitting technology that
is available maximizes the life of the engine. Such a program would
simply create a windfall to manufacturers whose product lines are
already capable of generating credits. The AIA, GAMA, and GE jointly
commented that the proposed emission offset program goes beyond the
borders of CAEP, and any emissions offset program should be developed
within ICAO. General Electric was interested in exploring a potential
emission offset program, particularly if the program would be
applicable to new engine designs and derivatives that are subject to
the proposed Tier 8 standards, and if it created the incentive to adopt
new technologies earlier than would otherwise be the case in the
absence of such incentives.
    We appreciate the concerns raised by the commenters regarding the
proposed voluntary offset emission program. We are also encouraged by
GE's interest in further discussions about how this program may be
useful in the context of the Tier 8 standards and a possible future
Tier 8 production cutoff. EPA agrees that the proposal needs to be
further developed to address certain aspects of the offset program. We
have determined that the time it would take to sufficiently develop the
program is incompatible with the need to promptly promulgate the Tier 6
production cutoff standard with a near-term effective date of January
1, 2013. Therefore we are not including the voluntary emission offset
program in the final rule at this time. Nonetheless, we continue to see
value in such a program for the aviation industry and recommend
continuing to consider such a regulatory flexibility in the future.
    Although we are deferring action on the proposed voluntary emission
offset program for the time being, we believe that such programs are
envisioned within the ETM language related to exemptions. Furthermore,
we do not agree with the commenters who questioned the EPA's legal
authority for adopting a voluntary emissions offset program as part of
the aircraft engine emission standards. We are somewhat surprised by
the industry commenters who questioned the authority for averaging,
banking, and trading (ABT) programs outside of the narrow examples
cited in their comments, and we are not yet persuaded by their claims.
Note that the U.S. Court of Appeals for the D.C. Circuit has clearly
stated that EPA has substantial discretion under the CAA section 231 to
adopt final aircraft emission standards as the agency deems appropriate
(National Ass'n of Clean Air Agencies v. EPA 489 F.3d 1221 (D.C. Cir.
2007)). We also wonder to what extent their view represents the
industry as a whole, including any aircraft engine manufacturers who
also manufacture engines that are subject to other EPA regulations that
provide for ABT without the ``express'' statutory authority the
commenters claim is necessary. If in future actions we seek additional
comments on the legality of ABT programs under our aircraft standards,
we will be interested in receiving comments from other stakeholders in
the mobile source arena who might have views regarding the arguments
presented by the industry commenters above.
    In the meantime, we note that several of our mobile source
regulations, in addition to the rule cited by industry commenters, have
long provided regulated industry with the flexibilities inherent in an
ABT program, under the authority of, for example CAA section 213, and
none of those subject industries have opposed the creation of such
programs or questioned their legal basis. (See, e.g., 40 CFR part 89,
subpart C (averaging, banking and trading provisions for nonroad
compression-ignition engines); 40 CFR part 90, subpart C (certification
averaging, banking and trading provisions for nonroad spark-ignition
engines at or below 19 kilowatts); 40 CFR part 91, subpart C
(averaging, banking and trading provisions for marine spark-ignition
engines); 40 CFR part 92, subpart D (certification averaging, banking
and trading provisions for locomotives and locomotive engines); 40 CFR
part 94, subpart D (certification averaging, banking and trading
provisions for marine compression-ignition engines).) EPA continues to
believe that the legal basis of these ABT programs is sound.
4. Potential Phase-In of New Tier 8 NOX Standards for Newly-
Manufactured Engines
    We did not propose a production cutoff for the Tier 8
NOX standards for newly-manufactured engines. This means
that engine manufacturers may continue to produce Tier 6 compliant
engines of previously certified models after the Tier 8 standards
become effective for newly-certified engine models. As noted elsewhere,
EPA is working within the ICAO/CAEP framework to develop harmonized
international standards for aircraft

turbine engines. At the February 2010 meeting of CAEP, where the CAEP/8
NOX standards were approved for recommendation to ICAO, the
committee decided that further consideration could be given to a
related newly-manufactured engine standard pending new information on
technology and market responses, although no formal action was taken at
the time to explicitly make this a future work item for CAEP.\92\
---------------------------------------------------------------------------

    \92\ ICAO, ``Committee on Aviation Environmental Protection
(CAEP), Report of the Eighth Meeting, Montreal, February 1-12,
2010,'' CAEP/8-WP-80. A copy of this document is in docket number
EPA-HQ-OAR-2010-0687.
---------------------------------------------------------------------------

    Assuming a CAEP/8 production cutoff is adopted at some time in the
future, we will re-examine the permanent exemption provisions to ensure
a timely and orderly phase-out of engine models that do not meet the
CAEP/8 NOX standards. We would expect this to be done
through a notice and comment rulemaking process to amend our own
regulations.

C. Application of Standards for Derivative Engines

    It is very common for a manufacturer to make changes to an
originally type certificated engine model that is in production while
keeping the same basic engine core and combustor design. In some cases
these modifications may affect emissions. As a result, the
certificating authority (in our case the FAA) must decide whether the
emission characteristics of the modified design were significant enough
from the parent engine's certification basis that a demonstration of
compliance with more recent emission standards is necessary, or if the
changes were minor relative to the parent engine's emission
certification basis so that it is considered a derivative version of
the original model with no emissions changes. This may be further
complicated because of the common practice of making iterative changes
over time raises the question as to when the cumulative changes reach a
point where a new demonstration of compliance is warranted.
    In the past, these determinations were made for turbofan engines by
an engineering evaluation that was performed by the engine manufacturer
and then reviewed by the FAA. As part of the ICAO/CAEP deliberations
leading up to the February 2010 CAEP/8 meeting, a new standardized
guidance was agreed upon as described in the ETM. The guidance, which
the U.S. fully supported, includes specific criteria that can be used
to determine when a design modification requires a new demonstration of
compliance with newer emission standards, or when a modification was
simple enough to be considered a no emissions change.
    We are including the ETM requirements in our regulations to address
the longstanding need to provide consistent standards for the decision
process regarding derivative engines and applicable emission standards.
The definition of ``derivative engines for emissions certification
purposes,'' along with the criteria for making this determination, will
provide engine manufacturers and the regulators with more certainty
regarding emission standard requirements for future modifications made
to certificated models. To ensure that the numerical decision criteria
can be administered to allow for the consideration of unusual
circumstances or special information, we are also providing the FAA
with some flexibility to make adjustments to the specific criteria
based on good engineering judgment. In summary, if the FAA determines
that an engine model is sufficiently similar to its parent engine so as
to meet the criteria established in Sec.  87.48, the manufacturer may
demonstrate certification compliance and continue production of the
engine model to the same extent as allowed for the original engine
model. However, if the FAA determines that an engine model is not a
derivative for emission certification purposes, the manufacturer would
be required to demonstrate compliance with the most recent emissions
standards. This determination will be made using numerical criteria
consistent with ICAO provisions, and a modified engine model can be
considered a ``derivative'' only if it is: (1) Derived from an original
engine that had received a U.S. certification, (2) the original engine
was certified under title 14 of the CFR, and (3) one of the following
conditions is met:
    (1) The FAA determined that a safety issue exists that requires an
engine modification; or
    (2) Emissions from the derivative engines are equivalent to or
lower than the original engine.
    The proposed rule provided that the engine manufacturer could show
emissions equivalency by demonstrating that the difference between
emission rates of a derivative engine and the original engine are
within the following allowable ranges, unless otherwise adjusted using
good engineering judgment as determined by the FAA:

3.0 g/kN for NOX
1.0 g/kN for HC
5.0 g/kN for CO
2.0 SN for smoke

    The proposed rule also provided that engine models represented by
characteristic levels at least five percent below all applicable
standards would be allowed to demonstrate equivalency by engineering
analysis. In all other cases, the manufacturer would be required to
test the new engine model to show that its emissions met the
equivalency criteria.
    We received three significant comments on the proposed derivative
provisions. First, ATA, PW, and Dassault-Aviation (DA) pointed out that
the proposed criteria contained a substantial deviation from the
expressed intent of the proposal and the ETM guidance. Specifically,
they noted that the ETM provides that ``If a modified engine remains on
the existing type certificate, it may retain the existing certification
basis of the parent engine if the modification(s) * * * results in a
decrease of the absolute emissions levels. * * * '' They pointed out,
however, that the proposed rule provided that the certificate holder
must demonstrate `` * * * the proposed derivative engine model's
emissions meet the applicable standards and differ from the original
model's emission rates only within * * * '' specified ranges for each
pollutant. For example, the specified range is + or-3 g/kN for
NOX. The commenters stated that this is more stringent than
the ETM, and could discourage cleaner engines that are not clean enough
to meet the next tier of standards. They asked that the final rule be
consistent with the ETM to prevent this untoward effect.
    We agree that the regulations should allow for such engines to be
considered derivatives, even if the difference was outside the ``no
emission change'' range. This allowance is clearly consistent with the
ETM and was inadvertently left out of our proposed language. Therefore,
the final regulations contain this allowance.
    Second, AIA and GAMA jointly commented that the term ``new model''
was inappropriate when used to determine which engine models could
demonstrate equivalency by engineering analysis, and when the
manufacturer would be required to test the new engine model to
demonstrate compliance with the equivalency criteria. They argued that
because this provision applies to changes made to an existing engine,
it could cause an engine manufacturer to conduct an additional
emissions test in cases where a very small change was made to the
engine

due to a performance or engine weight change. The commenters
recommended that this be altered to allow a manufacturer to consider
``* * * such emissions changes by analysis prior to this point, and
only if such analysis revealed a deterioration that pushed the engine
very close to the emission limits that the manufacturer be requested to
complete an engine emissions test.''
    The AIA and GAMA also jointly commented on the proposed regulatory
text that states if the characteristic level of the original
certificated engine model before modification is at or above 95 percent
of the applicable standard for any pollutant, you must measure the
proposed derivative engine model's emissions for all pollutants to
demonstrate the derivative engine's resulting characteristic levels
will not exceed the applicable emission standards. They claimed that
the use of the term ``you must measure'' also implies further engine
testing when additional analysis may likely prove sufficient.
    We agree that the term ``new model'' should be modified and have
instead used the term ``new engine configuration'' in the final
regulations. We want to clarify, however, that the regulations do
explicitly require engine testing when an original engine's emissions
are within 5 percent of any emission standard. This text does not allow
engineering analysis in such cases. We continue to believe this to be
the appropriate policy. Given the greater uncertainty of engineering
analysis relative to actual testing, we cannot rely on it for engines
very close to the standard. This provision is also consistent with the
ETM. Therefore, we are promulgating this requirement as proposed.
    Third, AIA, GAMA, and GE commented that as a general matter, EPA
should not codify the ETM's derivative engine decision criteria because
the ETM guidance will evolve over time and the Agency's rigid
regulations will not, even allowing for the FAA flexibility to use good
engineering judgment if necessary when deciding what is or is not a
derivative engine. They concluded it was simply better to let the FAA
rely on the ETM guidance in its decision making. As noted by the
commenters, the ICAO ETM itself is a guidance document for use by
aviation authorities. It does not represent a standard or any other
enforceable regulatory requirement. In the particular case cited by the
commenters, they appear to ask that FAA be given unlimited discretion
to determine which engines are subject to each new tier of standards.
    In response to the comment, we also note that the Clean Air Act
directs EPA to establish air pollution emission standards for aircraft
engines. (See 42 U.S.C. 7551(a)(2)(A).) Implementation of this
statutory directive mandates that we specify enforceable air pollution
emission standards and control requirements for aircraft engines in
regulatory form. We believe that it is reasonable for us to also
establish other associated requirements in regulatory form. Our final
rule achieves an appropriate balance between providing FAA discretion
to implement the standards, and the need to establish aircraft engine
emission regulations that ensure consistency in application.
    We also disagree with the suggestion that the ETM will evolve over
time, but that our regulations will not. As a working member of ICAO's
Committee on Aviation Environmental Protection, we will participate in
developing any relevant revisions to the ETM and will make appropriate
adjustments to our regulations as needed.
    We continue to believe that the ETM specifications for ``no
emissions change'' are appropriate objective criteria for derivative
engines. Thus, because we are codifying regulatory provisions to
objectively specify when engines are considered to be ``derivative
engines'', we are promulgating regulatory provisions consistent with
the ICAO ETM guidance.

D. Annual Reporting Requirements

    In May of 1980, ICAO's Committee on Aircraft Engine Emissions
(CAEE) recognized that certain information relating to environmental
aspects of aviation should be organized into one document. This
document became ICAO's ``Annex 16 to the Convention on International
Civil Aviation, International Standards and Recommended Practices,
Environmental Protection'' and was split into two volumes--Volume I
addressing Aircraft Noise topics and Volume II addressing Aircraft
Engine Emissions. Annex 16 has continued to grow and today Annex 16,
Volume II includes a list of mandatory requirements to be satisfied in
order for an aircraft engine to meet the ICAO emission standards.\93\
These requirements include information relating to engine
identification and characteristics, fuel usage, data from engine
testing, data analysis, and the results derived from the test data.
Additionally, this list of aircraft engine requirements is supplemented
with voluntarily reported information which has been assembled into an
electronic spreadsheet entitled ``Emissions Databank'' (EDB) \94\ for
turbofan engines with maximum thrust ratings greater than 26.7 kN in
order to aid with emission calculations and analysis as well as help
inform the general public.
---------------------------------------------------------------------------

    \93\ ICAO, ``Annex 16 to the Convention on International Civil
Aviation, Environmental Protection, Volume II, Aircraft Engine
Emissions,'' Part III, Chapter 2, Section 2.4. A copy of this
document is in docket number EPA-HQ-OAR-2010-0687.
    \94\ United Kingdom, Civil Aviation Authority, ``ICAO Emissions
Databank.'' Available at the Civil Aviation Authority Web site
www.caa.co.uk/default.aspx?catid=702.
---------------------------------------------------------------------------

    In order to understand how current gaseous emission standards are
affecting the current fleet, we need to have access to timely,
representative emissions data of the engine fleet at the requisite
model level. The EDB is a useful tool for providing a general overview
of the aircraft fleet, as it contains information on engine exhaust
emissions and performance tests. However, it is not updated on a
consistent basis, it contains a varying amount of voluntarily reported
data from each manufacturer, and it does not specifically list every
engine sub-model.\95\ It also does not contain information on smaller
thrust category turbofans or turboprops, and contains no information on
past or recent engine production volumes. We need this data to conduct
accurate emission inventories and develop appropriate policy.
Accordingly, we do not consider the EDB to be a sufficient tool upon
which to base policy decisions or adopt future standards. Furthermore,
in the context of EPA's standards-setting role under the Clean Air Act
with regard to aircraft engine emissions, it is consistent with our
policy and practice to ask for timely and reasonable reporting of
emission certification testing and other information that is relevant
to our mission. Under the Clean Air Act, we are authorized to require
manufacturers to establish and maintain necessary records, make
reports, and provide such other information as we may reasonably
require to discharge our functions under the Act. (See 42 U.S.C.
7414(a)(1).)
---------------------------------------------------------------------------

    \95\ Under today's regulations, a grouping of engines with an
essentially identical emission-related design are defined to be an
``engine sub-model''. Engines with slightly different designs are
defined to be an ``engine model''.
---------------------------------------------------------------------------

    Therefore, we proposed to require that each aircraft engine
manufacturer submit a production report directly to EPA \96\ with
specific information for each individual engine sub-model that: (1) Is
designed to propel subsonic aircraft, (2) is subject to our exhaust
emission standards, and (3) has received

a U.S. type certificate. More specifically, the scope of the proposed
production report would include turbofan engines as described above
with maximum rated thrusts greater than 26.7 kN, i.e., those subject to
gaseous emission and smoke standards. In addition, it would include
turbofans with maximum rated thrusts less than or equal to 26.7 kN and
all turboprop engines, i.e., those only subject to smoke standards. We
also proposed that this specific exhaust emission related information
be reported to us in a timely manner, which will allow us to conduct
proper emissions inventory analyses of the existing fleet and to ensure
that any public policy we create based on this information will be well
informed. All of the specific reporting items we proposed were the same
as requested for the EDB, with the exception of total annual engine
production volumes, information on type certificates, and the emission
standards to which the engine sub-model was certified. We anticipated
that the new emissions database would be a significant improvement over
the current EDB because the data reporting is mandatory, it will be
comprehensive in that it covers all engine models, and it must be
updated annually.
---------------------------------------------------------------------------

    \96\ The report would be submitted only to EPA. No separate
submission or communication of any kind is required for the FAA.
---------------------------------------------------------------------------

    In addition to some minor comments which are addressed in the
analysis of comments document, we received comments from engine
manufacturers addressing two specific areas of the proposed production
reporting provision. First, the Aerospace Industries Association (AIA),
General Aviation Manufacturers Association (GAMA) and Pratt & Whitney
(PW) commented that annual production volume data is considered
confidential business information (CBI) and as such, it should be
exempt from Freedom of Information Act (FOIA) requests or other methods
of public disclosure. Second, AIA, GAMA, PW and Williams International
pointed out that for those engines which are only subject to smoke
standards (turbofans with maximum thrust ratings less than or equal to
26.7 kN, and turboprops), manufacturers are not required under current
regulations to measure gaseous emissions (HC, CO, NOX,
CO2). As such, data on these gaseous emissions, as well as
information used to measure gaseous emissions (reference pressure ratio
and fuel flow data) are not readily available for these engines.
Further, smoke data by mode of the LTO cycle may not be available for
these older engines. These manufacturers pointed out that new testing
of such engines would be required to generate these data, and that
appropriate test procedures for these engines do not currently exist.
    We understand and respect the needs of manufacturers to maintain
the confidentiality of their legitimately proprietary data. However, we
do not include in our regulations an up-front blanket CBI determination
for any of the other mobile source sectors, and do not believe it is
necessary here. As such, in response to the comments, we are including
regulatory language patterned after existing regulations for several
other mobile source categories which sets forth how we would treat--on
a case by case basis--submitted data which is covered by a CBI claim
from the manufacturer as provided by 40 CFR part 2. The addition of
this provision will ensure that no information that is legitimately
protected CBI gets inadvertently released to the public.
    We do not believe it is appropriate to require additional testing
for turbofans with maximum thrust ratings less than or equal to 26.7 kN
and turboprops specifically for production reporting purposes. Thus,
for these engines, we will not be requiring the submission of HC, CO,
NOX, CO2, reference pressure ratio or fuel rate
data. Further, we will not require additional testing of older engines
for which smoke data by specific LTO cycle segment is not currently
available.
    We also noted in the proposal that the reported information would
be used in conjunction with the NOX and CO2
emission data already required to be submitted to us under section
87.64 for purposes of greenhouse gas (GHG) reporting to establish. This
would effectively provide us with a complete and comprehensive engine
exhaust emissions database. We noted our expectation that most
manufacturers would likely add the proposed information items to the
annual GHG report. No comments were received on combining the two
reports. After further deliberation, we have decided to require a
single, integrated report in this final rule to eliminate any possible
confusion regarding the two separate reports and make reporting more
efficient.
    The incremental reporting elements for each affected gas turbine
engine sub-model are listed below. Although not proposed, we have added
engine type to the list for completeness. The reporting elements of the
existing GHG report are also identified for completeness.
     Company corporate name as listed on the engine type
certificate (GHG);
     Engine Type (turbofan, mixed turbofan, or turboprop);
     Calendar year for which reporting (GHG);
     Complete sub-model name (This will generally include the
model name and the sub-model identifier, but may also include an engine
type certificate family identifier) (GHG);
     The type certificate number, as issued by the FAA (Specify
if the sub-model also has a type certificate issued by a certificating
authority other than the FAA) (GHG);
     Date of issue of type certificate and/or exemption, i.e.
month and year (GHG);
     Emission standards to which the engine is certified, i.e.,
the specific Annex 16, Volume II, edition number and publication date
in which the numerical standards first appeared.
     If this is a derivative engine for emissions certification
purposes, identify the original certificated engine model.
     Engine sub-model that received the original type
certificate for the engine type certificate family;
     Production volume of the sub-model for the previous
calendar year (even if zero). If an engine sub-model is no longer being
produced, state that the engine sub-model is not in production and list
the date of manufacture (month and year) of the last engine produced;
     Regarding the above production volume report, specify (if
known) the number of engines that are intended for use on new aircraft
and the number intended for use as certified (non-exempt) spare engines
on in-use aircraft;
     Reference pressure ratio (GHG) (not applicable to
turbofans with maximum thrust ratings less than or equal to 26.7 kN,
and turboprops);
     Combustor description (type of combustor where more than
one type available on an engine);
     Engine maximum rated thrust output, in kilonewtons (kN) or
kilowatts (kW) (depending on engine type) (GHG);
     Unburned hydrocarbon (HC) mass (g) total (weighted) and
over each segment of the Landing and Take-off Cycle (LTO), i.e. Take-
off, Climb, Approach, Taxi/Ground Idle (not applicable to turbofans
with maximum thrust ratings less than or equal to 26.7 kN, and
turboprops);\97\
---------------------------------------------------------------------------

    \97\ See Regulation Part 87--Control of Air Pollution from
Aircraft and Aircraft Engines, Subpart E, Sec.  87.42 Production
report to EPA for definitions.
---------------------------------------------------------------------------

     Unburned hydrocarbon (HC) characteristic level (i.e. mass
of hydrocarbons over LTO cycle/Rated Thrust (Dp/Foo)) (not applicable
to turbofans with maximum thrust ratings less than or equal to 26.7 kN,
and turboprops);\98\
---------------------------------------------------------------------------

    \98\ Dp/Foo: total gross emissions of each gaseous pollutant
(mass)/rated thrust (g/kN).

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

     Carbon monoxide (CO) mass (g) total (weighted) and over
each segment of the entire Landing and Take-off Cycle (LTO) (i.e. Take-
off, Climb, Approach, Taxi/Ground Idle) (not applicable to turbofans
with maximum thrust ratings less than or equal to 26.7 kN, and
turboprops);
     Carbon monoxide (CO) characteristic level (i.e. mass of CO
over LTO cycle/Rated Thrust (Dp/Foo)) (not applicable to turbofans with
maximum thrust ratings less than or equal to 26.7 kN, and turboprops);
     Nitrogen oxides (NOX) mass (g) total (weighted)
and over each segment of the entire Landing and Take-off Cycle (LTO)
(i.e. Take-off, Climb, Approach, Taxi/Ground Idle) (GHG) (not
applicable to turbofans with maximum thrust ratings less than or equal
to 26.7 kN, and turboprops);
     Nitrogen oxides (NOX) characteristic level
(i.e. mass of NOX over LTO cycle/Rated Thrust (Dp/Foo))
(GHG) (not applicable to turbofans with maximum thrust ratings less
than or equal to 26.7 kN, and turboprops);
     Smoke number total and over each segment of the entire
Landing and Take-off Cycle (LTO) (i.e. Take-off, Climb, Approach, Taxi/
Ground Idle), if available;
     Smoke number characteristic level;
     Carbon dioxide (CO2) mass (g) total (weighted)
and over each segment of the entire Landing and Take-off Cycle (LTO),
(i.e. Take-off, Climb, Approach, Taxi/Ground Idle (GHG)) (not
applicable to turbofans with maximum thrust ratings less than or equal
to 26.7 kN, and turboprops);
     Number of tests run per sub-model (GHG);
     Number of engines tested per sub-model (GHG);
     Fuel flow (grams/second) total (weighted) and over each
segment of the Landing and Take-off Cycle (LTO) (i.e. Take-off, Climb,
Approach, Taxi/Ground Idle) (GHG) (not applicable to turbofans with
maximum thrust ratings less than or equal to 26.7 kN, and turboprops);
and
     Any additional remarks to the EPA.
    The annual report is required to be submitted for each calendar
year in which a manufacturer produces any engine subject to emission
standards as previously described. These reports will be due by
February 28 of each year, starting with the 2014 calendar year, and
cover the previous calendar year. This report shall be sent to the
Designated EPA Program Officer. Where information provided for any
previous year remains valid and complete, the engine manufacturer may
report the production figures and state that there are no changes
instead of resubmitting the original information. To facilitate and
standardize reporting, we expect to specify a particular format for
this reporting in the form of a spreadsheet or database template that
we provide to each manufacturer. As noted previously, we intend to use
the reports to help inform any policy approaches regarding aircraft
engine emissions that we consider, including possible future emissions
standards. The information will also enhance the general public's
understanding of the emission characteristics of aviation gas turbine
engines and allow independent development of emission inventories and
assessments of local environmental effects. Subject to the applicable
requirements of 42 U.S.C. 7414(c), 18 U.S.C. 1905, and 40 CFR part 2,
all data received by the Administrator that is not confidential
business information may be posted on our Web site and will be updated
annually. We have assessed the potential reporting burden associated
with this annual reporting requirement. That assessment is presented in
sections V. and IX.B of this notice.

E. Standards for Supersonic Aircraft Turbine Engines

    We proposed CO and NOX emission standards for turbine
engines that are used to propel aircraft at sustained supersonic
speeds, i.e., supersonic aircraft to complement our existing HC
standard for these engines. These standards were originally adopted by
ICAO in the 1980s, and our adoption of NOX and CO standards
for commercial engines in 1997 omitted coverage of these pollutants for
supersonic commercial engines that were then in use. The lack of EPA CO
and NOX standards for engines used by supersonic aircraft
has had no practical effect, because no such engines have been
certified by the FAA. Also, none of the engines used on these aircraft
are currently in production.
    The Aerospace Industries Association (AIA) and the General Aviation
Manufacturers Association (GAMA) commented that within CAEP it was
agreed that these standards are ``not appropriate for future products''
and should not be adopted by EPA.\99\ However, to meet U.S. treaty
obligations under the Convention on International Civil Aviation as
previously described in section I.C, we believe it is necessary and
appropriate to adopt these conforming standards. Therefore, we are
promulgating the standards for supersonic aircraft as proposed. As
previously noted, this action has no practical effect, and simply
aligns EPA standards with the rest of the world. (See section III.G for
a brief discussion of potential revised emission standards for future
engine designs that may be used on supersonic aircraft.)
---------------------------------------------------------------------------

    \99\ The CAEP position referred to by AIA and GAMA is based on
the expectation that future designs for supersonic aircraft will be
significantly different from past designs. The agreement was reached
at CAEP/8 to evaluate emission standards for these engines as a
future work item.
---------------------------------------------------------------------------

F. Amendments To Test and Measurement Procedures

    We are incorporating by reference into the 40 CFR 87.60 regulatory
text, amendments to ICAO's International Standards and Recommended
Practices for aircraft engine emissions testing and certification.\100\
\101\ \102\ These amendments to Annex 16, Volume II are primarily
intended to ensure that the provisions reflect current certification
practices. The amendments make clarifications or add flexibilities for
engine manufacturers. They are described below.
---------------------------------------------------------------------------

    \100\ A strikeout and highlighted version of the amendments is
contained in Attachment A to ICAO state letter AN 1/61.2, AN 1/62.2-
07/32 entitled, ``Proposed Amendment to International Standards and
Recommended Practices, Environmental Protection, Annex 16 to the
Convention on International Civil Aviation, Volume II Aircraft
Engine Emissions, May 27, 2007. A copy of this document is in docket
number EPA-HQ-OAR-2010-0687.
    \101\ ICAO, ``International Standards and Recommended Practices,
Annex 16 to the Convention on International Civil Aviation,
Environmental Protection, Volume II Aircraft Engine Emissions,''
Third Edition, July 2008, International Civil Aviation Organization.
This document contains the full text of ICAO standards and practices
and is in docket number EPA-HQ-OAR-2010-0687.
    \102\ ICAO, ``International Standards and Recommended Practices,
Annex 16 to the Convention on International Civil Aviation,
Environmental Protection, Volume II Aircraft Engine Emissions,
Amendment 7, effective July 18, 2011'' Third. A copy of this
document is in docket number EPA-HQ-OAR-2010-0687.
---------------------------------------------------------------------------

     Standardizing the terminology relating to engine thrust/
power
     Clarifying the need to correct measured results to
standard reference day and reference engine conditions
     Allowing a certificating authority to approve the use of
test fuels other than those specified during certification testing
     Allowing materials other than stainless steel in the
sample collection equipment
     Clarifying the appropriate value of fuel flow to be used
at each LTO test point
     Clarifying exhaust nozzle terminology for exhaust
emissions sampling
     Allowing an equivalent procedure for gaseous emission and
smoke

measurement if approved by the certificating authority
    Manufacturers are either already voluntarily complying with these
changes or will be even in the absence of a final rule. Our adoption of
these test procedure amendments is, therefore, unlikely to require new
action by manufacturers beyond what they have already done to meet
ICAO's adopted and recommended amendments.
    Our incorporation by reference of the ICAO test procedure makes
most of the existing subpart G and all of subpart H of part 87
obsolete. Therefore, we are removing these sections from the
regulation, as proposed.

G. Possible Future Revisions to Emission Standards for New Technology
Turbine Engines and Supersonic Aircraft Turbine Engines

    As a general matter, emission standards not only apply to all
conventional turbofan aircraft engines greater than 26.7 kN, but also
to all aircraft engines designed for applications that otherwise would
have been fulfilled by turbofan aircraft engines. The high price of jet
fuel, current emphasis on fuel economy, and need to reduce emissions
have renewed interest in open rotor propulsion designs for future
aircraft gas turbine engines. Essentially, the fan of an open rotor
engine is not contained within an engine nacelle as it is with a
conventional turbofan engine. This design has also been referred to as
an unducted fan, propfan, or ultra-high bypass engine. At least two
engine manufacturers are actively pursuing such designs for
certification in the later part of this decade.
    It now appears that certain aspects of EPA's gas turbine engine
emission standards may be incompatible with these new designs. For
example, the current landing and takeoff cycle for emissions
certification is based on conventional engine designs where a
significant amount of thrust is generated by an idling engine.
Specifically, idle emissions are measured and calculated at seven
percent of the engine's rated thrust. However, the fan/prop blades of
an open rotor engine may be variable in pitch and this may allow the
blades to be ``feathered'' at idle. In that position, the blades are
rotated so very little thrust is generated as the engine idles and
generates emissions. Also, future aircraft using these engine designs
may fly at somewhat slower speeds. This might affect the time these
aircraft spend during the climbout mode of the landing and takeoff
cycle. Therefore, the traditional landing and takeoff cycle used in
turbofan engine emissions certification may need to be revised in the
future to accommodate open rotor engines.
    We will be working within CAEP to evaluate the differences between
conventional turbine engine and open rotor engine technologies, and to
revise the emission standards and test procedures as appropriate for
these latter engines. If any changes are required, EPA will undertake
rulemaking to revise our regulations accordingly.
    There may also be changes in the emission standards and test
procedures for engines used to power future supersonic transport
aircraft designs. The emission standards for these engines were
originally developed in the early 1970s in response to the
Aerospatiale-BAC Concorde. Since that time, there have been varying
levels of interest in developing a new generation of supersonic
transport. As a result, the current CAEP work program is evaluating the
status of supersonic aircraft engine development and the potential need
for new emission standards and test procedures.\103\ Our recent
discussions with engine manufacturers indicate that no substantive work
is being undertaken at this time, however. We will continue to work
within CAEP on this issue and undertake rulemaking to revise the
regulations for supersonic aircraft engines as appropriate.
---------------------------------------------------------------------------

    \103\ The CAEP Working Group 3 has taken the position that
engine development programs for future supersonic aircraft
applications should be focused on achieving the emission standards
that are applicable to subsonic aircraft engines. Past supersonic
aircraft engines required the use of afterburner technology to
achieve supersonic speeds. Future supersonic aircraft are expected
to use engines without that technology, making them more similar to
their subsonic counterparts.
---------------------------------------------------------------------------

V. Description of Other Revisions to the Regulatory Text

    In addition to the changes discussed above, we are including a
number of other changes to the regulatory program. Most of these
changes are designed to bring the program into conformity with current
technology and current technical or policy practice. Each of these is
discussed below.

A. Applicability Issues

    This section discusses how this final rule relates to engines used
in military and noncommercial civilian aircraft. We do not believe
these changes will have practical significance for current engine
models because the changes align with manufacturers' current practice
in certifying their engines.
1. Military Engines
    We do not intend today's action to have any impact on engines
installed on military aircraft, or new aircraft that are destined to be
converted for military use. Military aircraft are not required to have
FAA standard airworthiness certificates, and our 1997 endangerment
finding for NOX and CO emissions and resulting standards did
not cover military aircraft (see 62 FR at 25359). As such, engines used
in military aircraft are not required to meet EPA emission standards,
since our current regulations define ``aircraft'' subject to our rules
as any airplane for which a U.S. standard airworthiness certificate (or
foreign equivalent) is issued. (See 40 CFR 87.1(a) of the existing
regulations.) Currently, manufacturers certificate some engine models
used in military aircraft with the FAA (with respect to emissions),
because these engine models also have commercial applications and have
to be certificated for such use. Our new standards and requirements
will continue to apply only to engines used in aircraft for which
standard airworthiness certificates are required, and thus are not
applicable to engines used in military aircraft. It is not our intent
to interfere with current practice with regard to engine models with
joint commercial/military applications to the extent such engines are
used in military aircraft. Although civilian aircraft applications of
all such engines would be subject to the new standards and production
cutoff, in the NPRM we proposed to include a statement in the
regulations to clarify that the proposed production cutoff would not
apply for previously certificated engines that are installed and used
in military aircraft. One manufacturer commented that the definition of
``military aircraft'' we proposed should extend to sales of military
aircraft outside of the U.S. While we believe the regulations as
written do not apply to foreign sales of military aircraft, we are
nonetheless revising our proposed definition of ``military aircraft''
to clarify that foreign aircraft considered military under
international laws and agreements are not covered by 40 CFR part 87.
2. Noncommercial Engines
    Prior to this action, section 87.21(d) specified that gaseous
emission standards applied to engines used in commercial applications
with rated thrusts greater than 26.7 kN. These are engines intended for
use by an air carrier or a commercial operator as defined in the
Chapter I, Title 49 of the United States Code and Title 14 of the Code
of Federal Regulations. Therefore,

engines of equivalent thrust ratings that are used in aircraft
certificated by the FAA that are used in non-revenue, general aviation
service were not required to comply with our current HC, CO, and
NOX exhaust emission standards in Sec.  87.21(d). They were
and are subject, however, to the current standards for smoke and fuel
venting.
    In today's action we are applying the gaseous emission standards
for commercial engines to their noncommercial civilian counterparts
that are required to obtain standard airworthiness certificates. There
are a couple of reasons for this action. First, the ICAO Annex 16,
Volume II standards and recommended practices apply equally to
commercial and noncommercial engines, and our rules' previous failure
to reflect this meant that our requirements did not fully conform to
ICAO's standards. Second, manufacturers already emissions certify
engines that are used in non-revenue, general aviation service to these
standards. Therefore, this provision simply incorporates the status
quo.
    In order to make EPA standards conform to ICAO's, we needed to, in
addition to promulgating the necessary regulatory amendments, update
the underlying finding regarding the need to limit gaseous emissions
from commercial and non-commercial civilian aircraft, pursuant to CAA
section 231(a)(2)(A). In 1997, our analysis and finding, and hence our
regulations, were limited to commercial aircraft emissions. (See 62 FR
at 25358.) In conjunction with the NPRM for this final rule, we
proposed to expand that analysis and finding to include gaseous
emissions from both commercial and non-commercial civilian aircraft
engines with rated thrusts greater than 26.7 kN. We received no
comments on that proposed finding, and are therefore finalizing our
emissions assessment supporting this finding, which is contained in the
docket for this rulemaking.\104\
---------------------------------------------------------------------------

    \104\ U.S. EPA, ``Final Finding for Commercial and Noncommercial
Turbofan and Turbojet Aircraft Emissions,'' memorandum from John
Mueller, Assessment and Standards Division, Office of Transportation
and Air Quality, March 2012. A copy of this document is in docket
EPA-HQ-OAR-2010-0687.
---------------------------------------------------------------------------

B. Non-Substantive Revisions

    We are also taking the opportunity to revisit the clarity of other
regulatory provisions in part 87. Many of these provisions were first
written 30 or 40 years ago with little or no change since then. We are
revising the text related to some of these provisions to better
organize, clarify, and update the regulations. Our goal is to revise
the regulations in part 87 to properly organize the content of the
regulation, use clearer language to describe the applicable
requirements, clarify some definitions, and clear up a variety of terms
and current practices that have not been adequately addressed.
    Except as discussed in previous sections, the changes to part 87
are not intended to significantly change the certification and
compliance program. We did not reopen for comment the substance of any
part of the program that remains unchanged substantively.
    This rule includes the following definitions and other minor
changes in addition to those changes described earlier in this section
or in section III.
    The definition of the term ``aircraft'' is being revised to be
consistent with its meaning under FAA regulations in 14 CFR 1.1. The
existing part 87 definition limits ``aircraft'' to be only those
aircraft issued an airworthiness certificate. This was done as a way to
specify the applicability of the standards. However, this can cause
confusion in a variety of ways. For example, this departs from the
plain meaning of ``aircraft,'' as well as from the meaning given under
the Clean Air Act and Title 49 of the United States Code. The revised
definition aligns with these statutory definitions. The changed wording
is intended to clarify the existing policy without changing it.
    Text specifying general applicability is being added to part 87.3
to be consistent with the new definition of ``aircraft'' and maintain
the effective applicability of the existing regulations, which uses
narrow definitions to limit applicability. For example, the existing
regulations limit the applicability of the standards by defining
``aircraft'' to only include fixed-wing airplanes with airworthiness
certificates. They exclude non-propulsion engines from the definition
of ``aircraft engine'' and turboshaft engines from the definition of
``aircraft gas turbine engine.'' We believe it is more appropriate to
explicitly exclude these engines in an applicability section than to
rely on readers finding these exclusions in the definitions section. We
are also renaming part 87.3 as ``General applicability and
requirements'' and reorganizing the content for clarity. Finally, we
are replacing the existing regulatory text related to federal
preemption for exempted engines in part 87.7(f) with a codification of
the statutory preemption language in part 87.3 and an explanatory note
that the statutory preemption applies to exempted engines because they
are certified to prior-tier standards.
    ICAO Annex 16, Volume II is being incorporated by reference for
test procedures. This involves a broader reference to Annex 16, with
less content repeated in part 87. However, this does not substantively
change the test procedures that apply since the existing procedures are
based directly on Annex 16, Volume II. As part of this change, we are
adding the ICAO definition of ``characteristic level'' to properly
describe how manufacturers demonstrate that they meet applicable
standards.
    Definitions are being added for ``date of introduction,'' ``date of
manufacture,'' and ``derivative engine for emissions certification
purposes,'' and the definition of ``engine model'' is being revised, to
more carefully describe when new emission standards apply to specific
aircraft engines. These definitions are generally consistent with the
most common understandings of these terms by industry and FAA, and with
the CAEP/8 recommendation for adoption by ICAO. Except for engines
subject to exemptions, there will be no more engines required to be
certified to the standards specified in part 87.21, so changing the
definition of ``engine model'' will not change the requirements for
engines certified to the Tier 4 or earlier standards. For the benefit
of the reader, we are also reprinting the following definitions that
remain unchanged:

 Aircraft engine
 Aircraft gas turbine engine
 Class TP
 Class TF
 Class T3
 Class T8
 Class TSS
 Commercial aircraft gas turbine engine
 Fuel venting emissions

    Specific provisions are being added to define and require the use
of ``good engineering judgment.'' This applies for instances where the
regulation cannot spell out every technical detail of how a
manufacturer should comply with the regulation. For example, the
regulations rely on good engineering judgment being used on the
engineering analysis of emissions equivalency for derivative engines
(part 87.48(b)(2)), and for applying the turbofan test procedures to
turboprop engines (part 87.60(a)). The general approach for
implementing good engineering judgment is to allow manufacturers to
exercise well substantiated and explained technical judgment subject to
potential EPA and FAA review (as appropriate). The consequences of
disagreements with a manufacturer's decision would depend

on whether we believe the manufacturer made the decision in good faith.
Where the manufacturer makes its decision in good faith, EPA or FAA
could require a different approach for future work if we believe it
would represent better engineering judgment. We believe these
provisions reflect the spirit of the approach being used today to
interpret the applicable regulations.
    Provisions are being added specifying rounding practices for rated
output, rated pressure ratio, and calculated emission standards;
generally specifying that they be expressed to at least three
significant figures. The primary exception to this is the specification
that smoke numbers be expressed to one decimal place. These
specifications are consistent with how manufacturers are generally
certifying engines today. Defining how to round these values would
prevent manufacturers in the future from effecting small changes in the
level of the emission standards to which they certify their engines.
This is because standards are calculated using the numerical values of
the rated output and rated pressure ratio. Without these
specifications, manufacturers could subject themselves to a slightly
less stringent standard by selectively rounding or truncating an engine
model's rated output to be low and its rated pressure ratio to be high,
or by strategically rounding the calculated standard itself. While this
has not been an issue in the past, it is important to maintain a level
playing field for all manufacturers as standards become more stringent.
We do not expect any more engines type-certificated to the standards
specified in part 87.21, so the specified procedures for rounding these
values will not change the requirements for engines certified to the
Tier 4 or earlier standards
    Definitions are being added for ``turbofan engine,'' ``turbojet
engine,'' ``turboprop engine,'' ``turboshaft engine,'' ``supersonic,''
and ``subsonic'' to avoid any uncertainty about how the standards apply
to different types of engines. The definitions are intended to reflect
the plain meaning of these terms.
    The regulations include the following additional amendments:

------------------------------------------------------------------------
                               Description of
      Regulation cite             amendment               Notes
------------------------------------------------------------------------
87.1.......................  Add definition of   The characteristic
                              ``characteristic    level is established
                              level''.            by ICAO Annex 16 as a
                                                  means of calculating a
                                                  statistical adjustment
                                                  to measured emission
                                                  results to take into
                                                  account the level of
                                                  uncertainty
                                                  corresponding to the
                                                  number of tests run
                                                  for a given pollutant.
87.1.......................  Remove definitions  These terms will no
                              for ``emission      longer be used in part
                              measurement         87. There will be no
                              system'', ``power   more engines certified
                              setting'',          to the standards
                              ``sample            specified in Sec.
                              system'', ``shaft   87.21, so removing
                              power'', ``taxi/    these definitions will
                              idle (in)'', and    not change the
                              ``taxi/idle         requirements for
                              (out)''.            engines certified to
                                                  the Tier 4 or earlier
                                                  standards.
87.1.......................  Revise definition   The new language
                              of ``exhaust        references the
                              emissions'' and     emission testing
                              ``smoke''.          procedures, since that
                                                  is the practical
                                                  meaning of these terms
                                                  in part 87. This
                                                  clarifies, for
                                                  example, that
                                                  emissions from the
                                                  nozzle of an aircraft
                                                  or aircraft engine
                                                  count as exhaust
                                                  emissions only if they
                                                  are measured using the
                                                  specified test
                                                  procedures. There will
                                                  be no more engines
                                                  certified to the
                                                  standards specified in
                                                  Sec.   87.21, so
                                                  revising these
                                                  definitions will not
                                                  change the
                                                  requirements for
                                                  engines certified to
                                                  the Tier 4 or earlier
                                                  standards.
87.1.......................  Define ``new''      The regulations also
                              instead of          refer to new turboprop
                              defining ``new      engines and new
                              aircraft turbine    engines used for
                              engine''.           supersonic aircraft,
                                                  so it is appropriate
                                                  to define the
                                                  adjective as it
                                                  relates to these
                                                  different kinds of
                                                  engines. This approach
                                                  does not change the
                                                  meaning of the
                                                  applicable terms and
                                                  therefore has no
                                                  bearing on the
                                                  requirements that
                                                  applied under the
                                                  standards specified in
                                                  Sec.   87.21.
87.1.......................  Revise the          The editorial changes
                              definition of       do not involve any
                              ``standard day      substantive change in
                              condition'': (1)    the specified
                              Remove the          conditions.
                              reference to the
                              1976 U.S.
                              Standard
                              Atmosphere, (2)
                              correct a
                              typographical
                              error in the
                              humidity
                              specification,
                              and (3) change
                              the atmospheric
                              pressure units
                              from Pa to kPa.
87.2.......................  Remove FAA from     This is intended to not
                              the list of         involve a change in
                              acronyms in Sec.    emission standards or
                               87.2 and add it    implementation.
                              to the set of
                              defined terms in
                              Sec.   87.1.
87.3.......................  Add provisions      The broad statement in
                              describing the      Sec.   87.3 is not
                              scope of            intended to conflict
                              applicability of    with the applicability
                              part 87.            statements in
                                                  individual subparts,
                                                  since those additional
                                                  statements indicate
                                                  that certain
                                                  requirements in part
                                                  87 apply more
                                                  narrowly. All
                                                  applicability
                                                  statements in the rule
                                                  are intended to be
                                                  consistent with
                                                  current policy.
87.3.......................  Remove the          This change more
                              provision related   carefully tracks the
                              to preemption of    statutory provisions
                              state standards     related to preemption.
                              for exempted
                              aircraft and
                              replace it with
                              the preemption
                              provision in the
                              Clean Air Act.
87.5.......................  Move the            This provision, and the
                              provisions          similar provision from
                              related to          Sec.   87.3(a), should
                              special test        be described together
                              procedures to       in the context of the
                              Sec.   87.60.       testing requirements
                                                  in subpart G.
87.21......................  Identify the        This corrects a
                              specific date       typographical error
                              when the smoke      from the Federal
                              standard started    Register.
                              to apply for
                              turbofan engines
                              with rated output
                              less than 26.7
                              kilonewtons.
87.21......................  Revise paragraph    This change is strictly
                              (f) to correctly    editorial.
                              reference the
                              regulatory
                              sections that
                              describe the
                              applicable test
                              procedures.

87.60......................  Revise the          There will be no more
                              description of      engines certified to
                              test procedures     the standards
                              to rely broadly     specified in Sec.
                              on the procedures   87.21, so any changes
                              specified in ICAO   to the test procedures
                              Annex 16. This      will not change the
                              includes a          requirements for
                              variety of recent   engines certified to
                              changes to the      the Tier 4 or earlier
                              Annex 16            standards. Moreover,
                              procedures.         engine manufacturers
                                                  are expected to
                                                  perform all their
                                                  testing based on the
                                                  current test
                                                  procedures from ICAO
                                                  Annex 16, regardless
                                                  of the standards that
                                                  apply.
------------------------------------------------------------------------

C. Clarifying Language for Regulatory Text

    The regulations incorporate the changes described in this preamble.
The following table highlights and clarifies several provisions that
may not be obvious to the reader.

------------------------------------------------------------------------
       Regulation cite                            Note
------------------------------------------------------------------------
87.1, Definition of            This definition would revert to the
 ``aircraft''.                  normal FAA definition of aircraft,
                                rather than the much narrower current
                                definition in part 87. To understand
                                this change, the definition needs to be
                                considered along with the changes to
                                applicability in 87.3(a).
87.1, Definition of ``date of  This is generally the same definition as
 manufacture''.                 given in ICAO Annex 16. However, our
                                definition addresses certain specific
                                circumstances that could possibly occur,
                                but that are not addressed by the Annex.
                                For example, our definition would
                                provide a date of manufacture for an
                                engine not previously documented by a
                                manufacturer.
87.1, Definition of            It is important to consider this
 ``derivative engine for        definition in combination with the
 emissions certification        definition of ``engine type certificate
 purposes''.                    family''.
87.1, Definition of ``engine   A manufacturer or FAA may further divide
 model''.                       an engine model into sub-models. Engines
                                from an engine model must be contained
                                within a single engine type certificate
                                family. Where FAA determines that
                                engines are not sufficiently similar to
                                be included under a single type
                                certificate, they will not be considered
                                to be the same engine model for purposes
                                of part 87.
87.1, Definition of            In Sec.   87.23(d) we clarify that the
 ``military aircraft'' and      production cutoff does not apply for
 87.23(d).                      military aircraft engines (even if they
                                have been certificated). In Sec.   87.1,
                                we define military aircraft to primarily
                                mean ``aircraft owned by, operated by,
                                or produced for sale to the armed forces
                                or other agency of the federal
                                government responsible for national
                                security (including but not limited to
                                the Department of Defense).'' For
                                example, aircraft owned by the U.S.
                                Coast Guard would be military aircraft.
                                In response to comments, we added a
                                clarification that military aircraft
                                also include ``other aircraft considered
                                to be military aircraft under
                                international law and conventions.''
87.1, Definition of            The production cutoff date for the Tier 6
 ``production cutoff date''.    NOX standards is December 31, 2012.
87.1, Definition of ``spare    Newly manufactured spare engines may be
 engine''.                      excepted under Sec.   87.50.
87.1, Definitions of tiers...  As specified in the definitions of ``Tier
                                0'' through ``Tier 8'', tiers apply only
                                for NOX standards. Tiers do not apply
                                for HC, CO, and smoke standards because
                                these continue to apply, independent of
                                the NOX standards.
87.23(d)(2)..................  The allowance to continue production of
                                Tier 6 engines after the Tier 8
                                standards start to apply is not
                                necessary for engines with rated
                                pressure ratio at or above 104.7 because
                                the Tier 6 and Tier 8 standards are
                                numerically identical at these thrust
                                levels.
87.42(c)(1)..................  Sec.   87.42 requires that a manufacturer
                                report the engines it produces by sub-
                                model. The manufacturer must specify the
                                manufacturer's unique sub-model name,
                                which will generally include a model
                                name and a sub-model name. It may also
                                include a family name.
87.50........................  This provision specifies that EPA must
                                provide written concurrence for
                                exemptions.
87.50(a)(1)(iv)(F)...........  This provision states that manufacturers
                                requesting exemptions should describe
                                equity issues. As an example of equity
                                issues related to an exemption request,
                                a manufacturer might provide a rationale
                                for granting the exemption when another
                                manufacturer has a compliant engine and
                                does not need an exemption, taking into
                                account the implications for operator
                                fleet composition, commonality, and
                                related issues in the absence of the
                                engine model in question.
87.50(a)(6)..................  This provision requires manufacturers to
                                promptly notify the FAA if new or
                                changed information could have affected
                                approval of an exemption. For
                                corrections to an exemption request that
                                would not affect the approval of the
                                exemption, manufacturers may include the
                                updated information in the annual report
                                described in Sec.   87.50(e).
------------------------------------------------------------------------

VI. Technical Feasibility and Cost Impacts

    During the CAEP process, the technical feasibility and cost of
compliance of the CAEP/6 and CAEP/8 NOX standards were
thoroughly assessed and documented.105 106 EPA participated
in these analyses and supported the results. Generally, CAEP considered
certain factors as pertinent to the cost estimates of a technology
level for engine changes, and these factors or technology levels are

described below. The first technology level was regarded as a minor
change, and it could include modeling work, minor design changes, and
additional testing and re-certification of emissions. The second
technology level was considered a scaled proven technology. At this
level an engine manufacturer applies its best-proven, combustion
technology that was already certified in at least one other engine type
to another engine type. This second technology level would include
substantial modeling, design, combustion rig testing, modification and
testing of development engines, and flight testing. The third
technology level was regarded as new technology or current industry
best practice, and it was considered where a manufacturer has no proven
technology that can be scaled to provide a solution and some technology
acquisition activity is required. (One or more manufacturers have
demonstrated the necessary technology, while the remaining
manufacturers would need to acquire the technology to catch up.) Since
the effective date for the CAEP/6 NOX standard was January
1, 2008 and nearly all in-production engines currently meet this
standard, we believe this clearly demonstrates the technical
feasibility of those standards. Therefore, we will limit our discussion
below to applying these technology levels to engines that need to
comply with the CAEP/8 NOX standard.
---------------------------------------------------------------------------

    \105\ CAEP/6 NOX standards: CAEP Forecasting and
Economic Analysis Support Group, Economic Analysis of NOX Emissions
Stringency Options, CAEP/6-IP/13 (Information Paper 13), January 15,
2004. A copy of this document is in docket number EPA-HQ-OAR-2010-
0687.
    \106\ CAEP/8 NOX standards: CAEP Working Group 3, NOX
Stringency Technology Response Assessment, CAEP-SG/20082-WP/18
(Working Paper 18), September 25, 2008. CAEP Forecasting and
Economic Analysis Support Group, Economic Assessment of the NOX
Stringency Scenarios, CAEP/8-IP/14, November 30, 2009. Modeling Task
Force, MODTF NOX .Stringency Assessment, CAEP/8-IP/13, December 11,
2009. United States, Aviation Environmental Portfolio Management
Tool for Economics (APMT-Economics) and Its Application in the CAEP/
8 NOX Stringency Analysis, CAEP/8-IP/29, January 6, 2010. A copy of
these documents are in docket number EPA-HQ-OAR-2010-0687.
---------------------------------------------------------------------------

    At the time of the CAEP reports, the CAEP/8 NOX standard
for higher thrust engines, i.e., 89.0 kN or more would apply to a total
of 15 engine types. For these types the following technology level
response was anticipated: six types would require no change, one type
would need the first technology level change, five would require the
second technology level, and three would need the third technology
level. For lower thrust engines, i.e., greater that 26.7 but less than
89.0 kN, CAEP listed a total of 13 engine types in their analysis of
the CAEP/8 NOX standard. The following technology level
response was estimated for these types: 11 types would require no
change, 1 type would need the first technology level change, and 1 type
would require a second technology. Based on these analyses, CAEP
concluded that the CAEP/8 NOX standards were technically
feasible within the lead time and time frame identified in the action.
    Regarding the costs of this final rule, aircraft turbofan engines
are designed and built for use on aircraft that are sold and operated