section. The affidavits must identify the part numbers of the
aftertreatment devices (or the corresponding alphanumeric designation
established under paragraph (c)(8) of this section) that the equipment
manufacturer installs on each engine model they purchase from you under
this section and include confirmation that the number of aftertreatment
devices received were sufficient for the number of engines involved.
    (5) Describe in your application for certification how you plan to
use the provisions of this section and any steps you plan to take under
paragraph (c)(4) of this section.
    (6) Keep records to document how many engines you produce under
this exemption. Also, keep records to document your contractual
agreements under paragraph (c)(3) of this section. Keep all these
records for five years after the end of the model year and make them
available to us upon request.
    (7) Make sure the engine has the emission control information label
we require under the standard-setting part. Include additional labeling
using one of the following approaches:
    (i) Apply an additional temporary label or tag in a way that makes
it unlikely that the engine will be installed in equipment other than
in its certified configuration. The label or tag must identify the
engine as incomplete and include a clear statement that failing to
install the aftertreatment device, or otherwise bring the engine into
its certified configuration, is a violation of federal law subject to
civil penalty.
    (ii) Add the statement ``DELEGATED ASSEMBLY'' to the permanent
emission control information label.
    (iii) Add an alphanumeric code that you identify in your
application for certification to the permanent emission control
information label and include additional label features such as
coloring or shading to ensure that the equipment manufacturer will
recognize that the engine needs an aftertreatment component to be in
its certified configuration.
    (8) Engine manufacturers must establish an alphanumeric designation
to identify each unique catalyst design (including size, washcoat,
precious metal loading, supplier, and any other appropriate factors).
Include this alphanumeric designation in the application for
certification as described in Sec.  1054.205. Engine manufacturers must
also give instructions as appropriate to ensure that the external
surface of the exhaust system includes stamping or other means to
permanently display this designation and that it will be readily
visible as much as possible when the equipment is fully assembled,
consistent with the objective of verifying the identity of the
installed catalyst.
    (9) You must have written confirmation that the vehicle
manufacturer has ordered the appropriate type of aftertreatment
components for an initial shipment of engines under this section. For
the purpose of this paragraph, initial shipment means the first
shipment of engines in a model year to a given equipment manufacturer
for a given engine model. You must receive the written confirmation
within 30 days of shipment. If you do not receive written confirmation
within 30 days, you may not ship any more engines from that engine
family to that equipment manufacturer until you have the written
confirmation. Note that it may be appropriate to obtain subsequent
written confirmations to ensure compliance with this section, as
described in paragraph (c)(4) of this section.
    (10) You must perform or arrange for audits of equipment
manufacturers as follows:
    (i) If you sell engines to 48 or more equipment manufacturers under
the provisions of this section, you must annually perform or arrange
for audits of twelve equipment manufacturers to whom you sell engines
under this section. To select individual equipment manufacturers,
divide all the affected equipment manufacturers into quartiles based on
the number of engines they buy from you; select equal numbers of
equipment manufacturers from each quartile each model year as much as
possible. Vary the equipment manufacturers selected for auditing from
year to year, though audits may be repeated in later model years if you
find or suspect that a particular equipment manufacturer is not
properly installing aftertreatment devices.
    (ii) If you sell engines to fewer than 48 equipment manufacturers
under the provisions of this section, set up a plan to perform or
arrange for audits of each equipment manufacturer on average once every
four model years.
    (iii) Starting with the 2019 model year, you may ask us to approve
a reduced auditing rate if you sell engines to fewer than 120 equipment
manufacturers under the provisions of this section. We may approve an
alternate plan that involves performing or arranging for audits of each
equipment manufacturer on average once every ten model years, as long
as you show that you have met the auditing requirements in preceding
years without finding noncompliance or improper procedures. You may
also ask us to approve a reduced auditing rate after you have audited
all affected equipment manufacturers at least once.
    (iv) To meet these audit requirements, you or your agent must at a
minimum either review the equipment manufacturers production records
and procedures, inspect the equipment manufacturer's production
operations, or inspect the final assembled products. You or your agent
must review the available information as needed to demonstrate that the
equipment manufacturer is complying with your installation
instructions. This must include confirmation that the number of
aftertreatment devices shipped was sufficient for the number of engines
involved. Inspection of final assembled products may occur at any point
in the product distribution system after the exemption defined in this
section expires. For example, you or your agent may inspect products at
the equipment manufacturer's assembly or storage facilities, at
regional distribution centers, or at retail locations.
    (v) You must keep records of these audits for five years after the
end of the model year.
    (11) In your application for certification, give a detailed plan
for performing audits as described in paragraph (c)(10) of this
section.
    (12) If one of your engines produced under this section is selected
for

production-line testing, you must arrange to get a randomly selected
aftertreatment component that will be used with the engine; you may not
use aftertreatment components from your own inventory. You may obtain
such aftertreatment components from any point in the normal
distribution from the aftertreatment component manufacturer to the
equipment manufacturer. Keep records showing how you randomly selected
these aftertreatment components, consistent with the requirements of
Sec.  1054.305.
    (d) If you manufacture engines and install them in equipment you
also produce, you must take steps to ensure that your facilities,
procedures, and production records are set up to ensure that equipment
and engines are assembled in their proper certified configurations. You
may demonstrate compliance with this requirement by maintaining a
database showing how you pair aftertreament components with the
appropriate engines.
    (e) The following provisions apply if you ship engines without air
filters or other portions of the air intake system such that the
shipped engine is not in its certified configuration (for example, if
you identify specific part numbers of air filters needed to ensure that
the engine will meet emission standards but do not include those with
the shipped engine):
    (1) If you are using the provisions of this section to ship an
engine without aftertreatment, apply all the provisions of this section
to ensure that each engine, including its intake system, is in its
certified configuration before it reaches the ultimate purchaser.
    (2) If you are not using the provisions of this section to ship an
engine without aftertreatment, shipping an engine without air-intake
components that you have specified as part of its certified
configuration will not be a violation of the prohibitions in 40 CFR
1068.101(a) if you follow the provisions specified in paragraphs (c)(1)
through (7) of this section. If we find there is a problem, we may
require you to perform audits as specified in paragraph (c)(10) of this
section.
    (f) Once the equipment manufacturer takes possession of an engine
exempted under this section and the engine reaches the point of final
equipment assembly, the exemption expires and the engine is subject to
all the prohibitions in 40 CFR 1068.101(a)(1).
    (g) You may use the provisions of this section for engines you sell
to a distributor, subject to the following provisions:
    (1) You may establish a contractual arrangement in which you
designate the distributor to be your agent in all matters related to
compliance with the requirements of this section.
    (2) Without the contractual arrangement specified in paragraph
(g)(2) of this section, a participating distributor is considered to be
the equipment manufacturer for all applicable requirements and
prohibitions. Such distributors must bring engines into their final
certified configuration. This may include shipping the engine with the
appropriate catalyst and air filter, but without completing the
assembly with all the components. The exemptions expire for such
engines when the distributor no longer has control of them.
    (h) You must notify us within 15 days if you find from an audit or
another source that engines produced under this section are not in
their certified configuration at the point of final assembly. If this
occurs, send us a report within 90 days of the audit describing the
circumstances related to the noncompliance.
    (i) We may suspend, revoke, or void an exemption under this
section, as follows:
    (1) We may suspend, revoke, or void your exemption for a specific
equipment manufacturer if any of the engines are not in their certified
configuration after installation in that manufacturer's equipment, or
if we determine that the equipment manufacturer has otherwise failed to
comply with the requirements of this section.
    (2) We may suspend, revoke, or void your exemption for the entire
engine family if we determine that you have failed to comply with the
requirements of this section. If we make an adverse decision with
respect to the exemption for any of your engine families under this
paragraph (i), this exemption will not apply for future certificates
unless you demonstrate that the factors causing the noncompliance do
not apply to the other engine families.
    (3) We may void your exemption for the entire engine family if you
intentionally submit false or incomplete information or fail to keep
and provide to EPA the records required by this section. Note that all
records and reports required under this section (whether generated by
the engine manufacturer, equipment manufacturer, or others) are subject
to the prohibition in 40 CFR 1068.101(a)(2), which prohibits the
submission of false or incomplete information. For example, the
affidavits required by this section are considered a submission.
    (j) You are liable for the in-use compliance of any engine that is
exempt under this section.
    (k) It is a violation of the Act for any person to introduce into
U.S. commerce a previously exempted engine, including as part of
equipment, without complying fully with the installation instructions.
    (l) [Reserved]
    (m) You may ask us to provide a temporary exemption to allow you to
complete production of your engines at different facilities, as long as
you maintain control of the engines until they are in their certified
configuration. We may require you to take specific steps to ensure that
such engines are in their certified configuration before reaching the
ultimate purchaser. You may request an exemption under this paragraph
(m) in your application for certification, or in a separate submission.

Sec.  1054.612  What special provisions apply for equipment
manufacturers modifying certified engines?

    (a) General provisions. If you buy certified nonhandheld engines
for installation in equipment you produce, but you install the engines
such that they use intake or exhaust systems that are not part of the
originally certified configuration, you become the engine manufacturer
for those engines and must certify that they will meet emission
standards. We will allow you to utilize the provisions for simplified
certification specified in paragraph (b) of this section, as long as
your design stays within the overall specifications from the original
engine manufacturer (such as exhaust backpressure) and you use a
catalyst as described in the original engine manufacturer's application
for certification.
    (b) Simplified certification. You must perform testing with an
emission-data engine to show that you meet exhaust emission standards;
however, you may use the deterioration factor from the original engine
manufacturer. The production-line testing requirements in subpart D of
this part do not apply for engines certified under this section. You
must meet all the other requirements that apply to engine manufacturers
for engines subject to standards under this part. The engine's model
year is determined by its date of final assembly. The engine family
must have the same useful life value specified by the original engine
manufacturer for that engine. In your application for certification
describe any differences between the original engine manufacturer's
design and yours and explain why the deterioration data

generated by the original engine manufacturer is appropriate for your
configuration.
    (c) Engine exemption. As an engine manufacturer, you may produce
nonconforming engines for equipment manufacturers as allowed under this
section. You do not have to request this exemption for your engines,
but you must have written assurance from equipment manufacturers that
they need a certain number of exempted engines under this section. Add
a label or tag to the engine with at least the following information:
    (1) The heading ``EMISSION CONTROL INFORMATION''.
    (2) Your corporate name and trademark.
    (3) Engine displacement (in cubic centimeters).
    (4) The following statement: ``THIS ENGINE IS TEMPORARILY EXEMPT
FROM EMISSION STANDARDS AND RELATED REQUIREMENTS UNDER 40 CFR
1054.612.''.

Sec.  1054.615  What is the exemption for engines certified to
standards for Large SI engines?

    (a) An engine is exempt from the requirements of this part if it is
in an emission family that has a valid certificate of conformity
showing that it meets emission standards and other requirements under
40 CFR part 1048 for the appropriate model year.
    (b) The only requirements or prohibitions from this part that apply
to an engine that is exempt under this section are in this section. See
paragraph (f) of this section to determine what evaporative
requirements apply for equipment using these engines.
    (c) If your engines do not have the certificate required in
paragraph (a) of this section, they will be subject to the provisions
of this part. Introducing these engines into U.S. commerce without a
valid exemption or certificate of conformity violates the prohibitions
in 40 CFR 1068.101(a).
    (d) Engines exempted under this section are subject to all the
requirements affecting engines under 40 CFR part 1048. The requirements
and restrictions of 40 CFR part 1048 apply to anyone manufacturing
these engines, anyone manufacturing equipment that uses these engines,
and all other persons in the same manner as if these were nonroad
spark-ignition engines above 19 kW.
    (e) Engines exempted under this section may not generate or use
emission credits under this part 1054.

Sec.  1054.620  What are the provisions for exempting engines used
solely for competition?

    The provisions of this section apply for new engines and equipment
built on or after January 1, 2009.
    (a) We may grant you an exemption from the standards and
requirements of this part for a new engine on the grounds that it is to
be used solely for competition. The requirements of this part, other
than those in this section, do not apply to engines that we exempt for
use solely for competition.
    (b) We will exempt engines that we determine will be used solely
for competition. The basis of our determination is described in
paragraphs (c) and (d) of this section. Exemptions granted under this
section are good for only one model year and you must request renewal
for each subsequent model year. We will not approve your renewal
request if we determine the engine will not be used solely for
competition.
    (c) Engines meeting all the following criteria are considered to be
used solely for competition:
    (1) Neither the engine nor any equipment containing the engine may
be displayed for sale in any public dealership or otherwise offered for
sale to the general public.
    (2) Sale of the equipment in which the engine is installed must be
limited to professional competition teams, professional competitors, or
other qualified competitors.
    (3) The engine and the equipment in which it is installed must have
performance characteristics that are substantially superior to
noncompetitive models.
    (4) The engines are intended for use only as specified in paragraph
(e) of this section.
    (d) You may ask us to approve an exemption for engines not meeting
the criteria listed in paragraph (c) of this section as long as you
have clear and convincing evidence that the engines will be used solely
for competition.
    (e) Engines are considered to be used solely for competition only
if their use is limited to competition events sanctioned by a state or
federal government agency or another widely recognized public
organization with authorizing permits for participating competitors.
Operation of such engines may include only competition events or trials
to qualify for competition events. Authorized attempts to set
performance records (and the associated official trials) are also
considered competition events. Engines will not be considered to be
used solely for competition if they are ever used for any recreational
or other noncompetitive purpose. Any use of exempt engines in
recreational events is a violation of 40 CFR 1068.101.
    (f) You must permanently label engines exempted under this section
to clearly indicate that they are to be used only for competition.
Failure to properly label an engine will void the exemption for that
engine.
    (g) If we request it, you must provide us any information we need
to determine whether the engines are used solely for competition. This
would include documentation regarding the number of engines and the
ultimate purchaser of each engine as well as any documentation showing
an equipment manufacturer's request for an exempted engine. Keep these
records for five years.

Sec.  1054.625  What requirements apply under the Transition Program
for Equipment Manufacturers?

    The provisions of this section allow equipment manufacturers to
produce equipment with Class II engines that are subject to less
stringent exhaust emission standards after the Phase 3 emission
standards begin to apply. To be eligible to use these provisions, you
must follow all the instructions in this section. See Sec.  1054.626
for requirements that apply specifically to companies that manufacture
equipment outside the United States and to companies that import such
equipment without manufacturing it. Engines and equipment you produce
under this section are exempt from the prohibitions in 40 CFR
1068.101(a)(1) with respect to exhaust emissions, subject to the
provisions of this section. Equipment exempted under this section must
meet all applicable requirements related to evaporative emissions,
except as described in Sec.  1054.627.
    (a) General. If you are an equipment manufacturer, you may
introduce into U.S. commerce limited numbers of nonroad equipment with
Class II engines exempted under this section. You may use the
exemptions in this section only if you have primary responsibility for
designing and manufacturing equipment and your manufacturing procedures
include installing some engines in this equipment. Consider all U.S.-
directed equipment production in showing that you meet the requirements
of this section, including those from any parent or subsidiary
companies and those from any other companies you license to produce
equipment for you. If you produce a type of equipment that has more
than one engine, count each engine separately. These provisions are
available during the first four model

years that the Phase 3 exhaust emission standards apply.
    (b) Allowances. Calculate how many pieces of equipment with
exempted engines you may produce under this section by determining your
total U.S.-directed production volume of equipment with Class II
engines from January 1, 2007 through December 31, 2009, calculating
your annual average production, and multiplying this total by 0.3. The
same calculation applies for small-volume equipment manufacturers,
except that average annual production is multiplied by 2.0. For
companies with no eligible production in a given year, calculate annual
average production based only on those years in which you produce
equipment with Class II engines for sale in the United States. Use
these allowances for equipment using model year 2011 and later Class II
engines. You may use these allowances for equipment you produce before
December 31, 2014.
    (c) Access to exempted engines. You may use one of the following
approaches to get exempted engines under this section:
    (1) Request a certain number of exempted Class II engines from the
engine manufacturer as described in paragraph (j)(1) of this section.
    (2) You may make arrangements with the engine manufacturer to
receive an engine without an exhaust system and install exhaust systems
without aftertreatment that would otherwise be required to meet Phase 3
standards, as described in paragraph (j)(2) of this section. You must
follow the engine manufacturer's instructions for installing
noncatalyzed mufflers. You must keep records to show which engines you
modify as described in this paragraph (c)(2) and make them available to
the engine manufacturer for any auditing under the provisions of Sec.
1054.610. If you do not place the label we specify in paragraph (f) of
this section adjacent to the engine manufacturer's emission control
information label, you must place an additional permanent label as
close as possible to the engine's emission control information label
where it will be readily visible in the final installation with at
least the following items:
    (i) Your corporate name and trademark.
    (ii) The following statement: ``THIS ENGINE MEETS PHASE 2 STANDARDS
UNDER Sec.  1054.625(c)(2).''.
    (d) Inclusion of engines not subject to Phase 3 standards. The
following provisions apply to engines that are not subject to Phase 3
standards:
    (1) If you use the provisions of 40 CFR 1068.105(a) to use up your
inventories of engines not certified to new emission standards, do not
include these units in your count of equipment with exempted engines
under paragraph (g)(2) of this section.
    (2) If you install engines that are exempted from the Phase 3
standards for any reason, other than for equipment-manufacturer
allowances under this section, do not include these units in your count
of equipment with exempted engines under paragraph (g)(2) of this
section. For example, if we grant a hardship exemption for the engine
manufacturer, you may count these as compliant engines under this
section. This paragraph (d)(2) applies only if the engine has a
permanent label describing why it is exempted from the Phase 3
standards.
    (e) Standards. If you produce equipment with exempted engines under
this section, the engines must meet the Phase 2 emission standards
specified in 40 CFR part 90.
    (f) Equipment labeling. You must add a permanent label, written
legibly in English, to the engine or another readily visible part of
each piece of equipment with exempted engines you produce under this
section. This label, which supplements the engine manufacturer's
emission control information label, must include at least the following
items:
    (1) The label heading ``EMISSION CONTROL INFORMATION''.
    (2) Your corporate name and trademark.
    (3) The calendar year in which the equipment is manufactured.
    (4) The name, e-mail address, and phone number of a person to
contact for further information.
    (5) The following statement: THIS EQUIPMENT [or identify the type
of equipment] HAS AN ENGINE THAT MEETS U.S. EPA EMISSION STANDARDS
UNDER 40 CFR 1054.625.
    (g) Notification and reporting. You must notify us of your intent
to produce equipment under the provisions of this section and send us
an annual report to verify that you are not exceeding the production
limits for equipment with exempted engines, as follows:
    (1) Send the Designated Compliance Officer and the Designated
Enforcement Officer a written notice of your intent by June 30, 2010
including all the following:
    (i) Your company's name and address, and your parent company's name
and address, if applicable. Also identify the names of any other
companies operating under the same parent company.
    (ii) Whom to contact for more information.
    (iii) The calendar years in which you expect to use the exemption
provisions of this section.
    (iv) The name and address of the company that produces the engines
you will be using for the equipment exempted under this section.
    (v) How many pieces of equipment with exempted engines you may sell
under this section, as described in paragraph (b) of this section.
Include your production figures for the period from January 1, 2007
through December 31, 2009, including figures broken down by equipment
model and calendar year. You may send corrected figures with lower
production volumes anytime after your initial notification. To make a
correction for higher production volumes, send us the corrected figures
by September 30, 2010. We may ask you to give us additional information
to confirm your production figures.
    (2) For each year that you use the provisions of this section, send
the Designated Compliance Officer and the Designated Enforcement
Officer a written report by March 31 of the following year. Identify in
your report how many pieces of equipment with exempted engines you sold
in the preceding year, based on actual U.S.-directed production
information. If you produce equipment in the 2010 calendar year with
exempted engines from the 2011 model year, include these units in your
March 31, 2012 report. Also identify cumulative figures describing how
many pieces of equipment with exempted engines you have produced for
all the years you used the provisions of this section.
    (3) If you send your initial notification under paragraph (g)(1) of
this section after the specified deadline, we may approve your use of
allowances under this section. In your request, describe why you were
unable to meet the deadline.
    (h) Recordkeeping. Keep the following records of all equipment with
exempted engines you produce under this section until at least December
31, 2019:
    (1) The model number for each piece of equipment.
    (2) Detailed figures for determining how many pieces of equipment
with exempted engines you may produce under this section, as described
in paragraph (b) of this section.
    (3) The notifications and reports we require under paragraph (g) of
this section.
    (i) Enforcement. Producing more exempted engines or equipment than
we allow under this section or installing engines that do not meet the
emission standards of paragraph (e) of this section violates the
prohibitions in 40 CFR

1068.101(a)(1). You must give us the records we require under this
section if we ask for them (see 40 CFR 1068.101(a)(2)).
    (j) Provisions for engine manufacturers. As an engine manufacturer,
you may produce exempted engines without request under this section
using one of the following approaches:
    (1) The provisions of this paragraph (j)(1) apply if you do not use
the delegated-assembly provisions of Sec.  1054.610 for any of the
engines in an engine family. You must have written assurance from
equipment manufacturers or your authorized distributors that they need
a certain number of exempted engines under this section. Keep these
records for at least five years after you stop producing engines under
this section. The engines must meet the emission standards in paragraph
(e) of this section and you must meet all the requirements of 40 CFR
1068.265. You must label the engines using one of the following
approaches:
    (i) Meet the labeling requirements in 40 CFR 90.114, but add the
following statement instead of the compliance statement in 40 CFR
90.114(b)(7): THIS ENGINE MEETS U.S. EPA EMISSION STANDARDS UNDER 40
CFR 1054.625 AND MUST BE USED ONLY UNDER THOSE FLEXIBILITY PROVISIONS.
    (ii) Meet the labeling requirements in Sec.  1054.135 for Phase 3
engines and add the separate label described in paragraph (c)(2) of
this section.
    (2) The following provisions apply if you notify us that you plan
to use the delegated-assembly provisions of Sec.  1054.610 for one or
more equipment manufacturers for an engine family:
    (i) Include test data in your application for certification showing
that your engines will meet the standards specified in paragraph (e) of
this section if they have a noncatalyzed muffler in place of the
aftertreatment that is part of the certified configuration. This may be
based on emission measurements from previous model years if the data is
still appropriate for the current engine configuration.
    (ii) Produce all your engines with the emission control information
label we specify in Sec.  1054.135. The engines must also have the
label we specify in Sec.  1054.610(c)(7), with additional information
summarizing the equipment manufacturers obligations under paragraph
(c)(2) of this section.
    (iii) Include in the installation instructions required under Sec.
1054.610 any appropriate instructions or limitations on installing
noncatalyzed mufflers to ensure that the fully assembled engine will
meet the emission standards specified in paragraph (e) of this section.
You may identify an appropriate range of backpressures, but this may
not involve any instructions related to changing the fuel system for
different fueling rates.
    (iv) If your engine family generates exhaust emission credits under
subpart H of this part, you must multiply the credits calculated under
Sec.  1054.705 by 0.9. This is based on the expectation that equipment
manufacturers will modify 10 percent of the engines to no longer meet
Phase 3 standards.
    (k) Additional exemptions for mid-sized companies. If your average
annual production of equipment with Class II engines as described in
paragraph (b) of this section is between 5,000 and 50,000 units, you
may request additional engine allowances under this section. To do
this, notify us by January 31, 2010 if you believe the provisions of
this section will not allow you to sell certain equipment models
starting in the 2011 model year. In your notification, show us that you
will be able to produce a number of Class II equipment models
representing at least half your total U.S.-directed production volume
in the 2011 model year that will be compliant with all Phase 3 exhaust
and evaporative emission standards. Also describe why you need more
allowances under this section to accommodate anticipated changes in
engine designs resulting from engine manufacturers'' compliance with
changing exhaust emission standards. Include a proposal for the number
of additional allowances you would need, with supporting rationale. We
may approve allowances up to a total of 100 percent of the average
annual U.S.-directed production volume you report under paragraph (b)
of this section (in place of the 30 percent that is otherwise allowed).

Sec.  1054.626  What special provisions apply to equipment imported
under the Transition Program for Equipment Manufacturers?

    This section describes requirements that apply to equipment
manufacturers using the provisions of Sec.  1054.625 for equipment
produced outside the United States. Note that Sec.  1054.625 limits
these provisions to equipment manufacturers that install some engines
and have primary responsibility for designing and manufacturing
equipment. Companies that import equipment into the United States
without meeting these criteria are not eligible for allowances under
Sec.  1054.625. Such importers may import equipment with exempted
engines only as described in paragraph (b) of this section.
    (a) As a foreign equipment manufacturer, you or someone else may
import equipment with exempted engines under this section if you comply
with the provisions in Sec.  1054.625 and commit to the following:
    (1) Give any EPA inspector or auditor complete and immediate access
to inspect and audit, as follows:
    (i) Inspections and audits may be announced or unannounced.
    (ii) Inspections and audits may be performed by EPA employees or
EPA contractors.
    (iii) You must provide access to any location where--
    (A) Any nonroad engine, equipment, or vehicle is produced or
stored.
    (B) Documents related to manufacturer operations are kept.
    (C) Equipment, engines, or vehicles are tested or stored for
testing.
    (iv) You must provide any documents requested by an EPA inspector
or auditor that are related to matters covered by the inspections or
audit.
    (v) EPA inspections and audits may include review and copying of
any documents related to demonstrating compliance with the exemptions
in Sec.  1054.625.
    (vi) EPA inspections and audits may include inspection and
evaluation of complete or incomplete equipment, engines, or vehicles,
and interviewing employees.
    (vii) You must make any of your employees available for interview
by the EPA inspector or auditor, on request, within a reasonable time
period.
    (viii) You must provide English language translations of any
documents to an EPA inspector or auditor, on request, within 10 working
days.
    (ix) You must provide English-language interpreters to accompany
EPA inspectors and auditors, on request.
    (2) Name an agent for service located in the United States. Service
on this agent constitutes service on you or any of your officers or
employees for any action by EPA or otherwise by the United States
related to the requirements of this part.
    (3) The forum for any civil or criminal enforcement action related
to the provisions of this section for violations of the Clean Air Act
or regulations promulgated thereunder shall be governed by the Clean
Air Act.
    (4) The substantive and procedural laws of the United States shall
apply to any civil or criminal enforcement action against you or any of
your officers or employees related to the provisions of this section.
    (5) Provide the notification required by Sec.  1054.625(g). Include
in the notice of intent in Sec.  1054.625(g)(1) a

commitment to comply with the requirements and obligations of Sec.
1054.625 and this section. This commitment must be signed by the owner
or president.
    (6) You, your agents, officers, and employees must not seek to
detain or to impose civil or criminal remedies against EPA inspectors
or auditors, whether EPA employees or EPA contractors, for actions
performed within the scope of EPA employment related to the provisions
of this section.
    (7) By submitting notification of your intent to use the provisions
of Sec.  1054.625, producing and exporting for resale to the United
States nonroad equipment under this section, or taking other actions to
comply with the requirements of this part, you, your agents, officers,
and employees, without exception, become subject to the full operation
of the administrative and judicial enforcement powers and provisions of
the United States as described in 28 U.S.C. 1605(a)(2), without
limitation based on sovereign immunity, for conduct that violates the
requirements applicable to you under this part 1054--including such
conduct that violates 18 U.S.C. 1001, 42 U.S.C. 7413(c)(2), or other
applicable provisions of the Clean Air Act--with respect to actions
instituted against you and your agents, officers, and employees in any
court or other tribunal in the United States.
    (8) Any report or other document you submit to us must be in the
English language, or include a complete translation in English.
    (9) You must post a bond to cover any potential enforcement actions
under the Clean Air Act before you or anyone else imports your
equipment with exempted engines under this section, as specified in
Sec.  1054.690. Use the bond amount specified in Sec.  1054.690 without
adjusting for inflation. Note that you may post a single bond to meet
the requirements of this section and Sec.  1054.690 together.
    (b) The provisions of this paragraph (b) apply to importers that do
not install engines into equipment and do not have primary
responsibility for designing and manufacturing equipment. Such
importers may import equipment with engines exempted under Sec.
1054.625 only if each engine is exempted under an allowance provided to
an equipment manufacturer meeting the requirements of Sec.  1054.625
and this section. You must notify us of your intent to use the
provisions of this section and send us an annual report, as follows:
    (1) Before January 1 of the first year you intend to use the
provisions of this section, send the Designated Compliance Officer and
the Designated Enforcement Officer a written notice of your intent,
including:
    (i) Your company's name and address, and your parent company's name
and address, if applicable.
    (ii) The name and address of the companies that produce the
equipment and engines you will be importing under this section.
    (iii) Your best estimate of the number of units you will import
under this section in the upcoming calendar year, broken down by
equipment manufacturer.
    (2) For each year that you use the provisions of this section, send
the Designated Compliance Officer and the Designated Enforcement
Officer a written report by March 31 of the following year. Include in
your report the total number of engines you imported under this section
in the preceding calendar year, broken down by engine manufacturer and
by equipment manufacturer.

Sec.  1054.627  How does the Transition Program for Equipment
Manufacturers relate to evaporative emissions?

    The provisions of this section allow equipment manufacturers to
produce equipment that does not comply with certain requirements
related to evaporative emissions in conjunction with the Transition
Program for Equipment Manufacturers in Sec.  1054.625.
    (a) You may use the provisions of this section only after you have
used up any available allowances under Sec.  1054.145(e).
    (b) For any equipment using Class II engines that you produce under
the flexibility provisions of Sec.  1054.625, the following special
provisions apply with respect to evaporative emissions:
    (1) You may use rotation-molded fuel tanks that do not meet
requirements related to the fuel tank permeation standards specified in
Sec.  1054.110. You may not apply the provisions of this paragraph
(b)(1) to fuel tanks that are not rotation-molded.
    (2) You may produce equipment that does not meet requirements
related to the running loss standard specified in Sec.  1054.110.
    (3) If you use the provisions of this section, add the following
statement to the label specified in Sec.  1054.625(f):
    THIS EQUIPMENT [or identify the type of equipment] IS EXEMPT FROM
[fuel tank permeation or running loss standards, as applicable] UNDER
40 CFR 1054.627.
    (c) You may not use the provisions of this section for equipment
that you do not produce under the flexibility provisions of Sec.
1054.625.

Sec.  1054.630  What provisions apply for importation of individual
items for personal use?

    (a) Any individual may import previously used nonconforming engines
for purposes other than resale, but no more than once in any five-year
period. This may include up to three nonconforming engines imported at
the same time. To import engines under this section, provide to the
Customs official the following information:
    (1) Identify your name, address, and telephone number.
    (2) If you are importing engines under this section on behalf of
another person, identify the ultimate engine owner's name, address, and
telephone number.
    (3) Identify the total number of engines you are importing and
specify the make, model, identification number, and original production
year of each engine.
    (4) State: ``I am importing these previously used engines for
personal use. I have not imported any engines under the provisions of
40 CFR 1054.630 within the previous five years. I am not importing
these engines for purpose of resale. I authorize EPA enforcement
officers to inspect my engines and my facilities as permitted by the
Clean Air Act.''.
    (b) We may require you to send us additional information, but you
do not need written approval from us to import engines under this
section. We will also not require a U.S. Customs Service bond for
engines you import under this section.
    (c) The provisions of this section may not be used to circumvent
emission standards that apply to new engines under this part. For
example, you may not purchase new engines and use them in a trivial
manner outside of the United States to qualify for importation under
this section.
    (d) If you violate the provisions of this section, or submit false
information to obtain this exemption, you will be subject to civil
penalties as specified in 40 CFR 1068.101(a)(2) and (b)(5).

Sec.  1054.635  What special provisions apply for small-volume engine
and equipment manufacturers?

    This section describes how we apply the special provisions in this
part for small-volume engine and equipment manufacturers.
    (a) If you qualify under paragraph (1) or (2) of the definition of
small-volume engine manufacturer or under paragraph (1) or (2) of the
definition small-volume equipment manufacturer in Sec.  1054.801, the
small-volume provisions apply as specified in this part.
    (b) If you are a small business (as defined by the Small Business

Administration at 13 CFR 121.201) that manufactures nonroad spark-
ignition engines or equipment, but you do not qualify under paragraph
(1) or (2) of the definition of small-volume engine manufacturer or
under paragraph (1) or (2) of the definition of small-volume equipment
manufacturer in Sec.  1054.801, you may ask us to designate you to be a
small-volume engine or equipment manufacturer. You may do this whether
you began manufacturing engines before, during, or after 2007. We may
set other reasonable conditions that are consistent with the intent of
this section and the Act.
    (c) If you use any of the provisions of this part that apply
specifically to small-volume manufacturers and we find that you exceed
the production limits or otherwise do not qualify as a small-volume
manufacturer, we may consider you to be in violation of the
requirements that apply for companies that are not small-volume
manufacturers for those engines produced in excess of the specified
production limits.

Sec.  1054.640  What special provisions apply to branded engines?

    The following provisions apply if you identify the name and
trademark of another company instead of your own on your emission
control information label, as provided by Sec.  1054.135(c)(2):
    (a) You must have a contractual agreement with the other company
that obligates that company to take the following steps:
    (1) Meet the emission warranty requirements that apply under Sec.
1054.120. This may involve a separate agreement involving reimbursement
of warranty-related expenses.
    (2) Report all warranty-related information to the certificate
holder.
    (b) In your application for certification, identify the company
whose trademark you will use and describe the arrangements you have
made to meet your requirements under this section.
    (c) You remain responsible for meeting all the requirements of this
chapter, including warranty and defect-reporting provisions.

Sec.  1054.645  What special provisions apply for converting an engine
to use an alternate fuel?

    (a) Converting a certified new engine to run on a different fuel
violates 40 CFR 1068.101(a)(1) if the modified engine is not covered by
a certificate of conformity.
    (b) Converting a certified engine that is not new to run on a
different fuel violates 40 CFR 1068.101(b)(1) if the modified engine is
not covered by a certificate of conformity. We may specify alternate
certification provisions consistent with the requirements of this part.
    (c) Engines may be certified as required in this section based on
the certification procedures for new engines or on those for
aftermarket parts specified in 40 CFR part 85, subpart V.

Sec.  1054.650  What special provisions apply for adding or changing
governors?

    The special provisions in this section apply for engines that will
not have constant-speed governors when installed in equipment.
Paragraph (a) of this section also applies for any engines shipped
without installed governors.
    (a) The representative-testing requirements of 40 CFR 1065.10(c)(1)
related to in-use duty cycles do not apply to engines you produce and
ship without constant-speed governors if you comply with all the
following requirements:
    (1) You must have test data showing that the effectiveness of the
engine's emission controls over the expected range of in-use operation
will be similar to that measured over the specified duty cycle.
Alternatively, if your emission controls depend on maintaining a
consistent air-fuel ratio, you may demonstrate that the engine is
calibrated to maintain a consistent air-fuel ratio over the expected
range of in-use operation.
    (2) Describe in your application for certification the data and
analysis that supports your conclusion.
    (b) As a distributor or equipment manufacturer, it is not a
violation of the tampering provisions in 40 CFR 1068.101(b)(1) for you
to remove a constant-speed governor that is covered by a certificate of
conformity, as long as you meet all the following requirements:
    (1) You must have a reasonable technical basis for believing that
the effectiveness of the modified engine's emission controls over the
expected range of in-use operation will be similar to that measured
over the specified duty cycle. This may require that you have test
data. You are not required to apply for a new certificate of
conformity.
    (2) You must notify the engine manufacturer before modifying the
engine. You must follow any instructions from the engine manufacturer
related to the emission control system.
    (3) You may not make any other changes to the engine that would
remove it from its certified configuration.
    (4) You must keep record of the number of engines you modify in
each model year, a description of your procedures for modifying engines
(including part numbers of the parts you install), and a description of
the reasonable technical basis described in paragraph (b)(1) of this
section. Keep these records for five years after you modify the
engines. Store these records in any format and on any media, as long as
you can promptly send us organized, written records in English if we
ask for them. You must keep these records readily available. We may
review them at any time.

Sec.  1054.655  What special provisions apply to installing and
removing altitude kits?

    (a) An action for the purpose of installing or removing altitude
kits and performing other changes to compensate for changing altitude
is not considered a prohibited act under 40 CFR 1068.101(b), as long as
it is done consistent with the provisions of this section.
    (b) You may install or remove an altitude kit as long as you are
using replacement parts that are specified in the engine manufacturer's
application for certification.

Sec.  1054.660  What are the provisions for exempting emergency rescue
equipment?

    The provisions of this section apply for new equipment built on or
after January 1, 2009.
    (a) Equipment manufacturers may introduce into U.S. commerce
equipment that is not certified to current emission standards under the
following conditions if the equipment will be used solely in emergency
rescue situations:
    (1) You must determine annually that no engines certified to
current emission standards are available to power the equipment safely
and practically. We may review your records supporting this
determination at any time.
    (2) You may not use exempted engines to power generators,
alternators, compressors, or pumps.
    (3) If engines that meet less stringent emission standards are
capable of powering your equipment safely and practically, you must use
them as a condition of this exemption. You must use available engines
meeting the most stringent standards feasible.
    (4) You must send the engine manufacturer a written request for
each exempted equipment model.
    (5) You must notify the Designated Compliance Officer of your
intent to use the provisions of this section. We may require you to
notify us annually or to send us annual reports describing how you meet
the conditions of this section.
    (b) For the purposes of this section, ``emergency rescue
situations'' means

firefighting or other situations in which a person is retrieved from
imminent danger.
    (c) As an engine manufacturer, you may produce exempt engines under
this section without our prior approval if you have a written request
for an exempted engine for use in emergency rescue equipment from the
equipment manufacturer. You must permanently label engines exempted
under this section to clearly indicate that they are to be used solely
for emergency rescue equipment. Failure to properly label an engine
will void the exemption.
    (d) We may discontinue an exemption under this section if we find
that engines are not used solely for emergency rescue equipment or if
we find that a certified engine is available to power the equipment
safely and practically.

Sec.  1054.685  What are my recall responsibilities?

    (a) You are responsible to meet all applicable recall requirements
in 40 CFR 1068, subpart F. You must also meet the additional
requirements of this section.
    (b) You must demonstrate at the time of certification that you will
be able to meet these requirements. Except as allowed in paragraph (c)
of this section, your demonstration must include at least one of the
following:
    (1) You have assembly facilities in the United States that are
available for processing recall repairs.
    (2) You have a repair network in the United States capable of
processing recall repairs. To qualify under this paragraph (b)(2), you
must have at least 100 authorized repair facilities in the United
States or at least one such facility for each 5000 engines you sell in
the United States, whichever is less.
    (c) If you do not have the assembly or repair facilities required
under paragraph (b) of this section, you may instead rely on
independent contractors that you name in your application for
certification to perform recalls, but you must provide assurance that
you can fulfill recall obligations, such as posting bond.

Sec.  1054.690  What are the bond requirements for importing certified
engines and equipment?

    As specified in this section, we are considering whether to require
you to post a bond if you introduce into U.S. commerce engines that are
subject to the standards of this part. See paragraph (f) of this
section for the requirements related to selling or importing engines
that have been certified by someone else.
    (a) Prior to introducing engines into U.S. commerce, you must post
a bond to cover any potential compliance or enforcement actions under
the Clean Air Act unless you demonstrate to us that you will meet any
compliance-or enforcement-related obligations. For example, it would be
a sufficient demonstration if you show that you have manufactured or
imported engines for the U.S. market for a significant period of time
without failing a test conducted by EPA officials or having been found
by the EPA not to be in compliance with applicable regulations.
    (b) The value of the bond is based on the per-engine bond values
shown in Table 1 of this section and on the U.S.-directed production
volume from each displacement grouping for the calendar year. For
example, if you have projected U.S.-directed production volumes of
10,000 engines with 180 cc displacement and 5,000 engines with 400 cc
displacement in 2013, the appropriate bond amount is $500,000. Adjust
the value of the bond as follows:
    (1) If your estimated or actual U.S.-directed production volume in
any later calendar year increases beyond the level appropriate for your
current bond payment, you must post additional bond to reflect the
increased volume within 90 days after you change your estimate or
determine the actual production volume. You may not decrease your bond.
    (2) The per-engine bond values listed are in 2008 dollars. Adjust
these values in 2010 and later calendar years by comparing the Consumer
Price Index values published by the Bureau of Labor Statistics for the
preceding June and June 2008 (see ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt
). Round calculated values to the nearest

dollar.
    (3) If you sell engines without aftertreatment components under the
provisions of Sec.  1054.610, you must increase the per-engine bond
values for the current year by 20 percent. Round calculated values to
the nearest dollar.

           Table 1 to Sec.   1054.690--Per-Engine Bond Values
------------------------------------------------------------------------
                                                          The per-engine
 For engines with displacement falling in the following    bond value is
                       ranges. . .                             . . .
------------------------------------------------------------------------
Disp. <  225 cc..........................................             $25
225 < = Disp. <  740 cc...................................              50
740 < = Disp. < = 1,000 cc................................             100
Disp. > 1,000 cc........................................             200
------------------------------------------------------------------------

    (c) You may meet the bond requirements of this section by obtaining
a bond from a third-party surety 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'' (http://www.fms.treas.gov/c570/c570.html#certified). You

must maintain this bond for 5 years.
    (d) If you forfeit some or all of your bond in an enforcement
action, you must post any appropriate bond for continuing sale within
90 days after you forfeit the bond amount.
    (e) You will forfeit the proceeds of the bond posted under this
section if you need to satisfy any United States administrative final
order or judicial judgment against you arising from your conduct in
violation of this chapter, including such conduct that violates 18
U.S.C. 1001, 42 U.S.C. 7413(c)(2), or other applicable provisions of
the Clean Air Act.
    (f) This paragraph (f) applies if you sell, or import for resale,
engines that have been certified by someone else (or equipment
containing such engines).
    (1) You and the certificate holder are each responsible for
compliance with the requirements of this part and the Clean Air Act.
For example, we may require you to comply with the warranty
requirements in the standard-setting part.
    (2) You do not need to post bond if the certificate holder complies
with the bond requirements of this section.

Sec.  1054.695  What restrictions apply to assigning a model year to
imported engines and equipment?

    This section includes limitations on assigning a model year to
engines and equipment that are imported in a year later than the model
year in which they were manufactured, except as specified in paragraph
(e) of this section.
    (a) The term ``model year'' is defined in each of the standard-
setting parts. These definitions may vary slightly to address the
different categories of engines and equipment. Except as specified in
paragraphs (b) and (c) of this section, the emission standards and
other emission-related requirements that apply for an imported engine
or piece of equipment are determined by the model year as defined in
the applicable standard-setting part and the provisions of 40 CFR
1068.105(a).
    (b) This paragraph (b) applies for the importation of new engines
and new equipment in any calendar year that is more than one year after
the named model year of the engine or equipment where emission
requirements applying to current engines are different than for engines
or equipment in the named model year. Regardless of what other
provisions of this subchapter U specify

for the model year of the engine or equipment, such engines and
equipment are deemed to have an applicable model year no more than one
year earlier than the calendar year in which they are being imported.
For example, a new engine identified as a 2007 model-year product that
is imported on January 31, 2010 will be treated as a 2009 model-year
engine; the same engine will be treated as a 2010 model-year engine if
it is imported any time in calendar year 2011.
    (c) If you claim that an engine or piece of equipment is not
subject to standards--or is subject to standards less stringent than
those currently in place--based on its original manufacture date
because it has already been placed into service, you must provide clear
and convincing evidence that it has already been placed into service.
Such evidence must generally include, but not be limited to,
documentary evidence of purchase and maintenance history and visible
wear that is consistent with the reported manufacture date. Importing
products for resale or importing more than one engine or piece of
equipment at a time would generally require a greater degree of
evidence under this paragraph (c). If you do not satisfactorily
demonstrate that the engine has already been placed into service, the
provisions of paragraph (b) of this section apply.
    (d) Nothing in this section should be interpreted to allow
circumvention of the requirements of this part by misstating or
mislabeling the model year of engines or equipment. For example, this
section does not permit engines imported in the same year as
manufactured to be treated as an engine manufactured in the previous
year. To verify compliance with the provisions of this section, we may
require you to verify the original manufacture date of the engine or
equipment based on manufacturing records, title-transfer documents,
service records, or other documentation.
    (e) If all the current emission requirements are the same as in the
named model year, the provisions of this section do not apply.

Subpart H--Averaging, Banking, and Trading for Certification

Sec.  1054.701  General provisions.

    (a) You may average, bank, and trade (ABT) emission credits for
purposes of certification as described in this subpart to show
compliance with the standards of this part. Participation in this
program is voluntary.
    (b) The definitions of subpart I of this part apply to this
subpart. The following definitions also apply:
    (1) Actual emission credits means emission credits you have
generated that we have verified by reviewing your final report.
    (2) Averaging set means a set of engines (or equipment) in which
emission credits may be exchanged only with other engines (or
equipment) in the same averaging set.
    (3) Broker means any entity that facilitates a trade of emission
credits between a buyer and seller.
    (4) Buyer means the entity that receives emission credits as a
result of a trade.
    (5) Family means engine family for exhaust credits or emission
family for evaporative credits.
    (6) Reserved emission credits means emission credits you have
generated that we have not yet verified by reviewing your final report.
    (7) Seller means the entity that provides emission credits during a
trade.
    (8) Standard means the emission standard that applies under subpart
B of this part for engines or fuel-system components not participating
in the ABT program of this subpart.
    (9) Trade means to exchange emission credits, either as a buyer or
seller.
    (c) The use of emission credits is limited to averaging sets, as
follows:
    (1) You may not average or exchange exhaust credits with
evaporative credits, or vice versa.
    (2) Handheld engines and nonhandheld engines are in separate
averaging sets with respect to exhaust emissions except as specified in
Sec.  1054.740(e). You may use emission credits generated under 40 CFR
part 90 for handheld engines subject to the standards in Sec.  1054.103
only if you can demonstrate that those credits were generated by
handheld engines, except as specified in Sec.  1054.740(e). You may use
emission credits generated under 40 CFR part 90 for nonhandheld engines
only if you can demonstrate that those credits were generated by
nonhandheld engines, subject to the provisions of Sec.  1054.740.
    (3) Equipment using handheld engines, Class I engines, and Class II
engines are in separate averaging sets with respect to evaporative
emissions. You may not average or exchange evaporative credits between
any of these averaging sets.
    (4) You may combine evaporative emission credits for fuel tanks and
fuel lines for handheld equipment.
    (5) For purposes of calculating emission credits under this
subpart, engines with displacement below 80 cc are presumed to be
handheld engines. You may treat these as nonhandheld engines for
calculating exhaust or evaporative emission credits only for those
engines you can demonstrate will be installed in nonhandheld equipment.
For example, if 50 percent of engines in an emission family will be
used in nonhandheld equipment, you may calculate the emission credits
for 50 percent of the engines to be nonhandheld credits using the
appropriate calculation methods.
    (d) You may not generate evaporative credits based on permeation
measurements from metal fuel tanks.
    (e) You may not use emission credits generated under this subpart
to offset any emissions that exceed an FEL or standard. This applies
for all testing, including certification testing, in-use testing,
selective enforcement audits, and other production-line testing.
However, if exhaust emissions from an engine exceed an exhaust FEL or
standard (for example, during a selective enforcement audit), you may
use emission credits to recertify the family with a higher FEL that
applies only to future production.
    (f) Emission credits may be used in the model year they are
generated (averaging) and in future model years (banking). Emission
credits may not be used for past model years.
    (g) You may increase or decrease an exhaust FEL during the model
year by amending your application for certification under Sec.
1054.225.

Sec.  1054.705  How do I generate and calculate exhaust emission
credits?

    The provisions of this section apply for calculating exhaust
emission credits. You may generate exhaust emission credits only if you
are a certifying engine manufacturer.
    (a) For each participating family, calculate positive or negative
emission credits relative to the otherwise applicable emission
standard. Calculate positive emission credits for a family that has an
FEL below the standard. Calculate negative emission credits for a
family that has an FEL above the standard. Sum your positive and
negative credits for the model year before rounding. Round calculated
emission credits to the nearest kilogram (kg), using consistent units
throughout the following equation:

Emission credits (kg) = (Std-FEL) x (Volume) x (Power) x (UL) x (LF) x
(10-3)

Where:

Std = the emission standard, in g/kW-hr.
FEL = the family emission limit for the family, in g/kW-hr.

Volume = the number of engines eligible to participate in the
averaging, banking, and trading program within the given family
during the model year, as described in paragraph (c) of this
section.
Power = the maximum modal power of the emission-data engine as
calculated from the applicable test procedure described in subpart F
of this part, in kilowatts.
UL = the useful life for the given family, in hours.
LF = load factor. Use 0.47 for nonhandheld engines and 0.85 for
handheld engines. We may specify a different load factor if we
approve the use of special test procedures for an engine family
under 40 CFR 1065.10(c)(2), consistent with good engineering
judgment.

    (b) [Reserved]
    (c) In your application for certification, base your showing of
compliance on projected production volumes for engines intended for
sale in the United States. As described in Sec.  1054.730, compliance
with the requirements of this subpart is determined at the end of the
model year based on actual production volumes for engines intended for
sale in the United States.
    Do not include any of the following engines or equipment to
calculate emission credits:
    (1) Engines exempted under subpart G of this part or under 40 CFR
part 1068.
    (2) Engines intended for export, unless there is reason to believe
that the engines will be later imported into the United States after
installation in equipment.
    (3) Engines that are subject to state emission standards for that
model year. However, this restriction does not apply if we determine
that the state standards and requirements are equivalent to those of
this part and that engines sold in such a state will not generate
credits under the state program. For example, you may not include
engines certified for California if it has more stringent emission
standards for these engines or those engines generate or use emission
credits under the California program.
    (4) Engines not subject to the requirements of this part, such as
those excluded under Sec.  1054.5.
    (5) Any other engines, where we indicate elsewhere in this part
1054 that they are not to be included in the calculations of this
subpart.

Sec.  1054.706  How do I generate and calculate evaporative emission
credits?

    The provisions of this section apply for calculating evaporative
emission credits. This applies for fuel line permeation for handheld
equipment and for fuel tank permeation from all equipment. You may
generate credits only if you are a certifying equipment manufacturer.
    (a) For each participating family, calculate positive or negative
emission credits relative to the otherwise applicable emission
standard. Calculate positive emission credits for a family that has an
FEL below the standard. Calculate negative emission credits for a
family that has an FEL above the standard. Sum your positive and
negative credits for the model year before rounding. Round calculated
emission credits to the nearest kilogram (kg), using consistent units
throughout the following equation:

Emission credits (kg) = (Std-FEL) x (Total Area) x (UL) x (AF) x (365)
x (10-3)

Where:

Std = the emission standard, in g/m\2\/day.
FEL = the family emission limit for the family, in g/m\2\/day, as
described in paragraph (b) of this section.
Total Area = The combined internal surface area of all fuel tanks or
fuel lines in the family, in m\2\.
UL = the useful life for the given family, in years.
AF = adjustment factor. Use 0.60 for fuel tank permeation testing
performed at 40 [deg]C; use 1.0 for all other testing.

    (b) For calculating credits under paragraph (a) of this section,
determine the FEL for fuel lines based on measured emission levels.
Determine the FEL for fuel tanks using any of the following values:
    (1) The FEL to which the fuel tank is certified, as long as the FEL
is at or below 3.0 g/m\2\/day.
    (2) 10.4 g/m\2\/day. However, if you use this value to establish
the FEL for any of your fuel tanks, you must use this value to
establish the FEL for every tank not covered by paragraph (b)(1) of
this section.
    (3) The measured permeation rate of the fuel tank or the measured
permeation rate of a thinner-walled tank of the same material. However,
if you use this approach to establish the FEL for any of your fuel
tanks, you must establish an FEL based on emission measurements for
every tank not covered by paragraph (b)(1) of this section.
    (c) To qualify for generating emission credits with structurally
integrated nylon fuel tanks used with handheld equipment, the FEL must
be at or below 1.5 g/m\2\/day for testing at a nominal temperature of
28 [deg]C, or 2.5 g/m\2\/day for testing at a nominal temperature of 40
[deg]C. Calculate positive emission credits under this section relative
to an emission standard of 1.5 g/m\2\/day. Calculate negative emission
credits under this section relative to an emission standard of 2.5 g/
m\2\/day.
    (d) To qualify for generating emission credits with fuel lines for
cold-weather equipment, the FEL must be at or below 15 g/m\2\/day.
Calculate positive emission credits under this section relative to an
emission standard of 15 g/m\2\/day. Calculate negative emission credits
under this section relative to an emission standard of 175 g/m\2\/day.
    (e) In your application for certification, base your showing of
compliance on projected production volumes for engines intended for
sale in the United States. As described in Sec.  1054.730, compliance
with the requirements of this subpart is determined at the end of the
model year based on actual production volumes for engines intended for
sale in the United States. Do not include any of the following
equipment to calculate emission credits:
    (1) Equipment exempted under subpart G of this part or under 40 CFR
part 1068.
    (2) Equipment intended for export.
    (3) Equipment that is subject to state emission standards for that
model year. However, this restriction does not apply if we determine
that the state standards and requirements are equivalent to those of
this part and that equipment sold in such a state will not generate
credits under the state program. For example, you may not include
equipment certified for California if it has more stringent emission
standards for these equipment or that equipment generates or uses
emission credits under the California program.
    (4) Equipment not subject to the requirements of this part, such as
those excluded under Sec.  1054.5.
    (5) Any other equipment, where we indicate elsewhere in this part
1054 that they are not to be included in the calculations of this
subpart.

Sec.  1054.710  How do I average emission credits?

    (a) Averaging is the exchange of emission credits among your
families. You may average emission credits only within the same
averaging set.
    (b) You may certify one or more families to an FEL above the
emission standard, subject to the FEL caps and other provisions in
subpart B of this part, if you show in your application for
certification that your projected balance of all emission-credit
transactions in that model year is greater than or equal to zero.
    (c) If you certify a family to an FEL that exceeds the otherwise
applicable standard, you must obtain enough emission credits to offset
the family's deficit by the due date for the final report required in
Sec.  1054.730. The

emission credits used to address the deficit may come from your other
families that generate emission credits in the same model year, from
emission credits you have banked, or from emission credits you obtain
through trading.

Sec.  1054.715  How do I bank emission credits?

    (a) Banking is the retention of emission credits by the
manufacturer generating the emission credits for use in averaging or
trading in future model years. You may use banked emission credits only
within the averaging set in which they were generated, except as
described in this subpart.
    (b) In your application for certification, designate any emission
credits you intend to bank. These emission credits will be considered
reserved credits. During the model year and before the due date for the
final report, you may redesignate these emission credits for averaging
or trading.
    (c) You may use banked emission credits from the previous model
year for averaging or trading before we verify them, but we may revoke
these emission credits if we are unable to verify them after reviewing
your reports or auditing your records.
    (d) Reserved credits become actual emission credits only when we
verify them in reviewing your final report.

Sec.  1054.720  How do I trade emission credits?

    (a) Trading is the exchange of emission credits between
manufacturers. You may use traded emission credits for averaging,
banking, or further trading transactions. Traded emission credits may
be used only within the averaging set in which they were generated,
except as described in this subpart.
    (b) You may trade actual emission credits as described in this
subpart. You may also trade reserved emission credits, but we may
revoke these emission credits based on our review of your records or
reports or those of the company with which you traded emission credits.
You may trade banked credits to any certifying engine or equipment
manufacturer.
    (c) If a negative emission credit balance results from a
transaction, both the buyer and seller are liable, except in cases we
deem to involve fraud. See Sec.  1054.255(e) for cases involving fraud.
We may void the certificates of all families participating in a trade
that results in a manufacturer having a negative balance of emission
credits. See Sec.  1054.745.

Sec.  1054.725  What must I include in my application for
certification?

    (a) You must declare in your application for certification your
intent to use the provisions of this subpart for each family that will
be certified using the ABT program. You must also declare the FELs you
select for the family for each pollutant for which you are using the
ABT program. Your FELs must comply with the specifications of subpart B
of this part, including the FEL caps. FELs must be expressed to the
same number of decimal places as the emission standard.
    (b) Include the following in your application for certification:
    (1) A statement that, to the best of your belief, you will not have
a negative balance of emission credits for any averaging set when all
emission credits are calculated at the end of the year.
    (2) Detailed calculations of projected emission credits (positive
or negative) based on projected production volumes. If your family will
generate positive emission credits, state specifically where the
emission credits will be applied (for example, to which family they
will be applied in averaging, whether they will be traded, or whether
they will be reserved for banking). If you have projected negative
emission credits for a family, state the source of positive emission
credits to offset the negative emission credits. Describe whether the
emission credits are actual or reserved and whether they will come from
averaging, banking, trading, or a combination of these. Identify from
which of your families or from which manufacturer the emission credits
will come.

Sec.  1054.730  What ABT reports must I send to EPA?

    (a) If any of your families are certified using the ABT provisions
of this subpart, you must send an end-of-year report within 90 days
after the end of the model year and a final report within 270 days
after the end of the model year. We may waive the requirement to send
the end-of year report, as long as you send the final report on time.
    (b) Your end-of-year and final reports must include the following
information for each family participating in the ABT program:
    (1) Family designation.
    (2) The emission standards that would otherwise apply to the
family.
    (3) The FEL for each pollutant. If you changed an FEL during the
model year, identify each FEL you used and calculate the positive or
negative emission credits under each FEL. Also, describe how the FEL
can be identified for each engine you produced. For example, you might
keep a list of engine or equipment identification numbers that
correspond with certain FEL values.
    (4) The projected and actual production volumes for the model year
with a point of retail sale in the United States, as described in
Sec. Sec.  1054.705(c) and 1054.706(c). For fuel tanks and fuel lines,
state the production volume in terms of total surface area. If you
changed an engine's FEL during the model year, identify the actual
production volume associated with each FEL.
    (5) The maximum modal power of the emission-data engine or the
appropriate internal surface area of the fuel tank or fuel line.
    (6) Useful life.
    (7) Calculated positive or negative emission credits for the whole
family. Identify any emission credits that you traded, as described in
paragraph (d)(1) of this section.
    (c) Your end-of-year and final reports must include the following
additional information:
    (1) Show that your net balance of emission credits from all your
participating families in each averaging set in the applicable model
year is not negative.
    (2) State whether you will reserve any emission credits for
banking.
    (3) State that the report's contents are accurate.
    (d) If you trade emission credits, you must send us a report within
90 days after the transaction, as follows:
    (1) As the seller, you must include the following information in
your report:
    (i) The corporate names of the buyer and any brokers.
    (ii) A copy of any contracts related to the trade.
    (iii) The families that generated emission credits for the trade,
including the number of emission credits from each family.
    (2) As the buyer, you must include the following information in
your report:
    (i) The corporate names of the seller and any brokers.
    (ii) A copy of any contracts related to the trade.
    (iii) How you intend to use the emission credits, including the
number of emission credits you intend to apply to each family (if
known).
    (e) Send your reports electronically to the Designated Compliance
Officer using an approved information format. If you want to use a
different format, send us a written request with justification for a
waiver.
    (f) Correct errors in your end-of-year report or final report as
follows:
    (1) You may correct any errors in your end-of-year report when you
prepare the

final report, as long as you send us the final report by the time it is
due.
    (2) If you or we determine within 270 days after the end of the
model year that errors mistakenly decrease your balance of emission
credits, you may correct the errors and recalculate the balance of
emission credits. You may not make these corrections for errors that
are determined more than 270 days after the end of the model year. If
you report a negative balance of emission credits, we may disallow
corrections under this paragraph (f)(2).
    (3) If you or we determine anytime that errors mistakenly increase
your balance of emission credits, you must correct the errors and
recalculate the balance of emission credits.

Sec.  1054.735  What records must I keep?

    (a) You must organize and maintain your records as described in
this section. We may review your records at any time.
    (b) Keep the records required by this section for at least eight
years after the due date for the end-of-year report. You may not use
emission credits for any engines or equipment if you do not keep all
the records required under this section. You must therefore keep these
records to continue to bank valid credits. Store these records in any
format and on any media, as long as you can promptly send us organized,
written records in English if we ask for them. You must keep these
records readily available. We may review them at any time.
    (c) Keep a copy of the reports we require in Sec. Sec.  1054.725
and 1054.730.
    (d) Keep the following additional records for each engine or piece
of equipment you produce that generates or uses emission credits under
the ABT program:
    (1) Family designation.
    (2) Engine or equipment identification number.
    (3) FEL and useful life.
    (4) Build date and assembly plant.
    (e) We may require you to keep additional records or to send us
relevant information not required by this section.

Sec.  1054.740  What special provisions apply for generating and using
emission credits?

    (a) You may generate Phase 3 emission credits from 2008 through
2011 model year Class I engines if you voluntarily meet the Phase 3
exhaust emission standards specified in Sec.  1054.105. Divide these
into transitional and enduring emission credits as follows:
    (1) Transitional credits are based on reducing emissions from Phase
2 levels down to Phase 3 levels. Calculate the value of transitional
emission credits as described in Sec.  1054.705, based on setting STD
equal to 15.0 g/kW-hr and FEL equal to 10.0 g/kW-hr. You may use these
transitional credits only for Class I engines in 2012 through 2014
model years. You may not use these transitional credits for Class II
engines.
    (2) Enduring credits are based on reducing emissions below Phase 3
levels. Calculate the value of enduring credits as described in Sec.
1054.705, based on setting STD equal to 10.0 g/kW-hr and FEL to the
value of the family emission limit you select for the engine family.
You may use these enduring credits for any nonhandheld engines
certified to the Phase 3 standards under this part, except as specified
in paragraph (d) of this section.
    (b) You may generate Phase 3 emission credits from 2008 through
2010 model year Class II engines if you voluntarily meet the Phase 3
exhaust emission standards specified in Sec.  1054.105. Divide these
into transitional and enduring emission credits as follows:
    (1) Transitional credits are based on reducing emissions from Phase
2 levels down to Phase 3 levels. Calculate the value of transitional
emission credits as described in Sec.  1054.705, based on setting STD
equal to 11.0 g/kW-hr and FEL equal to 8.0 g/kW-hr. You may use these
transitional credits only for Class II engines in 2011 through 2013
model years. You may not use these transitional credits for Class I
engines.
    (2) Enduring credits are based on reducing emissions below Phase 3
levels. Calculate the value of enduring credits as described in Sec.
1054.705, based on setting STD equal to 8.0 g/kW-hr and FEL to the
value of the family emission limit you select for the engine family.
You may use these enduring credits for any nonhandheld engines
certified to the Phase 3 standards under this part, except as specified
in paragraph (d) of this section
    (c) You may use emission credits generated by nonhandheld engines
subject to Phase 2 emission standards under 40 CFR part 90 to
demonstrate compliance with the Phase 3 exhaust emission standards, but
only after you have exhausted all credits from engines meeting Phase 3
standards, subject to the conditions of paragraph (d) of this section.
You may use these Phase 2 emission credits only in the 2012 and 2013
model years for Class I engines and only in the 2011 through 2013 model
years for Class II engines. Determine a maximum number of Phase 2
emission credits for demonstrating compliance with the Phase 3
standards for a given engine class (Class I or Class II) as follows:
    (1) Calculate a Phase 2 credit allowance for each engine class
based on production information for model years 2007, 2008, and 2009
using the following equation:

    Credit allowance (kg) = (Emissions Delta) x (Volume) x (Avg. Power)
x (Avg. UL) x (LF) x (10-3)

Where:

Emissions Delta = 1.6 g/kW-hr for Class I and 2.1 g/kW-hr for Class
II.
Volume = the number of engines eligible to participate in the
averaging, banking, and trading program, as described in Sec.
1054.705(c), based on actual U.S.-directed production volumes.
Avg. Power = the production-weighted average value of the maximum
modal power for all engine families in the engine class, as
described in Sec.  1054.705(a), in kilowatts.
Avg. UL = the production-weighted average value of the useful life
for all engine families in the engine class, in hours.
LF = load factor. Use 0.47.

    (2) Do not include wintertime engines in the calculation of credit
allowances unless they are certified to meet the otherwise applicable
HC+NOX emission standard.
    (3) Calculate the average annual Phase 2 credit allowance for each
engine class over three model years as specified in paragraph (c)(1) of
this section. The resulting value is the maximum number of Phase 2
emission credits you may use under this paragraph (c) for each engine
class.
    (4) For 2013 and earlier model years, include in the reports
described in Sec.  1054.730 the total allowable number of Phase 2
emission credits and your cumulative totals of Phase 2 credits you have
used to comply with the requirements of this part.
    (d) If you generate enduring emission credits from Class I engines
under paragraph (a) of this section, you may not use these for Class II
engines in the 2011 or 2012 model year. Similarly, If you generate
enduring emission credits from Class II engines under paragraph (b) of
this section, you may not use these for Class I engines in the 2012
model year. These restrictions also apply for emission credits you
generate for engines subject to the standards of this part in the 2011
or 2012 model year.
    (e) You may use Phase 2 or Phase 3 emission credits from
nonhandheld engines to demonstrate compliance with the Phase 3
standards for handheld engines subject to the following restrictions:
    (1) The handheld engine family must be certified in 2008 and all
later model years using carryover of emission data

from an engine family that was most recently certified with new
emission data in 2007 or an earlier model year.
    (2) The handheld engine family's FEL may not increase above the
level selected for the 2007 model year in later years, unless such an
increase is based on emission data from production engines.

Sec.  1054.745  What can happen if I do not comply with the provisions
of this subpart?

    (a) For each family participating in the ABT program, the
certificate of conformity is conditional upon full compliance with the
provisions of this subpart during and after the model year. You are
responsible to establish to our satisfaction that you fully comply with
applicable requirements. We may void the certificate of conformity for
a family if you fail to comply with any provisions of this subpart.
    (b) You may certify your family to an FEL above an emission
standard based on a projection that you will have enough emission
credits to offset the deficit for the family. However, we may void the
certificate of conformity if you cannot show in your final report that
you have enough actual emission credits to offset a deficit for any
pollutant in a family.
    (c) We may void the certificate of conformity for a family if you
fail to keep records, send reports, or give us information we request.
    (d) You may ask for a hearing if we void your certificate under
this section (see Sec.  1054.820).

Subpart I--Definitions and Other Reference Information

Sec.  1054.801  What definitions apply to this part?

    The following definitions apply to this part. The definitions apply
to all subparts unless we note otherwise. All undefined terms have the
meaning the Act gives to them. The definitions follow:
    Act means the Clean Air Act, as amended, 42 U.S.C. 7401-7671q.
    Adjustable parameter means any device, system, or element of design
that someone can adjust (including those which are difficult to access)
and that, if adjusted, may affect emissions or engine performance
during emission testing or normal in-use operation. This includes, but
is not limited to, parameters related to injection timing and fueling
rate. You may ask us to exclude a parameter that is difficult to access
if it cannot be adjusted to affect emissions without significantly
degrading engine performance, or if you otherwise show us that it will
not be adjusted in a way that affects emissions during in-use
operation.
    Aftertreatment means relating to a catalytic converter, particulate
filter, thermal reactor, or any other system, component, or technology
mounted downstream of the exhaust valve (or exhaust port) whose design
function is to decrease emissions in the engine exhaust before it is
exhausted to the environment. Exhaust-gas recirculation (EGR) and
turbochargers are not aftertreatment.
    Amphibious vehicle means a vehicle with wheels or tracks that is
designed primarily for operation on land and secondarily for operation
in water.
    Applicable emission standard or applicable standard means an
emission standard to which an engine is subject; or, where an engine
has been or is being certified another standard or FEL, applicable
emission standards means the FEL and other standards to which the
engine has been or is being certified. This definition does not apply
to subpart H of this part.
    Auxiliary emission control device means any element of design that
senses temperature, motive 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 system.
    Brake power means the usable power output of the engine, not
including power required to fuel, lubricate, or heat the engine,
circulate coolant to the engine, or to operate aftertreatment devices.
    Calibration means the set of specifications and tolerances specific
to a particular design, version, or application of a component or
assembly capable of functionally describing its operation over its
working range.
    Certification means relating to the process of obtaining a
certificate of conformity for an emission family that complies with the
emission standards and requirements in this part.
    Certified emission level means the highest deteriorated emission
level in an emission family for a given pollutant from either transient
or steady-state testing.
    Class I means relating to nonhandheld engines with total
displacement below 225 cc. See Sec.  1054.101 for special provisions
that apply for engines with total displacement below 80 cc.
    Class II means relating to nonhandheld engines with total
displacement at or above 225 cc.
    Class III means relating to handheld engines with total
displacement below 20 cc.
    Class IV means relating to handheld engines with total displacement
at or above 20 cc but below 50 cc.
    Class V means relating to handheld engines with total displacement
at or above 50 cc.
    Cold-weather equipment includes the following types of handheld
equipment: Chainsaws, cut-off saws, clearing saws, brush cutters with
engines at or above 40cc, commercial earth and wood drills, and ice
augers. This includes earth augers if they are also marketed as ice
augers.
    Crankcase emissions means airborne substances emitted to the
atmosphere from any part of the engine crankcase's ventilation or
lubrication systems. The crankcase is the housing for the crankshaft
and other related internal parts.
    Critical emission-related component means any of the following
components:
    (1) Electronic control units, aftertreatment devices, fuel-metering
components, EGR-system components, crankcase-ventilation valves, all
components related to charge-air compression and cooling, and all
sensors and actuators associated with any of these components.
    (2) Any other component whose primary purpose is to reduce
emissions.
    Designated Compliance Officer means the Manager, Heavy-Duty and
Nonroad Engine Group (6405-J), U.S. Environmental Protection Agency,
1200 Pennsylvania Ave., NW., Washington, DC 20460.
    Designated Enforcement Officer means the Director, Air Enforcement
Division (2242A), U.S. Environmental Protection Agency, 1200
Pennsylvania Ave., NW.,Washington, DC 20460.
    Deteriorated emission level means the emission level that results
from applying the appropriate deterioration factor to the official
emission result of the emission-data engine.
    Deterioration factor means the relationship between emissions at
the end of useful life and emissions at the low-hour test point. See
Sec. Sec.  1054.240 and 1054.245.
    Discrete-mode means relating to the discrete-mode type of steady-
state test described in Sec.  1054.505.
    Displacement has the meaning given in Sec.  1054.140.
    Dry weight means the weight of the equipment as sold, without fuel,
oil, or engine coolant.
    Emission control system means any device, system, or element of
design that controls or reduces the emissions of regulated pollutants
from an engine.
    Emission-data engine means an engine that is tested for
certification.

This includes engines tested to establish deterioration factors.
    Emission-data equipment means an engine, piece of equipment, or
fuel system component that is tested for certification. This includes
units tested to establish deterioration factors.
    Emission-related maintenance means maintenance that substantially
affects emissions or is likely to substantially affect emission
deterioration.
    Engine has the meaning given in 40 CFR 1068.30. This includes
complete and partially complete engines.
    Engine configuration means a unique combination of engine hardware
and calibration within an emission family. Engines within a single
engine configuration differ only with respect to normal production
variability.
    Emission family has the meaning given in Sec.  1054.230. We may
refer to emission families as ``engine families'' where provisions
relate only to exhaust emissions from engines.
    Engine manufacturer means the manufacturer of the engine. See the
definition of ``manufacturer'' in this section.
    Equipment includes engines and fuel system components installed in
equipment.
    Equipment manufacturer means a manufacturer that assembles nonroad
equipment. All nonroad equipment manufacturing entities under the
control of the same person are considered to be a single nonroad
equipment manufacturer.
    Evaporative means relating to fuel emissions controlled by 40 CFR
part 1060. This generally includes emissions that result from
permeation of fuel through the fuel-system materials, from ventilation
of the fuel system.
    Excluded means relating to an engine that either:
    (1) Has been determined not to be a nonroad engine, as specified in
40 CFR 1068.30; or
    (2) Is a nonroad engine that, according to Sec.  1054.5, is not
subject to this part 1054.
    Exempted has the meaning given in 40 CFR 1068.30.
    Exhaust-gas recirculation means a technology that reduces emissions
by routing exhaust gases that had been exhausted from the combustion
chamber(s) back into the engine to be mixed with incoming air before or
during combustion. The use of valve timing to increase the amount of
residual exhaust gas in the combustion chamber(s) that is mixed with
incoming air before or during combustion is not considered exhaust-gas
recirculation for the purposes of this part.
    Family emission limit (FEL) means an emission level declared by the
manufacturer to serve in place of an otherwise applicable emission
standard under the ABT program in subpart H of this part. The family
emission limit must be expressed to the same number of decimal places
as the emission standard it replaces. The family emission limit serves
as the emission standard for the emission family with respect to all
required testing.
    Fuel line means hose or tubing designed to contain liquid fuel.
This does not include any of the following:
    (1) Fuel tank vent lines.
    (2) Segments of hose or tubing whose external surface is normally
exposed to liquid fuel inside the fuel tank.
    (3) Hose or tubing designed to return unused fuel from the
carburetor to the fuel tank for handheld engines.
    (4) Primer bulbs that contain liquid fuel only for priming the
engine before starting.
    Fuel system means all components involved in transporting,
metering, and mixing the fuel from the fuel tank to the combustion
chamber(s), including the fuel tank, fuel tank cap, fuel pump, fuel
filters, fuel lines, carburetor or fuel-injection components, and all
fuel-system vents.
    Fuel type means a general category of fuels such as gasoline or
natural gas. There can be multiple grades within a single fuel type,
such as low-temperature or all-season gasoline.
    Generator-set engine means an engine used primarily to operate an
electrical generator or alternator to produce electric power for other
applications.
    Good engineering judgment has the meaning given in 40 CFR 1068.30.
See 40 CFR 1068.5 for the administrative process we use to evaluate
good engineering judgment.
    Handheld means relating to equipment that meets any of the
following criteria:
    (1) It is carried by the operator throughout the performance of its
intended function.
    (2) It is designed to operate multipositionally, such as upside
down or sideways, to complete its intended function.
    (3) It has a combined engine and equipment dry weight under 15.0
kilograms, has no more than two wheels, and at least one of the
following attributes is also present:
    (i) The operator provides support or carries the equipment
throughout the performance of its intended function. Carry means to
completely bear the weight of the equipment, including the engine.
Support means to hold a piece of equipment in position to prevent it
from falling, slipping, or sinking, without carrying it.
    (ii) The operator provides support or attitudinal control for the
equipment throughout the performance of its intended function.
Attitudinal control involves regulating the horizontal or vertical
position of the equipment.
    (iii) The engine powers a pump or is a generator-set engine.
    (4) It is a one-person auger, with a combined engine and equipment
dry weight under 21.0 kilograms.
    (5) It is used in a recreational application with a combined total
vehicle dry weight under 20.0 kilograms. Note that snowmobiles, offroad
motorcycles, and all terrain vehicles are regulated under 40 CFR part
1051 and marine vessels are regulated under 40 CFR part 1045.
    Hydrocarbon (HC) means the hydrocarbon group on which the emission
standards are based for each fuel type, as described in subpart B of
this part.
    Identification number means a unique specification (for example, a
model number/serial number combination) that allows someone to
distinguish a particular engine from other similar engines.
    Integrated equipment manufacturer means an equipment manufacturer
that also manufactures the engines for its equipment. Equipment
manufacturers that manufacture the engines for some but not all of
their equipment are considered to be integrated manufacturers for that
equipment using the manufacturer's own engines.
    Intermediate-speed equipment means nonroad equipment in which the
installed engine is intended for operation at speeds substantially
below 3600 rpm.
    Low-hour means relating to an engine that is considered to have
stabilized emissions and represents the undeteriorated emission level.
A low-hour engine typically operates no more than a few hours beyond
the minimum stabilization period. However, a low-hour engine could have
more hours, as long as emissions remain stable. In the absence of other
information, a low-hour engine with a useful life of 300 hours or less
would generally have operated 12 to 15 hours and a low-hour engine with
a longer useful would generally have operated no more than 24 hours.
    Manufacture means the physical and engineering process of
designing, constructing, and assembling an engine or piece of
equipment.
    Manufacturer has the meaning given in section 216(1) of the Act. In
general, this term includes any person who

manufactures an engine, vehicle, vessel, or piece of equipment for sale
in the United States or otherwise introduces a new nonroad engine or
piece of equipment into U.S. commerce. This includes importers who
import engines, equipment, or vehicles for resale, but not dealers. All
manufacturing entities under the control of the same person are
considered to be a single manufacturer.
    Marine engine means a nonroad engine that is installed or intended
to be installed on a vessel. This includes a portable auxiliary marine
engine only if its fueling, cooling, or exhaust system is an integral
part of the vessel. There are two kinds of marine engines:
    (1) Propulsion marine engine means a marine engine that moves a
vessel through the water or directs the vessel's movement.
    (2) Auxiliary marine engine means a marine engine not used for
propulsion.
    Marine generator engine means an auxiliary marine engine used
primarily to operate an electrical generator or alternator to produce
electric power.
    Marine vessel has the meaning given in 1 U.S.C. 3, except that it
does not include amphibious vehicles. The definition in 1 U.S.C. 3 very
broadly includes every craft capable of being used as a means of
transportation on water.
    Maximum engine power has the meaning given in Sec.  1054.140.
    Maximum test speed has the meaning given in 40 CFR 1065.1001.
    Maximum test torque has the meaning given in 40 CFR 1065.1001.
    Model year has the meaning given in 40 CFR part 1060 for equipment
and means one of the following things for engines:
    (1) For freshly manufactured engines (see definition of ``new
nonroad engine,'' paragraph (1)), model year means your annual new
model production period. This must include January 1 of the calendar
year for which the model year is named. It may not begin before January
2 of the previous calendar year and it must end by December 31 of the
named calendar year. For seasonal production periods not including
January 1, model year means the calendar year in which the production
occurs, unless you choose to certify the applicable emission family
with the following model year. For example, if your production period
is June 1, 2010 through November 30, 2010, your model year would be
2010 unless you choose to certify the emission family for model year
2011.
    (2) For an engine that is converted to a nonroad engine after being
placed into service as a motor-vehicle engine or a stationary engine,
model year means the calendar year in which the engine was originally
produced (see definition of ``new nonroad engine,'' paragraph (2)).
    (3) For a nonroad engine excluded under Sec.  1054.5 that is later
converted to operate in an application that is not excluded, model year
means the calendar year in which the engine was originally produced
(see definition of ``new nonroad engine,'' paragraph (3)).
    (4) For engines that are not freshly manufactured but are installed
in new nonroad equipment, model year means the calendar year in which
the engine is installed in the new nonroad equipment (see definition of
``new nonroad engine,'' paragraph (4)).
    (5) For imported engines:
    (i) For imported engines described in paragraph (5)(i) of the
definition of ``new nonroad engine,'' model year has the meaning given
in paragraphs (1) through (4) of this definition.
    (ii) For imported engines described in paragraph (5)(ii) of the
definition of ``new nonroad engine,'' model year means the calendar
year in which the engine is assembled in its final certified
configuration.
    (iii) For imported engines described in paragraph (5)(iii) of the
definition of ``new nonroad engine,'' model year means the calendar
year in which the importation occurs.
    Motor vehicle has the meaning given in 40 CFR 85.1703(a).
    New nonroad engine means any of the following things:
    (1) A freshly manufactured nonroad engine for which the ultimate
purchaser has never received the equitable or legal title. This kind of
engine might commonly be thought of as ``brand new.'' In the case of
this paragraph (1), the engine is new from the time it is produced
until the ultimate purchaser receives the title or the product is
placed into service, whichever comes first.
    (2) An engine originally manufactured as a motor-vehicle engine or
an uncertified stationary engine that is later installed or intended to
be installed in a piece of nonroad equipment. In this case, the engine
is no longer a motor-vehicle or stationary engine and becomes a ``new
nonroad engine.'' The engine is no longer new when it is placed into
nonroad service.
    (3) A nonroad engine that has been previously placed into service
in an application we exclude under Sec.  1054.5, where that engine is
installed in a piece of equipment that is covered by this part 1054.
The engine is no longer new when it is placed into nonroad service
covered by this part 1054. For example, this would apply to a marine-
propulsion engine that is no longer used in a marine vessel.
    (4) An engine not covered by paragraphs (1) through (3) of this
definition that is intended to be installed in new nonroad equipment.
The engine is no longer new when the ultimate purchaser receives a
title for the equipment or the product is placed into service,
whichever comes first. This generally includes installation of used
engines in new equipment.
    (5) An imported nonroad engine, subject to the following
provisions:
    (i) An imported nonroad engine covered by a certificate of
conformity issued under this part that meets the criteria of one or
more of paragraphs (1) through (4) of this definition, where the
original engine manufacturer holds the certificate, is new as defined
by those applicable paragraphs.
    (ii) An imported nonroad engine covered by a certificate of
conformity issued under this part, where someone other than the
original engine manufacturer holds the certificate (such as when the
engine is modified after its initial assembly), becomes new when it is
imported. It is no longer new when the ultimate purchaser receives a
title for the engine or it is placed into service, whichever comes
first.
    (iii) An imported nonroad engine that is not covered by a
certificate of conformity issued under this part at the time of
importation is new, but only if it was produced during or after the
1997 model year. This addresses uncertified engines and equipment
initially placed into service that someone seeks to import into the
United States. Importation of this kind of engine (or equipment
containing such an engine) is generally prohibited by 40 CFR part 1068.
    New nonroad equipment means either of the following things:
    (1) A nonroad piece of equipment for which the ultimate purchaser
has never received the equitable or legal title. The product is no
longer new when the ultimate purchaser receives this title or the
product is placed into service, whichever comes first.
    (2) A nonroad piece of equipment with an engine that becomes new
while installed in the equipment. For example a complete piece of
equipment that was imported without being covered by a certificate of
conformity would be new nonroad equipment because the engine would be
considered to be new at the time of importation.
    Noncompliant engine or noncompliant equipment means an engine or
equipment that was originally covered by a certificate of conformity
but is not in the certified configuration

or otherwise does not comply with the conditions of the certificate.
    Nonconforming engine or nonconforming equipment means an engine or
equipment not covered by a certificate of conformity that would
otherwise be subject to emission standards.
    Nonhandheld means relating to an engine subject to the standards of
this part that is not a handheld engine.
    Nonintegrated equipment manufacturer means an equipment
manufacturer that is not an integrated equipment manufacturer.
Equipment manufacturers that manufacture the engines for some but not
all of their equipment are considered to be nonintegrated manufacturers
for that equipment using a different engine manufacturer's engines.
    Nonmethane hydrocarbon has the meaning given in 40 CFR 1065.1001.
This generally means the difference between the emitted mass of total
hydrocarbons and the emitted mass of methane.
    Nonroad means relating to nonroad engines or equipment that
includes nonroad engines.
    Nonroad engine has the meaning given in 40 CFR 1068.30. In general
this means all internal-combustion engines except motor vehicle
engines, stationary engines, engines used solely for competition, or
engines used in aircraft.
    Official emission result means the measured emission rate for an
emission-data engine on a given duty cycle before the application of
any deterioration factor.
    Overhead valve means relating to a four-stroke spark-ignition
engine in which the intake and exhaust valves are located above the
combustion chamber within the cylinder head. Such engines are sometimes
referred to as ``valve-in-head'' engines.
    Owners manual means a document or collection of documents prepared
by the engine manufacturer for the owner or operator to describe
appropriate engine maintenance, applicable warranties, and any other
information related to operating or keeping the engine. The owners
manual is typically provided to the ultimate purchaser at the time of
sale.
    Oxides of nitrogen has the meaning given in 40 CFR part 1065.1001
    Percent has the meaning given in 40 CFR 1065.1001.
    Permeation emissions means fuel that escapes from the fuel system
by diffusing through the walls of fuel-system components.
    Phase 1 means relating to the Phase 1 emission standards described
in 40 CFR 90.103.
    Phase 2 means relating to the Phase 2 emission standards described
in 40 CFR 90.103.
    Phase 3 means relating to the Phase 3 exhaust emission standards
described in Sec.  1054.105.
    Placed into service means put into initial use for its intended
purpose.
    Pressurized oil system means a system designed to deliver
lubricating oil to internal engine components, including a step to
circulate oil through a filter.
    Ramped-modal means relating to the ramped-modal type of steady-
state test described in Sec.  1054.505.
    Rated speed means one of the following:
    (1) For ungoverned handheld engines, rated speed means the most
common engine speed for full-load operation with in-use engines from a
given engine family.
    (2) For governed handheld engines, rated speed means maximum test
speed, as defined in 40 CFR 1065.1001.
    (3) For nonhandheld engines, rated speed has the meaning given in
Sec.  1054.505(d).
    Rated-speed equipment means nonroad equipment in which the
installed engine is intended for operation at a rated speed that is
nominally 3600 rpm or higher.
    Recreational application means an application in which a vehicle is
ridden primarily for pleasure. Note that engines used in reduced-scale
model vehicles that cannot be ridden (such as model airplanes) are
excluded from this part under Sec.  1054.5.
    Revoke has the meaning given in 40 CFR 1068.30. In general this
means to terminate the certificate or an exemption for an engine
family.
    Round has the meaning given in 40 CFR 1065.1001.
    Running loss emissions has the meaning given in 40 CFR 1060.801.
    Scheduled maintenance means adjusting, repairing, removing,
disassembling, cleaning, or replacing components or systems
periodically to keep a part or system from failing, malfunctioning, or
wearing prematurely. It also may mean actions you expect are necessary
to correct an overt indication of failure or malfunction for which
periodic maintenance is not appropriate.
    Side valve means relating to a four-stroke spark-ignition engine in
which the intake and exhaust valves are located to the side of the
cylinder, not within the cylinder head. Such engines are sometimes
referred to as ``L-head'' engines.
    Small-volume emission family means any emission family whose U.S.-
directed production volume in a given model year is projected at the
time of certification to be no more than 5,000 engines.
    Small-volume engine manufacturer means one of the following:
    (1) For handheld engines, an engine manufacturer that had U.S.-
directed production volume of handheld engines of no more than 25,000
handheld engines in any calendar year. For manufacturers owned by a
parent company, this production limit applies to the production of the
parent company and all its subsidiaries.
    (2) For nonhandheld engines, an engine manufacturer that had U.S.-
directed production volume of no more than 10,000 nonhandheld engines
in any calendar year. For manufacturers owned by a parent company, this
production limit applies to the production of the parent company and
all its subsidiaries.
    (3) An engine manufacturer that we designate to be a small-volume
engine manufacturer under Sec.  1054.635.
    Small-volume equipment manufacturer means one of the following:
    (1) For handheld equipment, an equipment manufacturer that had a
U.S.-directed production volume of no more than 25,000 pieces of
handheld equipment in any calendar year. For manufacturers owned by a
parent company, this production limit applies to the production of the
parent company and all its subsidiaries.
    (2) For nonhandheld equipment, an equipment manufacturer with
annual average U.S.-directed production volumes of no more than 5,000
pieces of nonhandheld equipment in 2007 through 2009. For manufacturers
owned by a parent company, this production limit applies to the
production of the parent company and all its subsidiaries.
    (3) An equipment manufacturer that we designate to be a small-
volume equipment manufacturer under Sec.  1054.635.
    Snowthrower engine means an engine used exclusively to power
snowthrowers.
    Spark-ignition means relating to a gasoline-fueled engine or any
other type of engine with a spark plug (or other sparking device) and
with operating characteristics significantly similar to the theoretical
Otto combustion cycle. Spark-ignition engines usually use a throttle to
regulate intake air flow to control power during normal operation.
    Steady-state means relating to emission tests in which engine speed
and load are held at a finite set of essentially constant values.
Steady-state tests are either discrete-mode tests or ramped-modal
tests.

    Structurally integrated nylon fuel tank has the meaning given in 40
CFR 1060.801.
    Subchapter U means the portion of the Code of Federal Regulations
including 40 CFR parts 1000 through 1299.
    Suspend has the meaning given in 40 CFR 1068.30. In general this
means to temporarily discontinue the certificate or an exemption for an
engine family.
    Test engine means an engine in a test sample.
    Test sample means the collection of engines selected from the
population of an emission family for emission testing. This may include
testing for certification, production-line testing, or in-use testing.
    Tethered gas cap means a gas cap that is loosely but permanently
connected to the fuel tank.
    Thermal reactor means a hot surface in the engine exhaust system
that has the effect of significantly lowering emissions of one or more
regulated pollutants. Hot surfaces that have an inconsequential effect
on emissions are not thermal reactors.
    Total hydrocarbon has the meaning given in 40 CFR 1065.1001. This
generally means the combined mass of organic compounds measured by the
specified procedure for measuring total hydrocarbon, expressed as a
hydrocarbon with a hydrogen-to-carbon mass ratio of 1.85:1.
    Total hydrocarbon equivalent has the meaning given in 40 CFR
1065.1001. This generally means the sum of the carbon mass
contributions of non-oxygenated hydrocarbons, alcohols and aldehydes,
or other organic compounds that are measured separately as contained in
a gas sample, expressed as exhaust hydrocarbon from petroleum-fueled
locomotives. The hydrogen-to-carbon ratio of the equivalent hydrocarbon
is 1.85:1.
    Ultimate purchaser means, with respect to any new nonroad equipment
or new nonroad engine, the first person who in good faith purchases
such new nonroad equipment or new nonroad engine for purposes other
than resale.
    United States has the meaning given in 40 CFR 1068.30.
    Upcoming model year means for an emission family the model year
after the one currently in production.
    U.S.-directed production volume means the number of engine units,
subject to the requirements of this part, produced by a manufacturer
for which the manufacturer has a reasonable assurance that sale was or
will be made to ultimate purchasers in the United States.
    Useful life means the period during which the engine and equipment
are designed to properly function in terms of power output and intended
function without being remanufactured, specified as a number of hours
of operation. It is the period during which a new nonroad engine is
required to comply with all applicable emission standards. See
Sec. Sec.  1054.107 and 1054.110. If an engine has no hour meter, the
specified number of hours does not limit the period during which an in-
use engine is required to comply with emission standards, unless the
degree of service accumulation can be verified separately.
    Variable-speed engine means an engine that is not a constant-speed
engine.
    Vessel means marine vessel.
    Void has the meaning given in 40 CFR 1068.30. In general this means
to invalidate a certificate or an exemption both retroactively and
prospectively.
    Volatile liquid fuel means any fuel other than diesel or biodiesel
that is a liquid at atmospheric pressure and has a Reid Vapor Pressure
higher than 2.0 pounds per square inch.
    We (us, our) means the Administrator of the Environmental
Protection Agency and any authorized representatives.
    Wide-open throttle means maximum throttle opening.
    Wintertime engine means an engine used exclusively to power
equipment that is used only in wintertime, such as snowthrowers and ice
augers.

Sec.  1054.805  What symbols, acronyms, and abbreviations does this
part use?

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

ABT Averaging, banking, and trading.
cc cubic centimeters.
CFR Code of Federal Regulations.
CO carbon monoxide.
CO2 carbon dioxide.
EPA Environmental Protection Agency.
FEL Family Emission Limit.
g gram.
HC hydrocarbon.
hr hour.
kPa kilopascals.
kW kilowatts.
NARA National Archives and Records Administration.
NIST National Institute of Standards and Technology.
NMHC nonmethane hydrocarbons.
NOX oxides of nitrogen (NO and NO2).
psig pounds per square inch of gauge pressure.
RPM revolutions per minute.
SAE Society of Automotive Engineers.
THC total hydrocarbon.
THCE total hydrocarbon equivalent.
U.S.C. United States Code.

Sec.  1054.810  What materials does this part reference?

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

    (a) SAE material. Table 1 of this section lists material from the
Society of Automotive Engineers that we have incorporated by reference.
The first column lists the number and name of the material. The second
column lists the sections of this part where we reference it. Anyone
may purchase copies of these materials from the Society of Automotive
Engineers, 400 Commonwealth Drive, Warrendale, PA 15096 or http://www.sae.org.

Table 1 follows:

               Table 1 to Sec.   1054.810.--SAE Materials
------------------------------------------------------------------------
                                                             Part 1054
                Document number and name                     reference
------------------------------------------------------------------------
SAE J30, Fuel and Oil Hoses, June 1998..................       1054.245,
                                                                1054.501
SAE J1930, Electrical/Electronic Systems Diagnostic             1054.135
 Terms, Definitions, Abbreviations, and Acronyms,
 revised May 1998.......................................
SAE J2260, Nonmetallic Fuel System Tubing with One or           1054.245
 More Layers, November 1996.............................
------------------------------------------------------------------------

    (b) ASTM material. Table 2 of this section lists material from the
American Society for Testing and Materials that we have incorporated by
reference. The first column lists the number and name of the material.
The second column lists the sections of this part where we reference
it. Anyone may purchase copies of these materials from the American
Society for Testing and Materials, 100 Barr Harbor Dr., P.O. Box C700,
West Conshohocken, PA 19428 or http://www.astm.org. Table 2 follows:

               Table 2 to Sec.   1054.810--ASTM Materials
------------------------------------------------------------------------
                                                             Part 1054
                Document number and name                     reference
------------------------------------------------------------------------
ASTM D471-98, Standard Test Method for Rubber Property--        1054.501
 ffect of Liquids.......................................
ASTM D814-95 (reapproved 2000), Standard Test Method for        1054.245
 Rubber Property--Vapor Transmission of Volatile Liquids
------------------------------------------------------------------------

Sec.  1054.815  What provisions apply to confidential information?

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

Sec.  1054.820  How do I request a hearing?

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

Sec.  1054.825  What reporting and recordkeeping requirements apply
under this part?

    Under the Paperwork Reduction Act (44 U.S.C. 3501 et seq), the
Office of Management and Budget approves the reporting and
recordkeeping specified in the applicable regulations. The following
items illustrate the kind of reporting and recordkeeping we require for
engines and equipment regulated under this part:
    (a) We specify the following requirements related to engine
certification in this part 1054:
    (1) In Sec.  1054.20 we require equipment manufacturers to label
their vessels if they are relying on component certification.
    (2) In Sec.  1054.135 we require engine manufacturers to keep
certain records related to duplicate labels sent to equipment
manufacturers.
    (3) In Sec.  1054.145 we include various reporting and
recordkeeping requirements related to interim provisions.
    (4) In subpart C of this part we identify a wide range of
information required to certify engines.
    (5) In Sec. Sec.  1054.345 and 1054.350 we specify certain records
related to production-line testing.
    (6) [Reserved]
    (7) In subpart G of this part we identify several reporting and
recordkeeping items for making demonstrations and getting approval
related to various special compliance provisions.
    (8) In Sec. Sec.  1054.725, 1054.730, and 1054.735 we specify
certain records related to averaging, banking, and trading.
    (b) We specify the following requirements related to equipment and
component certification in 40 CFR part 1060:
    (1) In 40 CFR 1060.20 we give an overview of principles for
reporting information.
    (2) In 40 CFR part 1060, subpart C, we identify a wide range of
information required to certify products.
    (3) In 40 CFR 1060.301 we require manufacturers to make engines or
equipment available for our testing if we make such a request.
    (4) In 40 CFR 1060.505 we specify information needs for
establishing various changes to published test procedures.
    (c) We specify the following requirements related to testing in 40
CFR part 1065:
    (1) In 40 CFR 1065.2 we give an overview of principles for
reporting information.