Equipment manufacturers choosing to take advantage of the Tier 4 allowances will be required to: ( 1) keep records of the production of all pieces of equipment excepted under the allowance provisions for at least five full years after the final year in which allowances are available for each power category; ( 2) include in such records the serial and model numbers and dates of production of equipment and installed engines, and the rated power of each engine, ( 3) calculate annually the number and percentage of equipment made under these transition provisions to verify compliance that the allowances have not been exceeded in each power category; and ( 4) make these records available to EPA upon request.

b. Notification Requirements for Equipment Manufacturers We are adopting new notification requirements for equipment manufacturers with the Tier 4 program. Under the Tier 4 transition program, equipment manufacturers wishing to participate in the Tier 4 transition provisions will be required to notify EPA prior to their use of the Tier 4 transition provisions. Equipment manufacturers will be required to submit their notification before the first calendar year in which they intend to use the transition provisions. We believe that prior notification will greatly enhance our ability to ensure compliance. Under the newly adopted notification requirements, each equipment manufacturer will be required to notify EPA in writing and provide the following information prior to the start of the first year in which the manufacturer intends to use the flexibilities: 125 ( 1) the nonroad equipment manufacturer's name, address, and contact person's name, phone number; ( 2) the allowance program that the nonroad equipment manufacturer intends to use by power category; ( 3) the calendar years in which the nonroad equipment manufacturer intends to use the exception; ( 4) an estimation of the number of engines to be exempted under the transition provisions by power category; ( 5) the name and address of the engine manufacturer from whom the equipment manufacturer intends to obtain exempted engines; and ( 6) identification of the equipment manufacturer's prior use of Tier 2/ 3 transition provisions.

Engine manufacturers supported the new notification requirements for equipment manufacturers. One equipment company, however, commented that the notification requirements are of minimal value and should be deleted. We disagree and continue to believe the new notification requirements will greatly enhance our ability to ensure compliance with the flexibility provisions. Given the limited information that must be provided by equipment manufacturers, we do not expect that the notifications will require any significant effort to pull the information together and submit to EPA.

EPA had requested comment on whether the notification provisions should also apply to the current Tier 2/ Tier 3 transition program, and if so, how these provisions should be phased in for equipment manufacturers using the current Tier 2/ Tier 3 transition provisions. We did not receive any comments on this issue. However, consistent with our approach to several other Tier 4 requirements that we were considering applying to the Tier 2/ Tier 3 transition program, we are not adopting such notification requirements for equipment manufacturers for the current Tier 2/ Tier 3 program.

c. Reporting Requirements for Engine and Equipment Manufacturers As with the current program, engine manufacturers who participate in the Tier 4 program will be required to submit information each year on the number of such engines produced and to whom the engines are provided. The purpose of these submittals is to help EPA monitor compliance with the program and prevent abuse of the program.

We are adopting new reporting requirement for equipment manufacturers participating in the Tier 4 equipment manufacturer transition provisions. With today's action, equipment manufacturers participating in the program will be required to submit an annual written report to EPA that calculates its annual number of exempted engines under the transition provisions by power category in the previous year. Equipment manufacturers using the percent of production allowance, will also have to calculate the percent of production the exempted engines represented for the appropriate year. Each report will include a cumulative calculation ( both total number 126 and, if appropriate, the percent of production) for all years the equipment manufacturer is using the transition provisions for each of the Tier 4 power categories. In order to ease the reporting burden on equipment manufacturers, EPA intends to work with the manufacturers to develop an electronic means for submitting information to EPA.

EPA had requested comment on whether these new reporting requirements for equipment manufacturers should also apply to the current Tier 2/ Tier 3 transition program, and if so, how these provisions should be phased in for equipment manufacturers using the current Tier 2/ Tier 3 transition provisions. We did not receive any comments on this issue. However, consistent with our approach to several other Tier 4 requirements that we were considering applying to the Tier 2/ Tier 3 transition program, we are not adopting reporting requirements for equipment manufacturers for the current Tier 2/ Tier 3 program.

d. Labeling Requirements for Engine and Equipment Manufacturers Engine manufacturers are currently required to label their certified engines with a label that contains a variety of information. Under today's action, as proposed, we are adopting requirements that engine manufacturers be required to identify on the engine label if the engine is exempted under the Tier 4 transition program. In addition, and also as proposed, equipment manufacturers will be required to apply a label to the engine or piece of equipment that identifies the equipment as using an engine produced under the Tier 4 transition program for equipment manufacturers.

Engine manufacturers were opposed to the new labeling requirements. We believe these new labeling requirements will allow EPA to easily identify the exempted engines and equipment, verify which equipment manufacturers are using these exceptions, and more easily monitor compliance with the transition provisions. Labeling of the equipment should also help U. S. Customs to quickly identify equipment being imported using the exemptions for equipment manufacturers.

4. What are the requirements associated with use of transition provisions for equipment produced by foreign manufacturers?

Under the current regulations in 40 CFR 89.2, importers are treated as equipment manufacturers and are each allowed the full allowance under the transition provisions in 40 CFR 89.102( d). Therefore, under the current provisions, importers of equipment from a foreign equipment manufacturer could as a group import more excepted equipment from that foreign manufacturer than 80% of that manufacturer's production for the U. S. market ( i. e., more than the percent of production), or more than the small volume allowance. Therefore, the current regulation creates a potentially significant adverse environmental impact. EPA did not intend this outcome, and does not believe it is needed to provide reasonable lead time to foreign equipment manufacturers. EPA thus proposed to change the current regulations to eliminate this disparity. 68 See, for example, 40 CFR 80.410 concerning provisions for foreign refiners with individual gasoline sulfur baselines.

127 As noted earlier, with today's action, only those nonroad equipment manufacturers that install engines and have primary responsibility for designing and manufacturing equipment will qualify for the allowances or other relief provided under the Tier 4 transition provisions. Foreign equipment manufacturers who comply with the compliance related provisions discussed below will receive the same allowances and other transition provisions as domestic manufacturers. Foreign equipment manufacturers who do not comply with these compliance related provisions will not receive allowances. Importers that have little involvement in the manufacturing and assembling of the equipment will not receive any allowances or other transition relief directly, but can import exempt equipment if it is covered by an allowance or transition provision associated with a foreign equipment manufacturer. These provisions allow the transition allowances and other provisions to be used by foreign equipment manufacturers in the same way as domestic equipment manufacturers, while avoiding the potential for importers using unnecessary allowances.

Under today's action, a foreign equipment manufacturer includes any equipment manufacturer that produces equipment outside of the United States that is eventually sold in the United States. All foreign nonroad equipment manufacturers wishing to use the transition provisions will have to comply with all requirements of the regulation discussed above including: notification, recordkeeping, reporting and labeling. Along with the equipment manufacturer's notification described earlier, a foreign nonroad equipment manufacturer will have to comply with various compliance related provisions similar to those adopted in several fuel regulations relating to foreign refiners. 68 As part of the notification, the foreign nonroad equipment manufacturer will have to:

1) Agree to provide EPA with full, complete and immediate access to conduct inspections and audits; 2) Name an agent in the District of Columbia for service of process; 3) Agree that any enforcement action related to these provisions will be governed by the Clean Air Act; 4) Submit to the substantive and procedural laws of the United States; 5) Agree to additional jurisdictional provisions; 6) Agree that the foreign nonroad equipment manufacturer will not seek to detain or to impose civil or criminal remedies against EPA inspectors or auditors for actions performed within the scope of EPA employment related to the provisions of this program; 7) Agree that the foreign nonroad equipment manufacturer becomes subject to the full operation of the administrative and judicial enforcement powers and provisions of the United States without limitation based on sovereign immunity; and 8) Submit all reports or other documents in the English language, or include an English language translation. 128 In addition to these requirements, we are adopting a new provision for foreign equipment manufacturers that participate in the transition program to comply with a bond requirement for engines imported into the U. S. We believe the bond requirements are an important tool to ensure that foreign equipment manufacturers are subject to the same level of enforcement as domestic equipment manufacturers. Furthermore, we believe that a bonding requirement for the foreign equipment manufacturer is an important enforcement tool in order to ensure that EPA has the ability to collect any judgements assessed against a foreign equipment manufacturer for violations of these transition provisions.

Under the bond program adopted today, a participating foreign equipment manufacturer will have to obtain annually a bond in the proper amount that is payable to satisfy United States judicial judgments that results from administrative or judicial enforcement actions for conduct in violation of the Clean Air Act. The foreign equipment manufacturer will have two options for complying with the bonding requirement. The foreign equipment manufacturer can:

1) Obtain a bond in the proper amount from a third party surety agent that is cited in the U. S. Department of Treasury Circular 570, " Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring Companies"; or 2) Obtain an EPA waiver from the bonding requirement, if the foreign equipment manufacturer can show that it has assets of an appropriate value in the United States.

EPA expects the second bond option to address instances where an equipment manufacturer produces equipment outside the United States containing flexibility engines, but also has facilities ( and thus significant assets) inside the United States. Under this second option, such a manufacturer can apply to the EPA for a waiver of the bonding requirement.

Because EPA's concerns of compliance will relate to the nature and tier of engines used in the transition equipment, we believe the bond value should be related to the value of the engine used. Therefore, we are adopting requirements that the bond be set at a level designed to represent approximately 10% of the cost of the engine for each piece of transition equipment produced for import into the United States under this program. So that manufacturers have certainty regarding the bond amounts and so that there isn't a need for extensive data submittals and evaluation between EPA and the manufacturer, the rule specifies the bond value for each imported engine based on the estimated average cost for a Tier 4 engine on which the bond would be based. Based on average engine cost estimates from table 6.2 5 of the final RIA, equipment using engines exempted under the transition program will require a bond in the amount shown in table III. B 3. 129 Table III. B 3.   Bond Value For Engines Imported Under the Tier 4 Transition Program Power Range Per Engine Bond Value 0< hp< 25 $ 150 25

hp< 75 $ 300 75

hp< 175 $ 500 175

hp< 300 $ 1,000 300

hp< 600 $ 3,000 hp  600 hp $ 8,000 Depending on the number of engines/ equipment brought into the U. S. each year, the value of the bond calculated using the above values could change from year to year. Under the provisions adopted today, an importer would calculate the estimated bond amount using the values in table III. B 3 and be required to obtain a bond equal to the highest bond value estimated over the seven year flexibility period. Because we have the authority to bring enforcement actions against a manufacturer for five years beyond the end of the program, the manufacturer would be required to maintain the bond for five years beyond the end of the flexibility period or five years after using up all of its available allowances, whichever occurs first. Finally, if a foreign equipment manufacturer's bond is used to satisfy a judgment within the seven year flexibility period, the foreign equipment manufacturer will then be required to increase the bond to cover the amount used within 90 days of the date the bond is used.

Most comments received on this issue supported the proposed provisions. However, Ingersoll Rand commented that EPA should clarify whether the special requirements for foreign equipment manufacturers apply to U. S. based companies that have foreign manufacturing facilities. Ingersoll Rand believes that such requirements should not apply because EPA appears to be concerned about abuse of the program by foreign companies that export machines into the U. S. With today's action, all equipment manufacturers who import equipment into the U. S. will be required to comply with the provisions for foreign equipment manufacturers, even if they are U. S. based companies. Because there is a wide range of actual presence in this country for " U. S.   based" companies, EPA believes it is important that all companies importing equipment to the U. S. comply with the requirements for foreign equipment manufacturers. Neither the notification requirements described earlier for foreign equipment manufacturers nor the bonding requirements should cause any burden for companies with significant presence in this country. We would expect that only those companies with limited presence or no presence in this country will be impacted to any measurable degree because of the requirements placed on foreign equipment manufacturers. 130 In addition to the foreign equipment manufacturer requirements discussed above, EPA is also requiring importers of exempted equipment from a complying foreign equipment manufacturer to comply with certain provisions. EPA believes these importer provisions are essential to EPA's ability to monitor compliance with the transition provisions. Under today's action, each importer will be required to notify EPA prior to their initial importation of equipment exempted under the Tier 4 transition provisions. Importers will be required to submit their notification prior to the first calendar year in which they intend to import exempted equipment from a complying foreign equipment manufacturer under the transition provisions. The importer's notification will need to include the following information:

1) The name and address of importer ( and any parent company); 2) The name and address of the manufacturers of the exempted equipment and engines the importer expects to import; 3) Number of exempted equipment the importer expects to import for each year broken down by equipment manufacturer and power category; and 4) The importer's use of the transition provisions in prior years ( number of flexibility engines imported in a particular year, under what power category, and the names of the equipment and engine manufacturers).

In addition, EPA is requiring that any importer electing to import to the United States exempted equipment from a complying foreign equipment manufacturer will have to submit annual reports to EPA. The annual report will have to include the number of exempted equipment the importer actually imported to the United States in the previous calendar year; and the identification of the equipment manufacturers and engine manufacturers whose exempted equipment/ engines were imported.

C. Engine and Equipment Small Business Provisions ( SBREFA)

The Regulatory Flexibility Act ( RFA) generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions. As EPA believed that the ultimate rule could have a significant economic impact on small businesses, we prepared a regulatory flexibility analysis as part of this rulemaking. We prepared an Initial Regulatory Flexibility Analysis ( IRFA) pursuant to section 603 of the RFA which is part of the record for the NPRM, and we prepared a Final Regulatory Flexibility Analysis ( FRFA) to support today's action.

Under section 609( b) of the RFA, a Small Business Advocacy Review Panel ( SBAR Panel or Panel) is required to be convened prior to publication of both an IRFA and a FRFA. Section 609( b) of the RFA directs the Panel to, through outreach with small entity representatives ( SERs), report on the comments of the SERs and make findings under section 603 of the RFA on 131 issues related to identified elements of an IRFA during the proposal stage of a rulemaking. During the development of the rulemaking, EPA is to analyze the elements of the IRFA in developing the FRFA for the final rulemaking ( see section X. C of this preamble for more discussion on the elements of a FRFA). The purpose of the Panel was to gather information to identify impacts on small businesses and to develop potential regulatory options to mitigate these concerns. At the completion of the SBAR Panel process, the Panel prepared a Final Panel Report. This report includes: ° background information on the proposed rule being developed; ° information on the types of small entities that would be subject to the proposed rule; ° a description of efforts made to obtain the advice and recommendations of representatives of those small entities; and, ° a summary of the comments that had been received to date from those representatives. The Panel report was included in the proposal's rulemaking record ( and hence in the rulemaking record for this final rule), and provided the Panel and the Agency with an opportunity to identify and explore potential ways of shaping the rule to minimize the burden of the rule on small entities while achieving the rule's purposes and being consistent with Clean Air Act statutory requirements.

EPA approached this process with care and diligence. To identify representatives of small businesses for this process, we used the definitions provided by the Small Business Administration ( SBA) for manufacturers of nonroad diesel engines and vehicles. The categories of small entities in the nonroad diesel sector that will potentially be affected by this rulemaking are defined in the following table:

Industry Defined as small entity by SBA if: Major SIC Codes Engine manufacturers Less than 1,000 employees Major Group 35 Equipment manufacturers:

 construction equipment Less than 750 employees Major Group 35  industrial truck manufacturers ( i. e., forklifts) Less than 750 employees Major Group 35  all other nonroad equipment manufacturers Less than 500 employees Major Group 35 One small engine manufacturer and 5 small equipment manufacturers agreed to serve as Small Entity Representatives ( SERs) throughout the SBAR Panel process for this proposal. These companies represented the nonroad market well, as the group of SERs consisted of businesses that manufacture various types of nonroad diesel equipment. 132 The following are the provisions recommended by the SBAR Panel. As described in section III. B above, there are other provisions that apply to all equipment manufacturers; however, the discussion in this section focuses mainly on small entities.

1. Nonroad Diesel Small Engine Manufacturers a. Lead Time Transition Provisions for Small Business Engine Manufacturers i. Panel Recommendations and Our Proposal The transition provisions recommended by the SBAR Panel for engines produced or imported by small entities are listed below. For all of the provisions, the Panel recommended that small business engine manufacturers and small importers must have certified engines in model year 2002 or earlier in order to take advantage of these provisions. Each manufacturer would be limited to 2,500 units per year as this number allows for some market growth. The Panel recommended these stipulations in order to prohibit the misuse of the transition provisions as a tool to enter the nonroad diesel market or to gain unfair market position relative to other manufacturers.

Currently, certified nonroad diesel engines produced by small manufacturers all have a horsepower rating of 80 or less. At proposal, we considered both a one step approach, and the two step approach which we are finalizing today. Due to the structure of the standards and their timing, EPA proposed transition provisions for small business engine manufacturers which encompassed both approaches recommended by the Panel, with the inclusion of the 2,500 unit limit ( as suggested by the Panel) for each manufacturer. Given the two step structure of the final rule, we are only providing those proposed provisions related to that approach ( a complete description of the provisions proposed by the Panel, and also by specific Panel members, is located in the SBAR Final Panel Report).

For a two step approach the Panel recommended that: ° an engine manufacturer should be allowed to skip the first phase and comply on time with the second; or, ° a manufacturer could delay compliance with each phase of standards for up to three years.

We proposed the following provisions in the NPRM ( based on available data, we believe that there are no small manufacturers of nonroad diesel engines above the 75 175 hp category): With regard to PM ° Engines under 25 hp and those between 75 and 175 hp have only one standard so the manufacturer could delay compliance with these standards for up to three years. ° For engines between 50 and 75 hp, we proposed to delay compliance for one year if the 2008 interim standards are met, with the stipulation that small business 133 manufacturers cannot use PM credits to meet the interim standard. However, if a small manufacturer elects the optional approach to the standard ( elects to skip the interim standard), no further relief will be provided. With regard to NO X ° There is no change in the level of the NO X standard for engines under 25 hp and those between 50 and 75 hp, so we did not propose any special provisions for these categories. ° For engines in the 25 50 hp and the 75 175 hp categories we proposed a three year delay in the program consistent with the one phase approach recommendation above.

ii. What We are Finalizing We are finalizing all of the provisions set out above for NO X. For PM, we are finalizing some of the proposed provisions with certain revisions, as described below. In finalizing these provisions, we considered not only the recommendations of the Panel, but also the public comments on the proposed small business engine manufacturer transition provisions. Extensions of an applicable standard also apply to all certification requirements associated with that standards ( so that transient and NTE testing would not be required until expiration of the extension). Based on available data, and further conversations with manufacturers during the development of this rulemaking ( documented in the administrative record), we have found no small business manufacturers of nonroad diesel engines above 175 hp.

For engines under 25 hp: ° PM a manufacturer may elect to delay compliance with the standard for up to three years. ° NO X  there is no change in the level of the existing NO X standard for engines in this category, so no special provisions are being provided.

For engines in the 25 50 hp category: ° PM manufacturers must comply with the interim standards ( the Tier 4 requirements that begin in model year 2008) on time, and may elect to delay compliance with the 2013 Tier 4 requirements ( 0.02 g/ bhp hr PM standard) for up to three years. Due to an oversight at proposal, we did not include transition provisions for this category in the NPRM, but there is no reason to exclude them when all other small business engines are eligible for extensions. We therefore are adopting a three year extension with today's action. As engines in this category must meet the 2008 standard, we are not conditioning this three year extension on meeting this standard. ( Please note the distinction between these engines and engines in the 50 75 hp power band, where we are conditioning a three year extension on meeting the 2008 standards. The difference is that engines in the 50 75 hp category have an option of whether or not to meet those 2008 standards. 134 We consequently have structured the small business engine extension to encourage a choice to comply with those standards.) ° NO X  a manufacturer may elect to delay compliance with the standard for up to three years.

For engines in the 50 75 hp category: ° As proposed, EPA is adopting special provisions for these engines, reflecting the special provisions in the rules which give engine manufacturers the choice of meeting an interim standard for PM in 2008 and meeting the aftertreatment based standard in 2013, or meeting the aftertreatment based standard in 2012 without meeting an interim standard. A small business engine manufacturer may delay compliance with the 2013 Tier 4 requirement of 0.02 g/ bhp hr PM for up to three years provided that it complies with the interim Tier 4 requirements that begin in model year 2008 on time, without the use of credits. We proposed an extension of only one year, but this would be inconsistent with the extension period we are adopting, and which we proposed, for all of the other power categories. In addition, this provision for 50 75 hp engines is structured to encourage small business engine manufacturers to opt for early PM reductions by meeting the 2008 interim PM standard, so that an extension of three years is appropriate as an incentive. We are requiring that these engines achieve the 2008 standard without use of credits to assure that there be improvements in actual performance by engines certifying to the standard. We believe that such assurance is a necessary and reasonable balance for the three year additional lead time for meeting the aftertreatment based standard. There were no adverse comments on conditioning the extension in this manner. In the alternative, a manufacturer may elect to skip the interim standard completely. However, manufacturers choosing this option will receive only one additional year for compliance with the 0.02 g/ bhp hr standard ( i. e. compliance in 2013, rather than 2012). These engines would already have had eight years of lead time to prepare for the PM standard without any diversion of resources to meet an interim PM standard, so that an extension of longer than one year would not be appropriate, within the meaning of section 213 ( b) of the Act. In addition, structuring the extension in this way encourages small engine manufacturers to choose to meet the 2008 interim standard for PM, furthering the objective of early PM emission reductions. ° NO X  there is no change in the NO X standard for engines in this category, therefore no special provisions are being provided.

For engines in the 75 to 175 hp category: ° PM a manufacturer may elect to delay compliance with the standard for up to three years. ° NO X  a manufacturer may elect to delay compliance with the standard for up to three years. 135 These provisions are also set out below in the following table ( in all instances, these engines must meet the previously applicable standards as set out in § 1039.104 ( c):

Horsepower Category Provision < 25 hp NO X No special provisions are being provided PM Manufacturers may delay compliance with the standard for three years 25  50 hp NO X Manufacturers may delay compliance with the standard for three years PM Manufacturers must comply with the interim standards in 2008, and may delay compliance with the 2013 Tier 4 requirements ( 0.02 g/ bhp hr PM standard) for three years 50  75 hp NO X No special provisions are being provided PM Manufacturers must comply with the interim Tier 4 requirements in 2008, without the use of credits, and may elect to delay compliance with the 2013 Tier 4 requirements ( 0.02 g/ bhp hr PM standard) for three years  OR

Manufacturers may skip the interim standard completely, and will receive an additional year for compliance with the 0.02 g/ bhp hr PM Tier 4 standard ( i. e.

compliance in 2013, rather than 2012)

75  175 hp NO X Manufacturers may delay compliance with the standard for three years PM Manufacturers may delay compliance with the standard for three years b. Hardship Provisions for Small Business Engine Manufacturers i. Panel Recommendations and Our Proposals The Panel recommended two types of hardship provisions for small business engine manufacturers. These provisions would allow for relief in the following cases: ° a catastrophic event, or other extreme unforseen circumstances, beyond the control of the manufacturer that could not have been avoided with reasonable discretion ( i. e., fire, tornado, supplier not fulfilling contract, etc.); and ° the event where a manufacturer has taken all reasonable business, technical, and economic steps to comply but cannot.

The Panel believed that either hardship relief provision would provide lead time for up to 2 years, and that a manufacturer should have to demonstrate to EPA's satisfaction that failure to 69 The one comment that we received supported the provisions proposed for small business engine manufacturers.

136 sell the noncompliant engines would jeopardize the company's solvency. EPA may also require that the manufacturer make up the lost environmental benefit.

We proposed the Panel recommendations for hardship provisions for small business engine manufacturers. While perhaps ultimately not necessary given the phase in schedule discussed above, we stated that such provisions provide a useful safety valve in the event of unforeseen extreme hardship.

ii. What We are Finalizing We received two comments on the provisions for small business engine manufacturers. SBA's Office of Advocacy commented that the rule would impose significant burdens on a substantial number of small entities with little corresponding environmental benefit; and further, that we should exclude smaller engines ( those under 75 hp) from further regulation in order to comply with the Regulatory Flexibility Act and fulfill the requirement of reducing the burden on small engine classes. As proposed, we are not adopting standards based on performance of NO X aftertreatment technologies for engines under 75 hp. As described in more detail in section II of this preamble, the Summary and Analysis of Comment Document, and the RIA, we have found no factual basis supporting the assertion that standards for PM for engines between 25 and 75 hp based on use of advanced aftertreatment impose costs out of relation to environmental benefit, have a disproportionate impact on small businesses, or are otherwise inappropriate. In fact, it is our finding that these standards for PM are " appropriate" within the meaning of section 213( a)( 4) of the Clean Air Act, and that PM standards for these engines not based on performance of advanced aftertreatment would be inappropriate as failing to reflect standards based on available treatment for these engines ( taking into account costs, noise, safety, and energy factors). We received no adverse comments from small business engine manufacturers on the proposed transition provisions for those manufacturers. 69 Accordingly, we are finalizing the small business engine manufacturer hardship provisions that we proposed in the NPRM ( as recommended by the Panel). We believe that these provisions will provide adequate regulatory flexibility for these manufacturers, while remaining consistent with the requirements of section 213( a)( 4) and 213 ( b) of the Clean Air Act.

c. Other Small Business Engine Manufacturer Issues i. Panel Recommendations and Our Proposals The Panel also recommended that an ABT program be included as part of the overall rulemaking program. In addition, the Panel suggested that EPA take comment on including specific ABT provisions for small business engine manufacturers. We proposed an ABT program 137 for all engine manufacturers, with this program retaining the basic structure of the current nonroad diesel ABT program.

We did not include small business engine manufacturer specific ABT provisions in the proposal. Discussions during the SBAR process indicated that small volume manufacturers would need extra time to comply due to cost and personnel constraints, and there is little reason to believe that small business manufacturer specific ABT provisions could create an incentive to accelerate compliance.

ii. What We are Finalizing As discussed above in section III. B, we are finalizing an ABT program in today's action similar to that already in place for nonroad engine manufacturers. We have also made a number of changes to accommodate implementation of these new emission standards.

2. Small Nonroad Diesel Equipment Manufacturers a. Transition Provisions for Small Business Equipment Manufacturers i. Panel Recommendations and Our Proposals The Panel recommended that we adopt the transition provisions described below for small business manufacturers and small business importers of nonroad diesel equipment. These transition provisions are similar to those in the Tier 2/ 3 rule ( see 40 CFR 89.102). The recommended transition provisions were as follows:

° Percent of Production Allowance: Over a seven model year period, equipment manufacturers may install engines not certified to the new emission standards in an amount of equipment equivalent to 80 percent of one year's production. This is to be implemented by power category with the average determined over the period in which the flexibility is used.

° Small Volume Allowance: A manufacturer may exceed the 80 percent allowance in seven years as described above, provided that the previous Tier engine use does not exceed 700 total over seven years, and 200 in any given year. This is limited to one family per power category. Alternatively, the Panel recommended, at the manufacturer's choice by hp category, a program that eliminates the " single family provision" restriction with revised total and annual sales limits as shown below:  for categories < 175 hp 525 previous Tier engines ( over 7 years) with an annual cap of 150 units ( these engine numbers are separate for each hp category defined in the regulations) 70 The Panel recognized that, similar to the Tier 2/ 3 standards, it may be necessary to provide transition provisions for all equipment manufacturers, not just for small entities, and the Panel recommended that this be taken into account.

138  for categories of > 175 hp 350 previous Tier engines ( over 7 years) with an annual cap of 100 units ( these engine numbers are separate for each hp category defined in the regulations)

The Panel recommended that EPA seek comment on the total number of engines and annual cap values listed above. In contrast to the Tier 2/ Tier3 rule, the SBA Office of Advocacy expected the transition to the Tier 4 technology will be more costly and technically difficult. Therefore, the small business equipment manufacturers may need more liberal flexibility allowances especially for equipment using the lower hp engines. The Panel's recommended flexibility may not adequately address the approximately 50 percent of small business equipment models where the annual sales per model is less than 300 and the fixed costs are higher. Thus, the SBA Office of Advocacy and the Office of Management and Budget ( OMB) Panel members recommended that comment be sought on implementing the small volume allowance ( 700 engine provision) for small business equipment manufacturers without a limit on the number of engine families which could be covered in any hp category.

° Due to the changing nature of the technology as the manufacturers make the transition from Tier 2 to Tier 3 and Tier 4, the Panel recommended that the equipment manufacturers be permitted to borrow from the Tier3/ Tier 4 flexibilities for use in the Tier 2/ Tier 3 time frame.

° Lastly, the Panel recommended proposing a continuation of the current transition provisions, without modifications to the levels or nature of the provisions, that are available to these manufacturers.

To maximize the likelihood that the application of these provisions will result in the availability of previous Tier engines for use by the small business equipment manufacturers, the Panel recommended that  similar to the application of flexibility options that are currently in place  these provisions should be provided to all equipment manufacturers. 70 We did in fact propose the Percent of Production and Small Volume Allowances listed above for all equipment manufacturers, and explicitly took the Panel report into account in making that proposal. We also requested comment on a number of additional items, some of which were proposed by the Panel ( see section III. B above). 139 ii. What We are Finalizing We are finalizing the Percent of Production and Small Volume Allowances for all equipment manufacturers, with a few changes. Some non small equipment manufacturers commented that the small volume provision should enable manufacturers to exempt up to 700 pieces of equipment over a seven year period, with no engine family restriction. As explained earlier in section III. B. 2. c, we are finalizing provisions that allow manufacturers to choose between two options: a) manufacturers would be allowed to exempt 700 pieces of equipment over seven years, within one engine family; or b) manufacturers using the small volume allowance could exempt 525 machines over seven years ( with a maximum of 150 in any given year) for each of the three power categories below 175 horsepower, and 350 machines over seven years ( with a maximum of 100 in any given year) for the two power categories above 175 horsepower. Concurrent with the revised caps, manufacturers could exempt engines from more than one engine family under the small volume allowance program. As explained earlier, based on sales information for small businesses, we estimated that the alternative small volume allowance program to include lower caps and allow manufacturers to exempt more than one engine family would keep the total number of engines eligible for the allowance at roughly the same overall level as the 700 unit program. The Agency believes that these provisions will afford manufacturers the type of transition leeway recommended by the Panel. Further, these transition provisions could allow small business equipment manufacturers to postpone any redesign needed on low sales volume or difficult equipment packages, thus saving both money and strain on limited engineering staffs. Within limits, small equipment manufacturers would be able to continue to use their current engine/ equipment configuration and avoid out of cycle equipment redesign until the allowances are exhausted or the time limit passes.

During the SBREFA Panel process, the Panel discussed the possible misuse of the transition provisions by using them as a loophole to enter the nonroad diesel equipment market or to gain unfair market position relative to other manufacturers. See 68 FR at 28481. EPA was concerned that importers of equipment from a foreign equipment manufacturer could, as a group, import more exempted equipment from that foreign manufacturer than 80 percent of that manufacturer's production for the United States market or more than the small volume allowances identified in the transition provisions. This would create a potentially significant disparity between the treatment of foreign and domestic equipment manufacturers. EPA did not intend this outcome, and did not believe it was needed to provide reasonable lead time to foreign equipment manufacturers. The Panel recognized that this was a possible problem, and believed that a requirement that small equipment manufacturers and importers must have reported equipment sales using certified engines in model year 2002 or earlier in order to be eligible to access the transition provisions was sufficient to alleviate this problem. Upon further analysis during the development of the proposal, EPA decided to limit the availability of transition provisions to entities that install engines and have primary responsibility for designing and manufacturing equipment and included such a requirement in the proposal. Id. at 28477. Therefore, a company that only imported equipment, and had no involvement in the actual manufacturing of the equipment, would be ineligible to access the transition provisions. As 140 described in section III. B. 4, we are finalizing the proposed requirements associated with the use of transition provisions by foreign importers. Therefore, we no longer believe it is necessary to have a separate requirement that small equipment manufacturers and importers have reported equipment sales using certified engines in model year 2002 or earlier, and therefore are not finalizing this redundant provision.

We are also finalizing the Panel's recommendation that equipment manufacturers be allowed to borrow from Tier 4 flexibilities in the Tier2/ 3 time frame. See the more extended discussion on this issue in section III. B. 2. d above.

We are not finalizing the Panel recommendation of a provision allowing small manufacturers to request limited " application specific" alternative standards for equipment configurations which present unusually challenging technical issues for compliance. We do not believe that the need for such a provision has been established, and further, it could likely provide more lead time than can be justified, and undermine emission reductions which are achievable. Moreover, no participant in the SBAR process or during the public comment period offered any empirical support that such a problem even exists. Nor have such issues been demonstrated ( or raised) by equipment manufacturers, small or large, in implementing the current nonroad standards. In addition, we believe that any application specific difficulties can be accommodated by the transition provisions the Agency is proposing including ABT.

We are also finalizing two additional provisions for all equipment manufacturers that small business equipment manufacturers may take advantage of. These provisions are the Technical Hardship Provision and the Early Tier 4 Engine Incentive Program. Both provisions are discussed in greater detail in sections III. B. 2. b and e above.

b. Hardship Provisions for Small Business Equipment Manufacturers i. Panel Recommendations and Our Proposals The Panel also recommended that two types of hardship provisions be extended to small business equipment manufacturers. These provisions would allow for relief in the following cases:

° a catastrophic event, or other extreme unforseen circumstances, beyond the control of the manufacturer that could not have been avoided with reasonable discretion ( i. e., fire, tornado, supplier not fulfilling contract, etc.).

° the event where a manufacturer has taken all reasonable business, technical, and economic steps to comply but cannot. In this case relief would have to be sought before there is imminent jeopardy that a manufacturer's equipment could not be sold and a manufacturer would have to demonstrate to the Agency's satisfaction that failure to get permission to sell equipment with a previous Tier engine would create a serious economic hardship. Hardship relief of this nature cannot be 141 sought by an ` integrated' manufacturer ( one which also manufactures the engines for its equipment).

We proposed that the hardship provisions recommended by the Panel be extended to small business equipment manufacturers in addition to the transition provisions described above. We also requested comment on the stipulation that, to be eligible for these hardship provisions ( as well as the other proposed transition provisions), equipment manufacturers and importers must have reported equipment sales using certified engines in model year 2002 or earlier.

ii. What We are Finalizing We are finalizing the Panel recommended hardship provisions for small business equipment manufacturers ( which are the same provisions that are being adopted for all equipment manufacturers).

EPA also received comment concerning the situation faced by small business equipment manufacturers using engines in the 25 50 horsepower range. The concern was raised that small businesses in this power grouping will face a greater relative burden in designing equipment for engines with aftertreatment, and that they may need additional lead time beyond that provided by the small volume allowances. EPA believes that in general the small volume allowances should provide reasonable lead time opportunity for these manufacturers, but recognizes that there may be individual cases where more lead time would be appropriate for small business manufacturers in this power category. EPA is therefore adopting a technical hardship provision similar to that adopted for the percent of production allowance. Small business manufacturers using engines in the 25 50 hp range could petition EPA to approve additional needed lead time in appropriate, individualized circumstances, based on a showing of extreme technical or engineering hardship as provided in 40 CFR 1039.625( m). EPA could approve additional small volume allowances, up to a total number of 1100 units. This total number includes the allowances that are already available under the rule without request. These additional allowances could only be used for engines in the 25 50 horsepower range, and could only be approved for qualifying small business equipment manufacturers. The limitations on the use of small volume allowances ( such as when allowances may only be used within a single engine family and the annual limits) continue to apply to the standard allowances ( that are available under the rule without request). Finally, any additional allowances granted under this provision would have to be used within 36 months after the transition flexibility period commences for these engines. The additional allowances would not be subject to the annual limits noted earlier but they could only be used after the maximum amount of standard allowances are used in a given year ( e. g., a manufacturer using the 700 unit allowance would have to use 200 of their standard allowances for that year before they could use any of the additional allowances granted by EPA under this technical hardship provisions).

EPA recognizes that it is important to facilitate the process for small business equipment manufacturers to seek such approval, and intends to work with small manufacturers so that any transaction costs for them or for EPA can be minimized. For example, EPA could consider at one 142 time a common request from similarly situated small business equipment manufacturers, as long as all of the necessary individual information for each applicant were provided. Given that information in such an application would still be both company and fact specific ( and likely confidential as well), and that the criteria for relief as well as the scope of appropriate relief are case specific, we would necessarily evaluate and decide whether or not to approve additional small volume allowances on a company by company, case by case basis.

For a detailed description of the comments received on small business engine and equipment manufacturer issues, please refer to the Summary and Analysis of comments, which is a part of the rulemaking record ( E DOCKET number OAR 2003 0012, and legacy docket number A 2001 28). A summary of the SBREFA process is located in section X. C of this preamble.

D. Certification Fuel It is well established that measured emissions may be affected by the properties of the fuel used during the test. For this reason, we have historically specified allowable ranges for test fuel properties such as cetane number and sulfur content. These specifications are intended to represent most typical fuels that are commercially available in use. This helps to ensure that the emissions reductions expected from the standards occur in use as well as during emissions testing.

We are establishing all 6 provisions that we proposed related to the sulfur content of fuel used in conducting nonroad diesel engine emissions testing: ° 300 500 ppm for model year 2008 to 2010 engines, ° 7 15 ppm for 2011 and later model year engines, ° Extension through model year 2007 of the maximum 2000 ppm specification for Agency testing on pre Tier 4 engines, ° 7 15 ppm for 2007 2010 model year engines that use sulfur sensitive technology, ° 7 15 ppm for 2008 2010 model year engines under 75 hp, ° 300 500 ppm for some model year 2006 2007 engines at or above 100 hp. The last 3 of these provisions are at the certifying manufacturer's option, and involve additional measures that the manufacturer must take to help ensure that the specified fuel is used in the field. The below discussion provides more detail on each of these provisions.

We received very little comment on our proposed certification fuel provisions. Detroit Diesel commented that we should set a maximum sulfur specification of 500 ppm for Tier 3 engines, which we are in fact doing beginning in model year 2008 after this fuel is introduced in the nonroad market, and optionally allowing as early as 2006, the earliest Tier 3 model year, provided manufacturers take steps to encourage the use of this fuel, as discussed below.

Because we are lowering the upper limit for in use nonroad diesel fuel sulfur content to 500 ppm in 2007, and again to 15 ppm in 2010, we are also establishing new ranges of allowable sulfur content for testing. These are 300 to 500 ppm ( by weight) for model year 2008 to 2010 71 See 66 FR 5112 5113 ( January 18, 2001) where we adopted a similar approach to certification fuels for highway heavy duty diesel engines ( HDDEs).

143 engines, and 7 to 15 ppm ( by weight) for 2011 and later model year engines. We believe that these ranges best correspond to the fuels that diesel machines will potentially see in use. 71 These specifications will apply to emission testing conducted for certification, selective enforcement audits, in use, and NTE testing, as well as any other laboratory engine testing for compliance purposes for engines in the designated model years. Any compliance testing of previous model year engines will be done with the fuels designated in our regulations for those model years. Note that, as proposed, we are allowing certification with fuel meeting the 7 to 15 ppm sulfur specification in 2010 for under 11 hp, air cooled, hand startable, direct injection ( DI) engines certified under the optional standard provision discussed in section II. A. 3. a.

It is important to note that while these specifications include the maximum sulfur level allowed for in use fuel, we believe that it is generally appropriate to test using the most typical fuels. As for highway fuel, we expect that, under the 15 ppm maximum sulfur requirement, refineries will typically produce diesel fuel with about 7 ppm sulfur, and that the fuel could have slightly higher sulfur levels after distribution. Thus, we expect that we will use fuel having a sulfur content between 7 and 10 ppm sulfur for our emission testing. This is the same as the range we indicated will be used for heavy duty diesel engine ( HDDE) engine testing in model year 2007 and later ( 66 FR 5002, January 18, 2001). As with the highway fuel, should we determine that the typical in use nonroad diesel fuel has significantly more sulfur than this, we would adjust this target upward.

We are also adopting two options for early use of the new 7 to 15 ppm sulfur diesel test fuel. The first will be available beginning in the 2007 model year for engines employing sulfur sensitive technology. ( Model year 2007 coincides approximately with the introduction of 15 ppm highway fuel.) This allowance to use the new fuel in model years before 2011 will only be available for engines which the manufacturer demonstrates will be operated in use on fuel with 15 ppm sulfur or less. Any testing that we perform on these engines will also use fuel meeting this lower sulfur specification. This optional certification fuel provision is intended to encourage the introduction of low emission diesel technologies in the nonroad sector. These engines will be able to use the lower sulfur fuel throughout their operating life, given the early availability of this fuel under the highway program, and the assured availability of this fuel for nonroad engines by mid 2010.

Considering that our Tier 4 program will subject engines under 75 hp to new emission standards in 2008 when 15 ppm maximum sulfur fuel will be readily available from highway fuel pumps ( and will enter the nonroad fuel market shortly after in 2010), we believe it is appropriate to provide a second, less proscriptive, option for use of 15 ppm sulfur certification fuel. This option will be available to any manufacturers willing to take extra steps to encourage the use of this fuel before it is required in the field. We are allowing the early use of 15 ppm certification fuel for 2008 2010 engines under 75 hp, provided the certifying manufacturer ensures that 144 ultimate purchasers of equipment using these engines are informed that the use of fuel meeting the 15 ppm specification is recommended, and also recommends to equipment manufacturers buying these engines that labels be applied at the fuel inlet to remind users of this recommendation. This option does not apply to those 50 75 hp engines not being certified to the 0.22 g/ bhp hr PM standard, under the manufacturers' option discussed in section II. A. 1. a.

We believe that there may be a very small loss of emissions benefit from any of these engines for which the operator chooses to ignore the recommendation. This is because the engine manufacturer will be designing the engine to comply with the emissions standards when tested using 15 ppm fuel, potentially resulting in slightly higher emissions when it is not operated on the 15 ppm fuel. We also believe, however, that this is more than offset overall by the encouragement this provision provides for early use of 15 ppm fuel. We are not making this option available for engine designs employing oxidation catalysts or other sulfur sensitive exhaust emission control devices except under the more restrictive provision for early use of 15 ppm fuel described above, involving a demonstration by the manufacturer that the fuel will indeed be used. Because these devices could potentially have very high sulfur to sulfate conversion rates ( see section II. B. 4 and 5 above), and because very high sulfur fuels will still be available to some extent, we believe that allowing this provision for these engines would risk very high PM emissions until the 15 ppm nonroad fuel is introduced. We are not making this second early 15 ppm test fuel option available for engines not subject to a new Tier 4 standard in 2008 as these engines should already be designed to meet applicable standards in earlier years without need for the 15 ppm fuel.

We are also adopting a similar provision for use of certification fuel meeting the 300 500 ppm sulfur specification before the 2008 model year. We believe certification of model year 2006 and 2007 engines being designed without the use of sulfur sensitive technologies to meet new Tier 2 or Tier 3 emission standards taking effect in those years ( 2006 for engines at or above 175 hp and 2007 for 100 175 hp engines) should be able to use this fuel, provided the certifying manufacturer is willing to take measures equivalent to those discussed above to encourage the early use of this fuel ( a recommendation to the ultimate purchaser to use fuel with 500 ppm maximum sulfur and a recommendation to equipment manufacturers to so label their equipment).

The widespread availability of 500 ppm sulfur highway fuel, the short time that these 2006 and 2007 engines could use higher sulfur fuels if an operator were to ignore the recommendation, and the eventual use of 15 ppm sulfur fuel in most of these engines for most of their operating lives, gives us confidence that this provision to encourage early use of lower sulfur fuel will be beneficial to the environment overall. As with the change to 300 500 ppm cert fuel for model years 2008 2010, engine manufacturers will design their engines to comply based on the test fuel specifications for certification and compliance testing. The change from a fuel specification for compliance testing that ranges up to 2000 ppm sulfur for Tier 2 and 3 engines to a specification of 500 ppm sulfur maximum could have some limited effect on the emissions control designs used on these Tier 2 and 3 engines, in that it will be slightly easier to meet the Tier 2 and 3 standards using the lower sulfur test fuel. In general, it is reasonable to set specifications of test fuel reflecting representative in use fuels, and here the engines are expected to be using fuel with sulfur levels of 145 500 ppm or lower until 2010, and 15 ppm or lower after that. In this case, any impact on expected engine emissions from this change in test fuel for Tier 2 and 3 is expected to be slight.

We note that under current regulations manufacturers are already allowed to conduct testing with certification fuel sulfur levels as low as 300 ppm. The additional provision for early use of 300 500 ppm sulfur test fuel will, however, result in any compliance testing conducted by the Agency being done with fuel meeting the 300 500 ppm specification. Likewise choice of the option for early use of 15 ppm sulfur test fuel would result in any Agency testing being done using that fuel. However, under both of these early certification fuel options involving a recommended fuel use provision, the Agency will not reject engines from in use testing for which there is evidence or suspicion that the engine had been fueled at some time with higher sulfur fuel.

Finally, we are extending a provision adopted in the 1998 final rule ( 63 FR 56967, October 23, 1998). In that rule we set a 2000 ppm upper limit on the test fuel sulfur concentration for any testing to be performed by the Agency on Tier 1 engines under 50 hp and Tier 2 engines at or above 50 hp. We did not extend this provision to later model year engines at that time because we felt that more time was needed to assess trends in fuel sulfur levels for fuels used in nonroad diesels. At this time we are not aware of any additional information that would indicate that a change in this test specification is warranted. More importantly, because the fuel regulation we are adopting will make 500 ppm maximum sulfur nonroad diesel fuel available by mid 2007, Tier 3 engines at or above 50 hp ( which phase in beginning in 2006) will be in the field for only 1 ½ years prior to the in use introduction of 500 ppm fuel, and Tier 2 engines under 50 hp ( which phase in beginning in 2004) will be in the field for at most 3 ½ years prior to this time. We believe it is appropriate to avoid adding the unnecessary complication of frequent multiple changes to the test fuel specification. We are therefore extending the 2000 ppm limit to testing conducted on engines until the 2008 model year when the 500 ppm maximum test fuel sulfur level takes effect as discussed above.

E. Temporary In Use Compliance Margins The Tier 4 standards will be challenging for diesel engine manufacturers to achieve, and will require manufacturers to develop and adapt new technologies for a large number and wide variety of engine platforms. Not only will manufacturers be responsible for ensuring that these technologies enable compliance with Tier 4 standards at the time of certification, they will also have to ensure that these technologies continue to be highly effective in a wide range of in use environments so that their engines will comply in use when tested by EPA. Furthermore, for the first time, these nonroad diesel engines will be subject to transient emissions control requirements and to NTE standards.

However, in the early years of a program that introduces new technology, there are risks of in use compliance problems that may not appear in the certification process or during developmental testing. Thus, we believe that for a limited number of model years after new standards take effect it is appropriate to adjust the compliance levels for assessing in use 146 compliance for diesel engines equipped with high efficiency exhaust emissions control devices. This provides assurance to the manufacturers that they will not face recall if they exceed standards by a small amount during this transition to clean technologies. This approach is very similar to that taken in the light duty highway Tier 2 final rule ( 65 FR 6796, February 10, 2000) and the highway heavy duty rule ( 66 FR 5113 5114, January 18, 2001), both of which involve similar approaches to introducing the new technologies. In fact, the similarities of nonroad diesel engines and expected Tier 4 control technologies to counterpart engines and technologies for heavy duty highway diesel engines led us to model the proposed Tier 4 add on provisions after the 2007 heavy duty highway diesel program, with add on levels chosen to be roughly equivalent to the levels adopted in the highway rule.

Comments on the proposal were received from engine manufacturers, requesting changes that would make the temporary in use adjustments more closely parallel the highway requirements. Specifically, they requested: ( 1) providing two full model years of applicability following the completion of standards phase in for the 75 175 hp category, as was proposed for the other power categories, ( 2) adjusting the NO X threshold for applicability of the provisions to a level 8% above the split family standard, ( 3) adopting 3 levels of add ons based on how many hours the test engine had been used, with cutpoints at 2000 and 3400 hours, and ( 4) a 25% upward adjustment to the add on levels. We agree that these changes would result in a closer approximation to the highway program. Our goal in proposing provisions somewhat different from the highway program was to avoid unnecessary complexity. However, we believe that maintaining consistency with the highway program is a more important goal and the manufacturers' suggested changes do not overly complicate the program, and so we have decided to make these changes.

We note too that changes we are making to the Tier 4 program for engines over 750 hp necessitate other changes to the in use add on program for these engines as well. Specifically, these are the extension of model year applicability to 2016, two years after the final Tier 4 standards take effect, and the clarification of what PM thresholds apply for engines used in generator sets and for other engines.

Table III. E 1 shows the in use adjustments that we will apply. These in use add on levels will be applied only to engines certified in the indicated model years and having FELs ( or certifying to standards without FELs) at or below the specified threshold levels. These adjustments are added to the appropriate FELs ( see section III. A) or, for engines certified to the standards without the use of ABT program credits, to the standards themselves, in determining the in use compliance level for a given in use hours accumulation on the engine being tested. Note that the PM adjustment is the same for all in use hours accumulation. Note also that, because the standards in the regulations are expressed in g/ kW hr, the adjustments included in the regulations are set at levels that make the resulting adjusted in use standard equivalent in stringency to the standards in this preamble ( expressed in g/ bhp hr) adjusted by the values in Table III. E 1 ( also expressed in g/ bhp hr). 147 Note too that, as part of the certification demonstration, manufacturers will still be required to demonstrate compliance with the unadjusted Tier 4 certification standards using deteriorated emission rates. Therefore, the manufacturer will not be able to use these in use standards as the design targets for the engine. They will need to project that most engines will meet the standards in use without adjustment. The in use adjustments will merely provide some assurance that they will not be forced to recall engines because of some small miscalculation of the expected deterioration rates.

Table III. E 1.   Add on Levels Used in Determining In use Standards Engine Power Model Years NOX PM Add On Level a ( g/ bhp hr) for operating hours Add On Level b ( g/ bhp hr)

25

hp < 75 ( 19

kW < 56) 2013 2014 none 0.01 75

hp < 175 ( 56

kW < 130) 2012 2016 0.12

2000 0.01 0.19 2001 3400 0.25 > 3400 175

hp

750 ( 130

kW

560) 2011 2015 0.12

2000 0.01 0.19 2001 3400 0.25 > 3400 hp > 750 ( kW > 560) 2011 2016 0.12

2000 0.01 0.19 2001 3400 0.25 > 3400 Notes:

a Applicable only to those engines certifying to standards or with FELs at or below 1.6 g/ bhp hr NOX.

b Applicable only to those engines certifying to standards or with FELs at or below the filter based Tier 4 PM standards ( 0.01 g/ bhp hr for 75 750 hp engines, 0.02 g/ bhp hr for 25 75 hp engines and for > 750 hp engines in generator sets, and 0.03 g/ bhp hr for all other > 750 hp engines).

F. Test Cycles 72 See EPA Dear Manufacturer Letter VPCD 98 13, " Heavy duty Diesel Engines Controlled by Onboard Computers: Guidance on Reporting and Evaluating Auxiliary Emission Control Devices and the Defeat Device Prohibition of the Clean Air Act," October 15, 1998 and EPA Advisory Circular 24 3,

" Implementation of Requirements Prohibiting Defeat Devices for On Highway Heavy Duty Diesel Engines." A copy of both of these documents is available in EPA Air Docket A 2001 28.

73 Letter from Jed Mandel of the Engine Manufacturers Association to Chet France of US EPA,

Office of Transportation and Air Quality, " Development of appropriate transient test cycle for variable speed land based compression ignition non road engines," Air Docket A 2001 28, II B 33.

148 1. Transient Test In the 1998 final rule that set new emission standards for nonroad diesel engines, EPA expressed a concern that the steady state test cycles used to demonstrate compliance with emission standards did not adequately reflect transient operation as many nonroad engines are used in applications that are largely transient in nature and would not therefore yield adequate control of emissions in use ( 63 FR 56984, October 23, 1998). Although we were not prepared to adopt a transient test at that time, we announced our intention in that final rule to move forward with the development of such a test. This development progressed steadily and has resulted in the creation of the Nonroad Transient Composite ( NRTC) test cycle which we are adopting in our Tier 4 nonroad diesel program. The NRTC cycle supplements the existing nonroad steady state test requirements. Thus, most nonroad engines subject to today's Tier 4 standards will be required to certify using both of these tests. 72 The NRTC cycle captures transient emissions over much of the typical nonroad engine operating range, and thus helps to ensure effective control of all regulated pollutants. The speed and load operating schedule for EPA's NRTC test cycle is described in regulations at 40 CFR 1039.505. A detailed discussion of the transient test cycle and its derivation is contained in chapter 4.2 of the RIA for this rule.

We expect that this transient test requirement will significantly reduce real world emissions from nonroad diesel equipment. Proper transient operation testing captures engine emissions from the broad range of engine speed and load combinations that the engine may attain in use, while the steady state emission test characterizes emissions at the few isolated operating points that may be typical for that family of engines. Testing for transient emissions will likewise identify emissions which result from the operation of the engine, as with speed and load changes, turbocharger lag, etc.

In keeping with our goal to maximize the harmonization of emissions control programs as much as possible, we have developed this cycle in collaboration with nonroad engine manufacturers and regulatory bodies, both domestic and foreign, over the last several years. 73 Further, the NRTC cycle has been introduced as a work item for possible adoption as a potential 74 Informal Document No. 2, ISO  45th GRPE, " Proposal for a Charter for the Working Group on a New Test Protocol for Exhaust Emissions from Nonroad Mobile Machinery," Jan. 13 17, 2003, Air Docket A 2001 28, document II A 171.

149 global technical regulation under the 1998 Agreement for Working Party 29 at the United Nations. 74 EPA's nonroad transient test will apply ( with one exception noted below) to a nonroad diesel engine when that engine must first show compliance with EPA's Tier 4 PM and NO X+ NMHC emissions standards which are based on the performance of the advanced postcombustion emissions control systems ( e. g. catalyzed diesel particulate filters and NO X adsorbers). This is 2011 for engines at 175 hp  750 hp, 2012 for 75  175 hp engines ( 2012, as well, for 50  75 hp engines made by a manufacturer choosing the option to not comply with the 2008 transitional PM standard.), and 2013 for engines under 75 hp. The transient test cycle will not apply to engines greater than 750 hp. Specific provision is made for engines under 25 hp for PM and under 75 hp for NO X ( which are not based on performance of advanced aftertreatment). Constant speed, variable load engines of any horsepower category currently certify to EPA's 5 Mode Steady State duty cycle and are not subject to transient duty cycle testing. As with current nonroad diesel standards, today's Tier 4 emission standards will apply to certification, Selective Enforcement Audits ( SEAs) and to recall testing of equipment in use for all engines subject to these standards.

Table III. F 1.   Implementation Model Year for Nonroad Transient Testing Power Category Transient Test Implementation Model Years < 25 hp 2013 25

hp < 75 2013 75

hp < 175 2012 175

hp < 750 2011 In addition, any engines for which an engine manufacturer ( see section III. M) or equipment maker ( see section III. B. 2. c) claims credit under the incentive program for earlyintroduction engines will have to be certified to that program's standards under applicable Tier 4 nonroad transient and steady state duty cycles, e. g., NRTC, 8 mode and 5 mode steady state cycles. In turn, any 2011 or later model year engine that uses these engine count based credits will not need to demonstrate compliance under the NRTC cycle. Engines in any power category certified to an alternate NO X standard are all subject to the transient test requirement, as they clearly will be substantially redesigned to achieve Tier 4 compliance, regardless of whether or not they use high efficiency exhaust emission controls. See section II. A. 1. c above.

We solicited comment on whether the transient duty cycle should apply to NO X emissions from phase out engines ( 68 FR 28484, May 23, 2003) and received comment from EMA. EMA 75 Please note that this discussion does not apply to engines certifying to the alternative NOX phase in standards, which engines are required to meet transient and NTE requirements for gaseous pollutants ( as well as all other requirements that would apply to phase in engines). See discussion at II. A. 2. c; also please note that these engines are expressly not defined as phase out engines in the rules; see section 1039.801 and 1039.102 ( e).

76 As noted elsewhere, the TCAFs are derived identically to the Transient Adjustment Factor used in the NONROAD emissions model.

150 prefers that the transient cycle only be applicable to PM emission testing and not for NO X, NMHC and CO for phase out engine families. They believe that the application of the transient NRTC and standards could result in the need to redevelop the NO X/ NMHC/ CO emission control systems used for their members' compliance with Tier 3 standards.

We essentially agree with this comment to the extent that phase out engines do not include improvements in gaseous pollutant emission control ( i. e. they remain essentially Tier 3 engines for emissions other than PM). Imposing new requirements with respect to these engines' gaseous pollutant emissions could divert resources inappropriately. The rule therefore states ( in 40 CFR 1039.102 ( a)( 2)) that gaseous pollutant emissions from these engines are not subject to transient testing standards. This would not apply if a manufacturer declares a new NO X+ NMHC FEL for the engine family ( since the manufacturer would then already be choosing to alter these engines' performance with respect to gaseous pollutant emissions). 75 Transient testing standards do apply with respect to PM emissions from phase out engines, however. The reason is evident: the PM standard for phase out ( and phase in) engines is based on performance of aftertreatment, so the full complement of test cycles ( NTE as well as transient testing) should apply. A consequence of this is that phase out engines will generally be tested over the transient cycle, since they must do so with respect to PM emissions. We repeat, however, that although the engines will do transient testing, only PM ( and not gaseous pollutants) is subject to the transient test standard.

In addition, manufacturers choosing to certify engines under 750 hp using alternative FEL caps during the first four years that the alternative caps are available ( see section III. A. i. 2 above) will not be subject to the transient or NTE standards. However, to properly account for the transient effects when calculating credits, we are requiring the FELs of such engines to be adjusted upwards by applying a Temporary Compliance Adjustment Factor ( TCAF) 76. See 40 CFR 1039.104 ( g) ( 2).

Even though we are requiring that NRTC testing start when the PM aftertreatment based standards take effect, one should not infer that the NRTC is directed at solely ( or even primarily) at PM control. In fact, we believe that advanced NO X emission controls may be even more sensitive to transient operation than PM filters, since the PM filters ordinarily operate equally 151 effectively in all operating modes, as noted earlier. It is, however, our intent that the control of emissions during transient operation be an integral part of Tier 4 engine design considerations. We have therefore chosen to apply the transient test requirement starting with the PM filter based Tier 4 PM standards as these standards precede or accompany the earliest Tier 4 NO X or NMHC standards in all power categories except engines over 750 hp.

As EPA is not promulgating PM filter based standards for engines below 25 hp in today's rulemaking, we are likewise not requiring these engines to be tested over the NRTC test cycle until model year 2013. More broadly, though we intend for transient emissions control to be an integral part of Tier 4 design considerations, we do not believe it appropriate to mandate compliance with the transient test for the engines under 50 hp which are subject to PM standards in 2008. We recognize that transient emission testing, though routine in highway engine programs, involves a fair amount of laboratory equipment and new expertise in the nonroad engine certification process. As with the transfer of advanced emission control technology itself, we believe that the transient test requirement should be implemented first for larger displacement engines. These engines are more likely to be made by manufacturers who provide engines to the on highway market and therefore have had prior on highway engine development and certification experience. We do not believe that the smaller engines should be the power categories first charged with implementing the new transient test, as early as 2008, especially because manufacturers of these engines do not generally make highway engines and are neither as experienced nor as well equipped as their larger engine manufacturer counterparts at conducting transient cycle testing. However, to encourage earlier transient emission control in these engines, EPA will allow manufacturers of engines below 25 hp to submit data describing emission levels for their engines over the appropriate certification transient duty cycle beginning in model year 2008. We extend this option as well to manufacturers of 25 50 hp engines, subject to those engines meeting the Tier 4 transitional PM standard in 2008. Should a manufacturer choose to submit data in the 2008 2011 time frame, prior to required certification data submissions, that transient data will not be used for compliance enforcement.

EPA requested comment on whether engines greater than 750 hp should be subject to the transient cycle, noting concerns of technical difficulties and cost for these engines ( 68 FR 28484, May 23, 2003). STAPPA ALAPCO and other agencies representing the States' interests responded to EPA that all nonroad engines should be uniformly required to test their transient emissions. Likewise, they asked that the Agency not delay implementation of this particular requirement. However, at this time, the Agency is not adopting a transient emission testing requirement for engines 750 hp and over. EPA sees the burden of transient cycle testing in these very large displacement engines as being greater than the benefit of gathering transient emission measurements from them. For example, in many instances, these engines will have multiple aspiration and exhaust systems requiring a test cell designed to accommodate multiple large flow volumes in real time on a five Hertz, or faster, basis. New transient test requirements could require manufacturers to create new or expanded testing facilities to house, prepare and run transient tests on these larger engines. The space requirements, i. e., " footprint," of such facilities could make building them cost prohibitive. 77 Memorandum from Kent Helmer to Cleophas Jackson, " Applicability EPA's NRTC cycle to Nonroad Diesel Population," Air Docket A 2001 28, document II B 34.

152 Absent transient testing, these engines will still be required to certify to both steady state and NTE test requirements. Moreover, we are modifying the certification requirements to include additional information for engines under 750 hp. For more detail on this submission, see the discussion in section III. I of this preamble and 40 CFR 1039.205( p) of the regulations.

Finally, engines in this power category are found in a relatively small proportion of the nonroad equipment population and, despite the potential for large quantities of emissions from this class of engines during operation, units equipped with these engines have likewise been noted to contribute a small proportion of total diesel nonroad engine emissions. 77 Many of these largerdisplacement engines operate predominately in a constant speed fashion with few transient excursions, as with electric power generation sets ( gen sets) which make up a significant percent of these larger engines. Many of these gen sets, too, operate on an intermittent or stand by only basis. Indeed, as explained below, such constant speed, variable load engines ( for example, those certifying exclusively to the 5 mode steady state cycle) of any horsepower category are not subject to the nonroad transient test cycle.

Further, the Agency does not intend at this time to require that manufacturers use partialflow sampling systems ( PFSS) to determine PM emissions from their engines for certification. A large engine manufacturer may, however, choose to submit PM data to the Agency using PFSS as an alternative test method, if that manufacturer can demonstrate test equivalency using a paired T test and F Test, as outlined in regulations at 40 CFR 86.1306 07.

Transient testing requires consideration of statistical parameters for verifying that test engines adequately follow the prescribed schedule of speed and load values. The regulations in 40 CFR 1065.514, table 1, detail these statistical parameters, also known as cycle performance statistics. These values are somewhat different than the comparable values for highway diesel engines to take into account the characteristics of nonroad engine operation. The values are an outgrowth of the long development process for the NRTC test cycle, itself.

2. Cold Start Transient Testing Nonroad diesel engines typically operate in the field by starting and warming to a point of stabilized hot operation at least once in a workday. Such " cold start" conditions may also occur at other times over the course of the workday, such as after a lunch break. We have observed that certain test engines, which generally had emission control technologies for meeting Tier 2 or Tier 3 standards, had elevated emission levels for about 10 minutes after starting from a cold condition. The extent and duration of increased cold start emissions will likely be affected by changing technology for meeting Tier 4 standards, but there is no reason to believe that this effect will lessen. In fact, cold start concerns are especially pronounced for engines with catalytic devices for controlling exhaust emissions, because many require heating to a " light off" or peak 78 Note that this discussion applies only to engines that are subject to testing with transient test procedures. For example, this excludes constant speed engines and all engines over 750 hp.

153 efficiency temperature to begin working. See, for example, RIA section <IP_ADDRESS> and following. EPA's highway engine and vehicle programs, which increasingly involve such catalytic devices, address this by specifying a test procedure that first measures emissions with a cold engine, then repeats the test after the engine is warmed up, weighting emission results from the two tests for a composite emission measurement.

In the proposal, we described an analytical approach that led to a weighting of 10 percent for the cold start test and 90 percent for the hot start test. Manufacturers pointed out that their analysis of the same data led to a weighting of about 4 percent for cold start testing and that a high cold start weighting would affect the feasibility of the proposed emission standards. Manufacturers also expressed a concern that there would be a significant test burden associated with cold start testing.

Unlike steady state tests, which always start with hot stabilized engine operation, transient tests come closer to simulating actual in use operation, in which engines may start operating after only a short cool down ( hot start) or after an extended soak ( cold start). The new transient test and manufacturers' expected use of catalytic devices to meet Tier 4 emission standards make it imperative to address cold start emissions in the measurement procedure. 78 We are therefore adopting a test procedure that requires measurement of both cold start and hot start emissions over the transient duty cycle, much like for highway diesel engines. We acknowledge, however, that limited data are available to establish an appropriate cold start weighting. For this final rule, we are therefore opting to establish a cold start weighting of 5 percent. This is based on a typical scenario of engine operation involving an overnight soak and a total of seven hours of operation over the course of a workday. Under this scenario, the 20 minute cold start portion constitutes 5 percent of total engine operation for the day. Section II. B above addresses the feasibility of meeting the emission standards with cold start testing. Regarding the test burden associated with cold start testing, we believe that manufacturers will be able to take steps to minimize the burden by taking advantage of the provision that allows for forced cooling to reduce total testing time ( 40 CFR 1039.510( c)).

We believe the 5 percent weighting is based on a reasonable assessment of typical in use operation and it addresses the need to design engines to control emissions under cold start operation. We believe cold start testing with these weighting factors will be sufficient to require manufacturers to take steps to minimize emission increases under cold start conditions. Once manufacturers have applied technologies and strategies to minimize cold start emissions, they will be achieving the greatest degree of emission reductions achievable under those conditions. A higher weighting factor for cold start testing is not likely be more effective in achieving in use emission control as new technologies will be expected to have resulted in significant control of emissions at engine startup. 79 Two Memoranda from Kent Helmer to Cleophas Jackson, " Speed and Load Operating Schedule for the Constant Speed Variable Load ( CSVL) transient test cycle," e Docket OAR 2003 0012

0993, and " CSVL Cycle Construction," A 2001 28, II B 50.

80 Memorandum from Kent Helmer to Cleophas Jackson, " Brake specific Emissions Impact of Nonroad Diesel Engine Testing Over the NRTC, AWQ, and AW1 duty cycles," Docket A 2001 28, # .

154 However, given our interest in controlling emissions under cold start conditions and the relatively small amount of information available in this area at this time, we intend to revisit the cold start weighting factor for transient testing in the future as additional data become available. Since the composite transient test represents a combination of variable speed and constant speed operation, we would consider operation from both of these types of engines in evaluating the cold start weighting. Also, we intend to apply the same cold start weighting when we adopt a transient duty cycle specifically for engines certified only for constant speed operation.

The planned data collection effort will focus on characterizing cold start operation for nonroad diesel equipment. The objective will be to reassess, and if necessary, redevelop a weighting factor that properly accounts for the degree of cold start operation so that in use engines effectively control emissions during these conditions. As we move forward with this investigation, other interested parties, including the State of California, will be invited to participate. We are interested in pursuing a joint effort, in consultation with other national government bodies, to ensure a robust and portable data set that will facilitate common global technical regulations. This effort will require consideration of at least the following factors:

 What types of equipment will we investigate?

 How many units of each equipment type will we instrument?

 How do we select individual models that will together provide an accurate crosssection of the type of equipment they represent?

 When will the program start and how long will it last?

 How should we define a cold start event from the range of in use operation?

We expect to complete our further evaluation of the cold start weighting in the context of the 2007 Technology Review, if not sooner. In case changes to the regulation are necessary, this timing will allow enough time for manufacturers to adjust their designs as needed to meet the Tier 4 standards.

3. Constant Speed Tests The Agency proposed that engine manufacturers could certify constant speed engines using EPA's Constant Speed, Variable Load ( CSVL) transient duty cycle79 as an alternative to certifying these engines under its NRTC test cycle. The CSVL transient cycle was developed to approximate the speed and load operating characteristics of many constant speed nonroad diesel applications. 80 It, too, would have been subject to the cold start requirement of nonroad transient 155 test cycles as is the NRTC. However, after considerable discussion with and comment from engine manufacturers, equipment makers and other interested parties, the Agency has decided not to promulgate an alternative nonroad transient test cycle for constant speed engines at this time. EMA, in its comments on the CSVL cycle, felt generally that: 1) the average load factor is much too low; 2) the frequency of the transient operations was too high; 3) the amplitudes of the transients were too great; and 4) the rates of transient load increase and response were too fast.

It was further noted that the CSVL test cycle is based solely upon the operation of a single, relatively small, naturally aspirated arc welder engine, which EMA claims is a variable speed type of engine certified generally on the 8 mode test cycle. Arc welders, Cummins noted, are not much like generator sets, which comprise around 50% of population of constant speed engines and have a very different operation and test cycle than the typical portable generator set. Generator sets, DDC wrote, were built generally for a higher power capability at a single speed, many having larger, less responsive turbochargers to achieve the higher brake mean effective pressure ( BMEP). This made it difficult for these engines to shed load as quickly as the CSVL test cycle would require them to do. Commenters likewise wrote that the test cycle was costly and burdensome for equipment which, like generator sets, was only operated infrequently or when emergencies occurred. Some wrote that it would compromise generator set engine performance if manufacturers had to re engineer their products to run over the CSVL test cycle, especially for larger BMEP engines. One commenter noted that these changes to nonroad engines would carry over to other stationary applications of these generator sets. A more extensive discussion of comments relating to the CSVL cycle may be read in the Summary and Analysis of Comment document for this rule.

Given these potential problems and the strong possibility of fixing them by 2007, the Agency has decided to defer adopting the CSVL test cycle here. Instead, EPA with all of its stakeholders in this regard will map out a process of engine testing and analysis to better characterize constant speed equipment in use to design the most appropriate test cycle for the largest number of constant speed engines. EPA undertakes this process with an eye to initiating rulemaking which would lead to promulgation of a transient cycle for constant speed engines before the Agency's 2007 Nonroad Diesel Technical Review.

EPA defines a constant speed engine in this regard as one which is certified to constantspeed operation, in other words, an engine which may not operate at a speed outside a single, fixed reference speed set by the engine's governor. It should be clear then that any engine for which the governor doesn't strictly limit the engine speed in use to constant speed operation, that engine will be subject to the NRTC. Thus, if a manufacturer's engine is certified to EPA's 8 mode steady state test, the engine would also need to certify to the NRTC, since the 8 mode test does not limit the engine's fixed operating speed. Conversely, those manufacturers who certify their engines to EPA's constant speed steady state test, the 5 mode test cycle are not required to have their engines certify to the NRTC. 156 By utilizing an inclusive, data driven approach ( see Summary and Analysis document for more detail), the Agency is allowing time to develop, and if appropriate, finalize and implement a test procedure that meets the needs of the Agency, manufacturers, and other parties in advance of the 2007 Technology Review. In fact, the Agency envisions constant speed variable load cycle generation to be completed by July 2005. This approach should allow the Agency to develop a testing program which ensures robust control in use, is data driven and remains globally harmonized. We expect to initiate this effort within 3 months of promulgation of this rule and to conclude the work on the new test cycle in enough time to promulgate it through rulemaking and to provide industry adequate lead time to implement it in an orderly manner. If we encounter unforeseen and unavoidable delays or complications in this process, we will consider approaches to control based on available data at the time of the 2007 Technology Review.

The Agency is adopting additional requirements, in conjunction with existing steady state test requirements, which will help ensure that constant speed nonroad diesel engines are subject to a rigorous program of in use control of emissions and that diesel engine emissions will be controlled over a wide range of speed and load combinations. EPA is finalizing stringent nonroad NTE limits and related test procedures for all new nonroad diesel engines subject to the Tier 4 emissions standards beginning in 2011 which will supplement the existing steady state five mode test cycle for constant speed application engines. NTE testing for transient operation will add further assurance that emissions from constant speed engines within this class, which have a limited speed response in use, are controlled under in use operation. Typically, engines which are designed to a particular transient cycle will control emissions effectively under other types of transient operation not specifically included in that certification procedure. Engines that are capable of meeting emission standards on a constant speed, variable load cycle will have the transient response characteristics that are appropriate for controlling emissions at higher engine loads and for less dynamic transient operation. EPA, engine manufacturers, and interested parties will, in the mean time, work to develop a more appropriate transient test for constant speed engines. A transient test for this broad class of nonroad engines will ensure a robust level of emissions control in use within the diverse population of constant speed engines and equipment.

4. Steady State Tests Recognizing the variety of both power classes and work applications to be found within the nonroad equipment and engine population, and as proposed, EPA is retaining current Federal steady state test procedures for nonroad engines. ( Manufacturers are thus required to meet emission standards under steady state conditions, in addition to meeting emission standards under the transient test cycle, whenever the transient test cycle applies.) This requirement, like NTE emission testing, is one of two tests which apply to every Tier 4 engine. Table III 2 below sets out the particular steady state duty cycle applicable to each of the following categories: 1) nonroad engines 25 hp and greater; 2) nonroad engines less than 25 hp; and 3) nonroad engines 81 These three steady state test cycles are similar to test cycles found in the International Standard ISO 8178 4: 1996 ( E) and remain consistent with the existing 40 CFR part 89 steady state duty cycles.

157 having constant speed, variable load applications, ( e. g., gen sets). The steady state cycles remain, respectively, the 8 mode cycle, the 6 mode cycle and the 5 mode cycle. 81 Steady state test cycles are needed so that testing for certification will reflect the broad range of operating conditions experienced by these engines. A steady state test cycle represents an important type of modern engine operation, in power and speed ranges that are typical in use. The mid to high speeds and loads represented by present steady state testing requirements are the speeds and loads at which these engines are designed to operate for extended periods for maximum efficiency and durability. Details concerning the three steady state procedures for nonroad engines and equipment are found in regulations at 40 CFR 1039.505 and in Appendices I III to 40 CFR part 1039.

Manufacturers will perform each steady state test following all applicable test procedures in the regulations at 40 CFR part 1039, e. g., procedures for engine warm up and exhaust emissions measurement. The testing must be conducted with all emission related engine control variables in the maximum NO X producing condition which could be encountered for a 30 second or longer averaging period at a given test point. Table III. F 2 below summarizes the steady state testing requirements by individual engine power categories.

Table III. F 2.   Summary of Steady State Test Requirements Nonroad Engine Power Classes Steady State Testing Requirements 8 Mode Cycle ( C1weighting) 6 Mode Cycle ( G3 weighting) 5 Mode Cycle ( D2 weighting)

hp < 25 ( kW < 19) applies a applies a applies b 25

hp < 75 ( 19

kW < 56) applies NA c applies b 75

hp < 175 ( 56

kW < 130) applies NA c applies b 175

hp

750 ( 130

kW

560) applies NA c applies b hp > 750 ( kW > 560) applies NA c applies b Notes:

a Manufacturers may use either of these tests for this class of engines.

b For constant, or nearly constant, speed engines and equipment with variable, or intermittent, load.

c Testing procedures not applicable to this class of engines. 82 Letter from EMA ( Engine Manufacturers Association) to EPA Air Docket A 2001 28, IV D

402, pp 64.

83 Memorandum and summary of technical discussions ( including Appendix " A" text) in the e

Docket submission, OAR 2003 0012 0028, to EPA's Air Docket.

158 Nonroad engine manufacturers82, have called for steady state testing which would collect emissions continuously " in a pseudo transient manner," proposing in effect, one filter PM collections during a steady state duty cycle. In response to these and other manufacturer concerns for emission variability during certification testing due to unanticipated emission control system regeneration between steady state test modes, the Agency83 has adopted, in its 40 CFR 1065.515 regulations, the concept of modifying EPA's 40 CFR part 89 steady state engine certification duty cycles. The section describes ramped " modal" steady state certification tests which would link the modes of a steady state test together for the purpose of collecting a continuous stream of engine emissions. These tests provide for operating an engine at all of the modes specified in the present steady state nonroad test cycles but without the breaks in emission collection required by switching between modes, stabilizing engine operation, and collecting emissions at that next operating mode. Since a ramped modal cycle ( RMC) test cycle may more reliably and consistently report engine emissions from particulate trap and other emission control hardware equipped nonroad engines than the comparable steady state duty cycle from which it was derived, the Agency is providing the option of using these RMC versions of its steady state engine duty cycles for nonroad diesel engine certification testing in lieu of the otherwise applicable steady state cycles. Details on the procedures may be found in chapter 4.2 of the RIA for this rule and at regulations at 40 CFR 1039.505 and Appendix I of part 1039.

The optional RMC duty cycles do not represent a relaxation in stringency of emission testing nor are they an unreasonable increase in the emission test burden of diesel engine manufacturers. Rather, the RMC versions of EPA's steady state test cycles allow for more consistent and predictable emission testing of emission control system hardware equipped diesel engines. Eliminating the " downtime" between modes for the emission collection equipment allows sampling of emissions to be done on a composite basis for the whole test as opposed to sampling emissions mode by mode. The RMC versions of these tests simply create a negligible transition period 20 seconds long connecting each mode and collects emissions during these brief transitions, as well as collecting emissions during the running of each test's discrete operating modes. The continuous emission sampling allows regeneration events from engine emission control hardware to be captured more reliably and repeatably. By running emission testing without breaks and over the same engine duty schedule for each repetition of a RMC test, regeneration within the engine's emission control hardware should become almost a predictable event. The longer sampling times of RMCs, while creating an identical weighting of each mode's emissions, also help to avoid collecting a minuscule, possibly unreliably measured, amount of sample over the course of any single operating mode. PM emissions, for example, can be collected and measured more precisely under these test conditions as either batch or continuous samples. The opportunities for loss of emissions during sampling and storage due to sample 159 retention by equipment at shut down between modes or by filter handling and weighing are greatly reduced. As well, running a " steady state" test on a continuous basis allows cycle performance statistics to be applied to RMC emission tests ( see 40 CFR, part 39). Manufacturers are familiar with test cycles run with a set of statistical engine duty cycle performance " targets". Further, their test runs will be subject to less test cell " tuning", modifying control strategies using repeat testing runs to fit the emission test cycle and the dynamometer to operate a particular engine. Finally, statistical targets serve to increase repeatability and reduce variability of engine operating parameters and emission test results on a test to test basis.

Transport refrigeration unit ( TRU) engines, a specific application of a steady state operation engine ( 68 FR 28485, May 23, 2003), will be subject to both steady state and NTE standards based on any normal operation that these engines would experience in the field. To that end, EPA has adopted a four mode steady state test cycle designed specifically for engines used in TRU applications which may be used by the manufacturer in lieu of normal steady state testing. Commenters to the rule agreed that a TRU test cycle would be more representative of refrigeration unit operation than the nonroad cycles currently available to manufacturers of TRU engines, but some took issue with EPA's usage restrictions in paragraphs ( d)( 2), ( e)( 2), and ( e)( 3) of regulations proposed at 40 CFR part 1039 subpart G. In response, the final rule allows manufacturers to test their engines under a broad definition of intermediate test speed. The definition covers the 60 75 % range of engine rpm at the specified test cycle engine load points, as defined in 40 CFR, 89.2. This will enable an engine manufacturer to more closely match the TRU cycle to the operation of their engines in use. Further, the engine is allowed to exhibit no more than 2% variation in transient operation ( speed or torque change) around the four operating modes defined under this test cycle. The provisions to address load set point drift are discussed in detail in the RIA chapter 4.3.2 and in regulations at 40 CFR part 1039 subpart G.

In choosing to certify their engine as a TRU engine, manufacturers will need to state on the engine emission control label that the engine will only be used in a TRU application and records must be kept on the delivery destination( s) for their engines. Manufacturers of these engines may petition EPA at certification for a waiver of the requirement to provide smoke emission data for their constant torque engines. A more detailed discussion of the TRU associated provisions is contained in chapter 4.2 of the RIA. It should be noted that an RMC version of the steady state TRU duty cycle is provided in Table 2 of 40 CFR part 1039 subpart G.

G. Other Test Procedure Issues This section contains further detail and explanation regarding several related nonroad diesel engine emissions test and measurement provisions. The test procedures are specified in 40 CFR part 1065 and part 1039 subpart F. Part 1065 contains general test procedure requirements and part 1039 contains the provisions that are specific to CI nonroad engines, such as test cycles. The changes described here will not significantly affect the stringency of the standards. While some of the changes being made may appear to increase the stringency of the standards when considered by themselves, others would appear to have the opposite effect. When considered 160 together, however, they will result in more repeatable and less subjective testing that is equivalent to the existing procedures with respect to stringency.

1. Smoke Testing To control smoke emissions, we are requiring in this final rule that the current smoke standards and procedures will continue to apply to certain engines. We proposed to change these smoke standards and procedures, based on recent developments toward an established international protocol that was designed to allow a straightforward method to test engines in the field ( 68 FR 28486, May 23, 2003). We have chosen not to adopt the proposed approach, mainly because it is becoming increasingly clear that ongoing development of in use testing equipment will allow direct measurement of PM emissions in the field. We believe this will provide the best long term control of both PM emissions. Controlling smoke is in some ways independent of PM, but the interest in developing an in use smoke test was primarily as a means of providing a secondary indicator of high in use PM emissions from these engines. Direct PM measurement removes much of the advantage of in use smoke measurements. Relying on the existing smoke test also addresses concerns raised by manufacturers that the effort to comply with the new smoke requirements would be a large testing and development burden with little air quality benefit. We believe that aftertreatment based Tier 4 PM standards will control smoke emissions as well as improved smoke testing standards and procedures. Engines below 19 kilowatts ( kW) will generally not have particulate filters, but most of these are constant speed engines and are therefore not subject to smoke standards, as described below.

We are continuing the established policy of exempting constant speed engines and singlecylinder engines from smoke standards. We do not believe that constant speed engines undergo the kind of acceleration or lugging events that occur during this smoke test procedure, so it would not be appropriate for these engines to be subject to smoke standards. We exempt singlecylinder engines for a different reason. These engines, which very often provide power for generator sets and other constant speed applications, but may in some cases experience accelerations, the nature of single cylinder engine operation makes it difficult to get a valid smoke emission measurement. Single cylinder engines generally have discrete puffs of smoke, rather than a stable emission stream for measuring smoke values. We believe it is not appropriate to use such erratic measurements to evaluate an engine's emission performance. As a result, we will not require single cylinder engines to meet our smoke standards until we find a test method that takes this into account.

Also, as described in the proposed rule, we are exempting from smoke emission standards any engines that are certified to PM emission standards or FELs at or below 0.07 g/ kW hr. We believe any engine that has such low PM emissions will have inherently low smoke emissions. No commenters disagreed with this position. 161 2. Maximum Test Speed We are changing how test cycles are specified. As proposed, we are applying the existing definition of maximum test speed in 40 CFR part 1065 to nonroad CI engines. This definition of maximum test speed is the single point on an engine's normalized maximum power versus speed curve that lies farthest away from the zero power, zero speed point. This is intended to ensure that the maximum speed of the test is representative of actual engine operating characteristics and is not improperly used to influence the parameters under which their engines are certified. In establishing this definition of maximum test speed, it was our intent to specify the highest speed at which the engine is likely to be operated in use. Under normal circumstances this maximum test speed should be close to the speed at which peak power is achieved. However, in past discussions, some manufacturers have indicated that it is possible for the maximum test speed to be unrepresentative of in use operation. Since we were aware of this potential during the original development of this definition, we included provisions to address issues such as these. Part 1065 allows EPA to modify test procedures in situations where the specified test procedures would otherwise be unrepresentative of in use operation. Thus, in cases in which the definition of maximum test speed resulted in an engine speed that was not expected to occur with in use engines, we would work with the manufacturers to determine the maximum speed that would be expected to occur in use ( see regulations at 40 CFR 1065.10 ( c)).

3. Improvements to the Test Procedures As we proposed, we are making changes to the test procedures to improve the precision of emission measurements. These changes address the potential effect of measurement precision on the feasibility of the standards. It is important to note that these changes are not intended to bias results high or low, but only to improve the precision of the measurements. Based on our experience with these modified test procedures, and our discussions with manufacturers about their experiences, we are confident that these changes will not affect the stringency of the standards. These changes are summarized briefly here. The rationale for the changes are discussed in detail elsewhere. The changes affecting Constant Volume Sampling ( CVS) and PM testing are discussed in a memo to the docket ( Air Docket A 99 06, IV B 11), which was originally submitted in support of the recent highway heavy duty diesel engine rule ( 66 FR 5001, January 18, 2001).

In general, we are applying the highway heavy duty engine test procedures to nonroad CI engines in this rulemaking. Many of the specific changes being adopted are to the PM sampling procedures. The PM procedures are the procedures finalized as part of the highway heavy duty diesel engine rule ( 66 FR 5001, January 18, 2001). These include changes to the type of PM filters that are used and improvements in how PM filters are weighed before and after emission measurements, including requirements for more precise microbalances.

It is also worth noting that we intend to make additional improvements to the test procedures in a separate rulemaking that will be proposed later this year to incorporate the latest 162 measurement technologies. Many of the improvements being considered were discussed in the previously mentioned memo to the docket ( Air Docket A 99 06, IV B 11). We recognize the importance of these improvements for use in testing by nonroad diesel engine manufacturers and EPA. However, since we expect that the changes would also apply to many nonroad sparkignition engine manufacturers, it is appropriate to conduct a separate notice and comment rulemaking for all affected parties. We remain committed to incorporating appropriate additional improvements to the test procedures. We have placed into the docket a draft revised version of part 1065 that represents our current thinking on appropriate testing regulations.

H. Engine Power Currently, rated power and power rating are undefined, and we are concerned that this makes the applicability of the standards too subjective and confusing. One manufacturer may choose to define rated power as the maximum measured power output, while another may define it as the maximum measured power at a specific engine speed. Using this second approach, an engine's rated power may be somewhat less than the true maximum power output of the engine. Given the importance of engine power in defining which standards an engine must meet and when, we believe that it is critical that a singular power value be determined objectively according to a specific regulatory definition.

To address this, we proposed to add a definition of " maximum engine power" to the regulations. This term was to be used instead of previously undefined terms such as " rated power" or " power rating" to specify the applicability of the standards. The addition of this definition was intended to allow for more objective applicability of the standards. More specifically, we proposed that:

Maximum engine power means the measured maximum brake power output of an engine. The maximum engine power of an engine configuration is the average maximum engine power of the engines within the configuration. The maximum engine power of an engine family is the highest maximum engine power of the engines within the family.

During the comment period, manufacturers opposed the proposed definition. ( We received no other comments on this issue.) The manufacturers correctly pointed out that they cannot know the average actual power of production engines when they certify an engine family, because certification typically occurs before production begins. Therefore the definition of " maximum engine power" being finalized today relies primarily upon the manufacturer's design specifications and the maximum torque curve that the manufacturer expects to represent the actual production engines. This provision is specified in a new section 40 CFR 1039.140. Under this approach the manufacturer would take the torque curve that is projected for an engine configuration, based on the manufacturer's design and production specifications, and convert it into a " nominal power curve" that would relate the maximum power that would be expected to engine speed when a production engine is mapped according our specified mapping procedures. 84 Auxiliary emission control device is defined at 40 CFR 89.2 as " any element of design that senses temperature, vehicle speed, engine RPM, transmission gear, or any other parameter for the purpose of activating, modulating, delaying or deactivating the operation of any part of the emission control 163 The maximum engine power is being defined as the maximum power point on that nominal power curve.

Manufacturers will be required to report the maximum engine power of each configuration in their applications for certification. As with other engine parameters, manufacturers will be required to ensure that the engines that they produce under the certificate have maximum engine power consistent with those described in their applications. However, since we recognize that variability is a normal part of engine production, we will not require that all production engines have exactly the power specified in the application. Instead, we will only require that the power specified in the application be within the normal range of powers of the production engines. Typically, we would expect the specified power to be within one standard deviation of the mean power of the production engines. If a manufacturer determines that the specified power is outside of the normal range, we may require the manufacturer to change the settings of the engines being produced and/ or amend the application for certification. In deciding whether to require such amendment, we would consider the degree to which the specified power differed from the production engines, the normal power variability for those engines, whether the engine used or generated emission credits, and whether the error affected which standards applied to the engine.

The preceding discussion presumes that each manufacturer will develop its production processes to produce the engines described in the application. If a manufacturer were to intentionally produce engines different than those described in the application, we would consider the application to be fraudulent, and could void the certificate ab initio for those engines. For example, for engines that use emission credits, this could occur if a manufacturer deliberately biased its production variability so that the engines have higher average power than described in the application. If we voided the certificate for those engines the manufacturer would be subject to large fines and any other appropriate enforcement provisions for each engine.

Finally, in light of some of the comments that we received, it is worth clarifying that the maximum engine power will not be used during engine testing. It is only used to define power categories and calculate ABT emission credits.

I. Auxiliary Emission Control Devices and Defeat Devices Existing nonroad regulations prohibit the use of a defeat device ( see 40 CFR 89.107) in nonroad diesel engines. The defeat device prohibition is intended to ensure that engine manufacturers do not use auxiliary emission control devices ( AECD) which sense engine operation in a regulatory test procedure and as a result reduce the emission control effectiveness of that procedure. 84 In today's notice we are supplementing existing nonroad test procedures system."

85 40 CFR 89.107( b)( 1) states " Defeat device includes any auxiliary emission control device ( AECD) that reduces the effectiveness of the emission control system under conditions which may reasonably be expected to be encountered in normal operation and use unless such conditions are included in the test procedure."

164 with a transient engine test cycle and NTE emission standards with associated test requirements. As such, the Agency believes that a clarification of the existing nonroad diesel engine regulations regarding defeat devices is required in light of these additional emission test requirements. The defeat device prohibition makes it clear that AECDs which reduce the effectiveness of the emission control system are defeat devices, unless one of several conditions is met. One of these conditions is that an AECD which operates under conditions " included in the test procedure" is not a defeat device. 85 While the existing defeat device definition does contain the term " test procedure," and therefore should be interpreted as including the supplemental testing requirements, we want to make it clear that both the supplemental transient test cycle and NTE emission test procedures are included within the defeat device regulations as conditions under which an operational AECD will not be considered a defeat device. Therefore, we are clarifying the defeat device regulations by specifying the appropriate test procedures ( i. e., the existing steady state procedures and the supplemental tests). We are clarifying the engine manufacturers certification reporting requirements with respect to the description of AECDs. Under the previous nonroad engine regulations, manufacturers are required to provide a generalized description of how the emissions control system operates and a " detailed" description of each AECD installed on the engine ( see 40 CFR 89.115( d)( 2)). This change clarifies what is meant by " detailed."

For engines rated above 750 horsepower, the expanded interpretation of " included in the test cycle" extends only to the NTE because we are not requiring these engine to be tested over the supplemental transient test cycle. Transient emissions control strategies that are substantially included in the NTE will be considered to comply with the defeat device criteria. For instances where transient emissions control strategies are not well represented over the official test requirements, we will rely on the defeat device provisions to ensure appropriate transient off cycle emissions control. The defeat device provisions restrict the ability of manufacturers to reduce the level of emissions control during transient operation compared to that employed over the steady state cycle. In order to evaluate transient emissions control strategies for compliance with the defeat device provisions, we are requiring manufacturers to submit information which indicates how transient emissions are controlled during normal operation and use. Information that would adequately fulfill this requirement includes but is not limited to:

A. Emissions data gathered with portable emissions measurement systems from inservice engines operating over a broad range of typical transient conditions; 86 Base emissions control maps describe the modulation of an emissions control parameter as a function of changing engine speed and torque.

165 B. Emissions data generated under laboratory conditions representing a broad range of typical transient operation; C. Transient test cycle results from certified engines rated at or below 750 horsepower which share nearly identical transient emissions control strategies; D. Base emissions control maps along with an explanation for differences in control between portions of the map substantially included in the steady state test cycle and that which is predominately associated with transient operation; 86 E. A comparative analysis of the base emissions control maps from certified engines rated at or below 750 horsepower and those rated over 750 horsepower.

We will use this information to determine the degree to which the design and effectiveness of the transient emissions control system compares to the control demonstrated over the steadystate cycle as well as the transient control used for certified engines at or below 750 horsepower where compliance over the transient cycle is required.

A thorough disclosure of the presence and purpose of AECDs is essential in allowing EPA to evaluate the AECD and determine whether it represents a defeat device. Clearly, any AECD which is not fully identified in the manufacturer's application for certification cannot be appropriately evaluated by EPA and therefore cannot be determined to be acceptable by EPA. Our clarifications to the certification application requirements include additional detail specific to those AECDs which the manufacturer believes are necessary to protect the engine or the equipment in which it is installed against damage or accident (" engine protection" AECDs). While the definition of a defeat device allows as an exception strategies needed to protect the engine and equipment against damage or accident, we intend to continue our policy of closely reviewing the use of this exception. In evaluating whether a reduction in emissions control effectiveness is needed for engine protection, EPA will closely evaluate the actual technology employed on the engine family, as well as the use and availability of other emission control technologies across the industry, taking into consideration how widespread the use is, including its use in similar engines and similar equipment. While we have specified additional information related to engine protection AECDs in the regulations, we reserve the right to request additional information on a case by case basis as necessary.

In the last several years, EPA has issued extensive guidance on the disclosure of AECDs for both highway and nonroad diesel engine manufactures. These provisions do not impose any new certification burden on engine manufacturers, rather, it clarifies the existing certification application regulations by specifying what type of information manufacturers must submit regarding AECDs.

Finally, we take this opportunity to emphasize that the information submitted must be specific to each engine family. The practice of describing AECDs in a " common" section, 87 Torque is a measure of rotational force. The torque curve for an engine is determined by an engine " mapping" procedure specified in the Code of Federal Regulations. The intent of the mapping procedure is to determine the maximum available torque at all engine speeds. The torque curve is merely a graphical representation of the maximum torque across all engine speeds.

166 wherein the strategies are described in general for all the manufacturer's engines, is acceptable as long as each engine family's application contains specific references to the AECDs in the common section which clearly indicate which AECDs are present on that engine family, and the application contains specific calibration information for that engine family's AECDs. The regulatory requirements can be found at 40 CFR 89.115( d)( 2) in today's notice.

J. Not To Exceed Requirements In today's action we are finalizing not to exceed ( NTE) emission standards for all new nonroad diesel engines subject to the Tier 4 emissions standards beginning in 2011. These NTE standards and requirements are largely identical to the NTE provisions we proposed, except as noted below.