(2) What is an agent for service?
    We are proposing to require that manufacturers identify an agent
for service in the United States in their application for
certification. The named person should generally be available within a
reasonable time to respond to our attempts to make contact, either by
telephone, e-mail, or in person. The person should also be capable of
communicating about matters related to emission program requirements in
English. (See Sec.  1045.205 and Sec.  1054.205).
(3) Are there special provisions for small manufacturers of these
engines, equipment, and vessels?
    The scope of this proposal includes many engine, equipment, and
vessel manufacturers that have not been subject to our regulations or
certification process. Many of these manufacturers are small
businesses. The sections describing the proposed emission control
program include discussion of proposed special compliance provisions
designed to address small business issues for the different types of
engines and other products covered by the rule. Section XIV.B gives an
overview of the inter-agency process in which we developed these small-
volume provisions.

VIII. General Nonroad Compliance Provisions

    This section describes a wide range of compliance provisions that
apply generally to all the engines and equipment that would be subject
to the proposed standards. Several of these provisions apply not only
to engine manufacturers but also to equipment manufacturers installing
certified engines, remanufacturing facilities, operators, and others.
    For standards that apply to equipment or fuel-system components,
the provisions generally applicable to engine manufacturers would also
apply to the equipment or component manufacturers. While this preamble
section is written as if it would apply to engine exhaust standards,
the same provisions would apply for equipment or component evaporative
standards. We are proposing extensive revisions to the regulations to
more carefully make these distinctions.
    As described in Section VII, we are proposing to migrate these
general compliance provisions from 40 CFR parts 90 and 91 to the
established regulatory text in 40 CFR part 1068. The provisions in part
1068 already apply to other engine categories and we believe they can
be applied to Small SI engines and Marine SI engines with minimal
modification. Note that Section XI.C describes a variety of proposed
changes and updates to the regulatory provisions in part 1068. We
request comment on all aspects of part 1068 for these engines. The
following discussion follows the sequence of the existing regulatory
text in part 1068.\95\
---------------------------------------------------------------------------

    \95\ The regulatory text in the proposal does not republish the
provisions of part 1068 that we are not proposing to change. For the
latest full-text version of part 1068, see http://www.gpoaccess.gov/ecfr/index.html.
 Note that part 1068 is in Title 40, Protection of

Environment.
---------------------------------------------------------------------------

A. Miscellaneous Provisions (Part 1068, Subpart A)

    This regulation contains some general provisions, including general
applicability and the definitions that apply to part 1068. Other
provisions concern good engineering judgment, how we would handle
confidential information, how the EPA Administrator delegates decision-

making authority, and when we may inspect facilities, engines, or
records.
    The process of testing engines and preparing an application for
certification requires the manufacturer to make a variety of judgments.
This includes, for example, selecting test engines, operating engines
between tests, and developing deterioration factors. EPA has the
authority to evaluate whether a manufacturer's use of engineering
judgment is reasonable. The regulations describe the methodology we use
to address any concerns related to a manufacturer's use of good
engineering judgment in cases where the manufacturer has such
discretion (see 40 CFR 1068.5). We will take into account the degree to
which any error in judgment was deliberate or in bad faith. This
subpart is consistent with provisions already adopted for light-duty
highway vehicles and various other nonroad engines.

B. Prohibited Acts and Related Requirements (Part 1068, Subpart B)

    The proposed provisions in this subpart lay out a set of
prohibitions for engine manufacturers, equipment manufacturers,
operators, and engine rebuilders to ensure that engines comply with the
emission standards. These provisions are summarized below but readers
are encouraged to review the regulatory text. These provisions are
intended to help ensure that each new engine sold or otherwise entered
into commerce in the United States is certified to the relevant
standards, that it remains in its certified configuration throughout
its lifetime, and that only certified engines are used in the
appropriate nonroad equipment.
(1) General Prohibitions (Sec.  1068.101)
    This proposed regulation contains several prohibitions consistent
with the Clean Air Act. We generally prohibit selling a new engine in
the United States without a valid certificate of conformity issued by
EPA, deny us access to relevant records, or keep us from entering a
facility to test or inspect engines. In addition, no one may
manufacture any device that will make emission controls ineffective or
remove or disable a device or design element that may affect an
engine's emission levels, which we would consider tampering. We have
generally applied the existing policies developed for tampering with
highway engines and vehicles to nonroad engines.\96\ Other prohibitions
reinforce manufacturers' obligations to meet various certification
requirements. We also prohibit selling engine parts that prevent
emission control systems from working properly. Finally, for engines
that are excluded from regulation based on their use in certain
applications, we generally prohibit using these engines in applications
for which emission standards apply.
    Each prohibited act has a corresponding maximum penalty as
specified in Clean Air Act section 205. As provided for in the Federal
Civil Penalties Inflation Adjustment Act of 1990, Pub. L. 10-410, these
maximum penalties are in 1970 dollars and should be periodically
adjusted by regulation to account for inflation. The current penalty
amount for most violations is $32,500.\97\
---------------------------------------------------------------------------

    \96\ ``Interim Tampering Enforcement Policy,'' EPA memorandum
from Norman D. Shutler, Office of General Counsel, June 25, 1974
(Docket A-2000-01; document II-B-20).
    \97\ EPA acted to adjust the maximum penalty amount in 1996 (61
FR 69364, December 31, 1996). See also 40 CFR part 19.
---------------------------------------------------------------------------

(2) Equipment Manufacturer Provisions (Sec.  1068.105)
    The provisions of Sec.  1068.105 require equipment manufacturers to
use certified engines in their new equipment once the emission
standards begin to apply. We would allow a grace period for equipment
manufacturers to deplete their supply of uncertified engines if they
follow their normal inventory practices for buying engines, rather than
stockpiling noncompliant (or previous-tier) engines to circumvent the
new standards.
    We require equipment manufacturers to observe the engine
manufacturers' emission-related installation instructions to ensure
that the engines remain consistent with the application for
certification. This may include such things as radiator specifications,
diagnostic signals and interfaces, and placement of catalytic
converters.
    If equipment manufacturers install a certified engine in a way that
obscures the engine label, we propose to require that they add a
duplicate label on the equipment. The equipment manufacturer would need
to request from the engine manufacturer a specific number of duplicate
labels, describe which engine and equipment models are involved, and
explain why the duplicate labels are necessary. Equipment manufacturers
would need to destroy any excess labels and keep records to show the
disposition of all the labels they receive. This would make it easier
for us to verify that engines are meeting requirements and it would be
easier for U.S. Customs to clear imported equipment with certified
engines.
    Equipment manufacturers not fulfilling the responsibilities we
describe in this section would be in violation of one or more of the
prohibited acts described above.
(3) In-Service Engines (Sec.  1068.110)
    The regulations generally prevent manufacturers from requiring
owners to use any certain brand of aftermarket parts as well as give
the manufacturers responsibility for engine servicing for emission-
related warranty issues, leaving the responsibility for all other
maintenance with the owner. This proposed regulation would also reserve
our right to do testing (or require testing), for example, to
investigate potential defeat devices or in-use noncompliance, as
authorized by the Clean Air Act.
(4) Engine Rebuilding (Sec.  1068.120)
    We are proposing to apply rebuild provisions for all the nonroad
engines subject to the proposed emission standards. This approach is
similar to what applies to heavy-duty highway engines and most other
nonroad engines. This is necessary to prevent an engine rebuilder from
rebuilding engines in a way that disables the engine's emission
controls or compromises the effectiveness of the emission control
system. We are proposing minimal recordkeeping requirements for
businesses involved in commercial engine rebuilding to show that they
comply with the regulations.
    In general, anyone who rebuilds a certified engine must restore it
to its original (or a lower-emitting) configuration. Rebuilders must
also replace some critical emission control components such as fuel
injectors and oxygen sensors in all rebuilds for engines that use those
technologies. Rebuilders must replace an existing catalyst if there is
evidence that it is not functional; for example, if rattling pieces
inside a catalyst show that it has lost its physical integrity, it
would need to be replaced. See Sec.  1068.120 for more detailed
information.
    These rebuilding provisions define good maintenance and rebuilding
practices to help someone avoid violating the prohibition on ``removing
or disabling'' emission control systems. These provisions therefore
apply also to individuals who rebuild their own engines. However, we do
not require such individuals to keep records to document compliance.
    We request comment on applying these proposed requirements for
engine rebuilding and maintenance to the engines and vehicles subject
to this rulemaking. In addition, we request

comment on the associated recordkeeping requirements.

C. Exemptions (Part 1068, Subpart C)

    We are proposing to apply several exemptions for certain specific
situations, consistent with previous rulemakings. In general, exempted
engines would need to comply with the requirements only in the sections
related to the exemption. Note that additional restrictions could apply
to importing exempted engines (see Section VIII.D). We may also require
manufacturers (or importers) to add a permanent label describing that
the engine is exempt from emission standards for a specific purpose. In
addition to helping us enforce emission standards, this would help
ensure that imported engines clear Customs without difficulty.
(1) Testing
    Anyone would be allowed to request an exemption for engines used
only for research or other investigative purposes.
(2) Manufacturer-Owned Engines
    Engines that are used by engine manufacturers for development or
marketing purposes could be exempted from regulation if they are
maintained in the manufacturers' possession and are not used for any
revenue-generating service. In contrast with the testing exemption,
only certificate holders would be able to use this exemption.
(3) Display Engines
    Anyone may request an exemption for an engine if it is for display
only.
(4) National Security
    Engine manufacturers could receive an exemption for engines they
can show are needed by an agency of the federal government responsible
for national defense. For cases where the engines will not be used on
combat applications, the manufacturer would have to request the
exemption with the endorsement of the procuring government agency.
(5) Exported Engines
    Engines that will be exported to countries that do not have the
same emission standards as those that apply in the United States would
be exempted without need for a request. This exemption would not be
available if the destination country has the same emission standards as
those in the United States.
(6) Competition Engines
    New engines that are used solely for competition are excluded from
regulations applicable to nonroad engines. For purposes of our
certification requirements, a manufacturer would receive an exemption
if it can show that it produces the engine specifically for use solely
in competition (see Sections III through V for specific provisions). In
addition, engines that have been modified for use in competition would
be exempt from the prohibition against tampering described above
(without need for request). The literal meaning of the term ``used
solely for competition'' would apply for these modifications. We would
therefore not allow the engine to be used for anything other than
competition once it has been modified. This also applies to someone who
would later buy the engine, so we would require the person modifying
the engine to remove or deface the original engine label and inform a
subsequent buyer in writing of the conditions of the exemption.
(7) Replacement Engines
    An exemption would be available to engine manufacturers without
request if that is the only way to replace an engine from the field
that was produced before the current emission standards took effect. If
less stringent standards applied to the old engine when it was new, the
replacement engine would also have to meet those standards.
(8) Unusual Circumstance Hardship Provision
    Under the unusual circumstances hardship provision, any
manufacturer subject to the proposed standards would be able to apply
for hardship relief if circumstances outside their control cause the
failure to comply and if failure to sell the subject engines or
equipment or fuel system component would have a major impact on the
company's solvency (see Sec.  1068.245). An example of an unusual
circumstance outside a manufacturer's control may be an ``Act of God,''
a fire at the manufacturing plant, or the unforeseen shutdown of a
supplier with no alternative available. The terms and time frame of the
relief would depend on the specific circumstances of the company and
the situation involved. As part of its application for hardship, a
company would be required to provide a compliance plan detailing when
and how it would achieve compliance with the standards. This hardship
provision would be available to all manufacturers of engines,
equipment, boats, and fuel system components subject to the proposed
standards, regardless of business size.
(9) Economic Hardship Provision for Small Businesses
    An economic hardship provision would allow small businesses subject
to the proposed standards to petition EPA for limited additional lead
time to comply with the standards (see Sec.  1068.250). A small
business would have to make the case that it has taken all possible
business, technical, and economic steps to comply, but the burden of
compliance costs would have a significant impact on the company's
solvency. Hardship relief could include requirements for interim
emission reductions and/or the purchase and use of emission credits.
The length of the hardship relief decided during review of the hardship
application would be up to one year, with the potential to extend the
relief as needed. We anticipate that one to two years would normally be
sufficient. As part of its application for hardship, a company would be
required to provide a compliance plan detailing when and how it would
achieve compliance with the standards. This hardship provision would be
available only to small manufacturers of engines, equipment, boats, and
fuel system components subject to the standards. For the purpose of
determining which manufacturers qualify as a small business, EPA is
proposing criteria based on either a production cut-off or the number
of employees. The proposed criteria for determining which companies
qualify as a small business are contained in Section III.F.2 for SD/I
engines, Section IV.G for OB/PWC engines, Sections V.F.2 for
nonhandheld engines, V.F.3 for nonhandheld equipment, and Section
VI.G.2.f for handheld equipment, boats, and fuel system components.
(10) Hardship for Equipment Manufacturers, Vessel Manufacturers, and
Secondary Engine Manufacturers
    Equipment manufacturers and boat builders in many cases will depend
on engine manufacturers and fuel system component manufacturers to
supply certified engines and fuel system components in time to produce
complying equipment or boats by the date emission standards begin to
apply. We are aware of other regulatory control programs where
certified engines have been available too late for equipment
manufacturers to adequately accommodate changing engine size or
performance characteristics. To address this concern, we are proposing
to allow Small SI equipment manufacturers and Marine SI boat builders
to request up to one extra year before using certified engines or fuel
system components if

they are unable to obtain certified product and they are not at fault
and would face serious economic hardship without an extension. See
Sec.  1068.255 for the proposed regulatory text related to this
hardship.
    In addition, we are aware that some manufacturers of nonroad
engines are dependent on another engine manufacturer to supply base
engines that are then modified for the final application. Similar to
equipment or vessel manufacturers, these ``secondary engine
manufacturers'' may face difficulty in producing certified engines if
the manufacturer selling the base engine makes an engine model
unavailable with short notice. These secondary engine manufacturers
generally each buy a relatively small number of engines and would
therefore not necessarily be able to influence the marketing or sales
practices of the engine manufacturer selling the base engine. As a
result, we are proposing that secondary engine manufacturers could
apply for this hardship as well. However, because these secondary
engine manufacturers control the final design of their modified engine
and could benefit in the market if they are allowed to produce a
product certified to less stringent standards than their competitors,
we would generally not approve an exemption unless the secondary engine
manufacturer committed to a plan to make for any calculated loss in
environmental benefit. Provisions similar to this hardship were already
adopted for Large SI engines and recreational vehicles. See the
existing regulatory text in Sec.  1068.255(c).
(11) Delegated Final Assembly
    The regulations in 40 CFR 1068.260 allow for flexible manufacturing
for companies that produce engines that rely on aftertreatment. These
regulations allow for equipment manufacturers to receive separate
shipment of aftertreatment devices with the obligation resting on the
equipment manufacturer to correctly install the aftertreatment on the
engine when installing the engine in the equipment. Allowing for this
practice requires an exemption from provisions which prohibit an engine
from being introduced into commerce in its uncertified configuration.
The provisions in Sec.  1068.260 to prevent improper use of this
exemption include requirements to (1) Have contractual arrangements
with equipment manufacturers; (2) submit affidavits to EPA regarding
the use of the exemption; (3) include the price of the aftertreatment
in the cost of the engine (to avoid giving equipment manufacturers an
incentive to reduce costs inappropriately); and (4) periodically audit
the affected equipment manufacturers.
    These provisions are not likely to be necessary for most Marine SI
engine manufacturers. We do not expect outboard or personal watercraft
engine manufacturers to use aftertreatment technology. For sterndrive/
inboard engines, we expect catalyst designs generally to be so integral
to the exhaust manifold that engine manufacturers will include them
with their engines. However, their may be some less common designs,
such as engines on large vessels or airboats, where engine
manufacturers may want to use the provisions allowing for separate
shipment of aftertreatment. We are therefore proposing to adopt the
provisions of Sec.  1068.260 without change for Marine SI engines.
    Manufacturers of handheld Small SI engines typically build both the
engine and the equipment so we are proposing not to allow for delegated
assembly with these engines.
    In contrast, nonhandheld engines (especially Class II) are built by
engine manufacturers and sold to equipment manufacturers, often without
complete fuel or exhaust systems. Ensuring that consumers get only
engines that are in a certified configuration therefore requires a
carefully crafted program. As described in Section V.E.2, we are
proposing special provisions to accommodate the unique circumstances
related to nonhandheld Small SI engines.
(12) Uncertified Engines Subject to Emission Standards
    In some cases we require manufacturers to meet certain emission
standards without requiring certification, most commonly for
replacement engines. In 40 CFR 1068.265 we spell out manufacturers
obligations for these compliant but uncertified engines. Manufacturers
must have test data showing that their engines meet the applicable
emission standards and are liable for the emission performance of their
engines, much like for certified engines, but are not required to
submit an application for certification and get EPA approval before
selling the engine. We propose to apply these provisions without
modification for Small SI engines and Marine SI engines.

D. Imports (Part 1068, Subpart D)

    In general, the same certification requirements would apply to
engines and equipment whether they are produced in the United States or
are imported. The regulations in part 1068 also include some additional
provisions that would apply if someone wants to import an exempted or
excluded engine.
    All the proposed exemptions described above for new engines would
also apply to importation, though some of these exemptions apply only
on a temporary basis. An approved temporary exemption would be
available only for a defined period. We could require the importer to
post bond while the engine is in the United States. There are several
additional proposed exemptions that would apply only to imported
engines.
     Identical configuration: This is a permanent exemption to
allow individuals to import engines that were designed and produced to
meet applicable emission standards. These engines may be different than
certified engines only in the fact that the emission label is missing
because they were not intended for sale in the United States.
     Ancient engines: We would generally treat used engines as
new if they are imported without a certificate of conformity. However,
this permanent exemption would allow for importation of uncertified
engines if they are more than 20 years old and remain in their original
configuration.
     Repairs or alterations: This is a temporary exemption to
allow companies to repair or modify engines. This exemption does not
allow for operating the engine except as needed to do the intended
work. This exemption would also apply for the practice for retiring
bigger engines; noncompliant engines may be imported under this
exemption for the purpose of recovering the engine block.
     Diplomatic or military: This is a temporary exemption to
allow diplomatic or military personnel to use uncertified engines
during their term of service in the U.S.
    We request comment on all these exemptions for domestically
produced and imported engines and vehicles.

E. Selective Enforcement Audit (Part 1068, Subpart E)

    Clean Air Act section 206(b) gives us the discretion in any program
with vehicle or engine emission standards to do selective enforcement
auditing of production engines. We would do a selective enforcement
audit by choosing an engine family and giving the manufacturer a test
order that details a testing program to show that production-line
engines meet emission standards. The regulation text describes the
audit procedures in greater detail.

    We intend generally to rely on manufacturers' testing of
production-line engines to show that they are consistently building
products that conform to the standards. However, we reserve our right
to do selective enforcement auditing if we have reason to question the
emission testing conducted and reported by the manufacturer or for
other reasons.

F. Defect Reporting and Recall (Part 1068, Subpart F)

    We are proposing to apply the defect reporting requirements of
Sec.  1068.501 to replace the provisions of 40 CFR part 85 for nonroad
engines. The requirements obligate manufacturers to tell us when they
learn that emission control components or systems are defective and to
conduct investigations under certain circumstances to determine if an
emission-related defect is present. We are also proposing a requirement
that manufacturers initiate these investigations when warranty claims
and other available information indicate that a defect investigation
may be fruitful. For this purpose, we consider defective any part or
system that does not function as originally designed for the regulatory
useful life of the engine or the scheduled replacement interval
specified in the manufacturer's maintenance instructions.
    We believe the investigation requirement proposed in this rule will
allow both EPA and the engine manufacturers to fully understand the
significance of any unusually high rates of warranty claims that may
have an impact on emissions. We believe prudent engine manufacturers
already conduct a thorough investigation when available data indicate
recurring parts failures as part of their normal practice to ensure
product quality. Such data are valuable and readily available to most
manufacturers and, under this proposal, must be considered to determine
whether or not there is a possible defect of an emission-related part.
    Defect reports submitted in compliance with the current regulations
are based on a single threshold applicable to engine families of all
production volumes. No affirmative requirement for gathering
information about the full extent of the problem applies. Many Small SI
engine families have very high sales volumes. The proposed approach may
therefore result in fewer total defect reports that should be submitted
compared with the traditional approach because the number of defects
triggering the submission requirement generally rises in proportion to
the engine family size. Under the existing regulations, very small
engine families would likely never report even a prominent defect
because a relatively high proportion of such engines would have to be
known to be defective before reporting is required under a scheme with
fixed thresholds. The proposed threshold for reporting for the smallest
engine families is therefore lower than under the current regulations.
    We are aware that accumulation of warranty claims will likely
include many claims and parts that do not represent defects, so we are
establishing a relatively high threshold for triggering the
manufacturer's responsibility to investigate whether there is, in fact,
a real occurrence of an emission-related defect.
    This proposal is intended to require manufacturers to use
information we would expect them to keep in the normal course of
business. We believe in most cases manufacturers would not be required
to institute new programs or activities to monitor product quality or
performance. A manufacturer that does not keep warranty information may
ask for our approval to use an alternate defect-reporting methodology
that is at least as effective in identifying and tracking potential
emission-related defects as the proposed requirements. However, until
we approve such a request, the proposed thresholds and procedures
continue to apply.
    The proposed investigation thresholds are ten percent of total
production to date up to a total production of 50,000 engines, but
never fewer than 50 for any single engine family in one model year. For
production between 50,000 and 550,000 units, the investigation
threshold would increase at a marginal rate of four percent. For all
production above 550,000 an investigation threshold of 25,000 engines
would apply. For example, for an engine family with a sales volume of
20,000 units in a given model year, the manufacturer would have to
investigate potential emission-related defects after identifying 2,000
possible defects. For an engine family with a sales volume of 450,000
units in a given model year, the manufacturer would have to investigate
potential emission-related defects after identifying 21,000 possible
defects. These thresholds reflect the relevant characteristics of
nonroad engines, such as the varying sales volumes, engine
technologies, and warranty and maintenance practices.
    To carry out an investigation to determine if there is an emission-
related defect, manufacturers would have to use available information
such as preexisting assessments of warranted parts. Manufacturers would
also have to gather information by assessing previously unexamined
parts submitted with warranty claims and replacement parts which are
available or become available for examination and analysis. If
available parts are deemed too voluminous to conduct a timely
investigation, manufacturers would be permitted to employ appropriate
statistical analyses of representative data to help draw timely
conclusions regarding the existence of a defect. These investigative
activities should be summarized in the periodic reports of recently
opened or closed investigations, as discussed below. It is important to
note that EPA does not regard having reached the investigation
thresholds as conclusive proof of the existence of a defect, only that
initiation of an appropriate investigation is merited to determine
whether a defect exists.
    The second threshold in this proposal specifies when a manufacturer
must report that an emission-related defect exists. This threshold
involves a smaller number of engines because each potential defect has
been screened to confirm that it is an emission-related defect. In
counting engines to compare with the defect-reporting threshold, the
manufacturer would consider a single engine family and model year.
However, when a defect report is required, the manufacturer would
report all occurrences of the same defect in all engine families and
all model years that use the same part. The threshold for reporting a
defect is two percent of total production for any single engine family
for production up to 50,000 units, but never fewer than 20 for any
single engine family in one model year. For production between 50,000
and 550,000 units, the investigation threshold would increase at a
marginal rate of one percent. For all production above 550,000 an
investigation threshold of 6,000 engines would apply.
    It is important to note that while EPA regards occurrence of the
defect threshold as proof of the existence of a reportable defect, it
does not regard that occurrence as conclusive proof that recall or
other action is merited.
    If the number of engines with a specific defect is found to be less
than the threshold for submitting a defect report, but warranty claims
or other information later indicate additional potentially defective
engines, under this proposal the information must be aggregated for the
purpose of determining whether the threshold for submitting a defect
report has been met. If a manufacturer has knowledge from any source
that the threshold for submitting a defect report has been met,

a defect report would have to be submitted even if the trigger for
investigating has not yet been met. For example, if manufacturers
receive information from their dealers, technical staff, or other field
personnel showing conclusively that a recurring emission-related defect
exists, they would have to submit a defect report if the submission
threshold is reached.
    At specified times, the manufacturer would have to report open
investigations as well as recently closed investigations that did not
require a defect report. We are not proposing a fixed time limit for
manufacturers to complete their investigations. However, the periodic
reports required by the regulations will allow us to monitor these
investigations and determine if it is necessary or appropriate for us
to take further action.
    We request comment on all aspects of this approach to defect
reporting. We also request comment on whether these reporting
requirements should also apply to the current Phase 2 compliance
program and if so, when these provisions should be applied.
    Under Clean Air Act section 207, if we determine that a substantial
number of engines within an engine family, although properly used and
maintained, do not conform to the appropriate emission standards, the
manufacturer must remedy the problem and conduct a recall of the
noncomplying engine family. However, we recognize that in some cases
recalling noncomplying nonroad engines may not achieve sufficient
environmental protection, so instead of making a determination of a
substantial number of nonconforming engines (and thereby triggering a
recall responsibility), we may allow manufacturers in some cases to
nominate alternative remedial measures to address most potential
noncompliance situations.

G. Hearings (Part 1068, Subpart G)

    According to this regulation, manufacturers would have the
opportunity to challenge our decision to deny an application for
certification or to suspend, revoke, or void an engine family's
certificate. This also applies to our decision to reject the
manufacturer's use of good engineering judgment (see Sec.  1068.5), and
to our decisions related to emission-credit programs. Part 1068,
subpart G, references the proposed procedures for a hearing to resolve
such disputes.

IX. General Test Procedures

    The regulatory text in part 1065 is written with the intent to
apply broadly to EPA engine programs. Part 1065 was originally adopted
on November 8, 2002 (67 FR 68242) and currently applies for nonroad
diesel engines, large nonroad spark-ignition engines and recreational
vehicles under 40 CFR parts 1039, 1048 and 1051, respectively. The
regulatory text was substantially revised in a recent rulemaking to
make a variety of corrections and improvements (70 FR 40420, July 13,
2005).
    This proposal applies to anyone who tests engines to show that they
meet the emission standards for Small SI engines or Marine SI engines.
This includes certification testing as well as all production-line and
in-use testing. See the program descriptions above for testing
provisions that are unique to each category of engines.
    We are proposing to apply the existing test provisions in part 1065
for all Small SI engines and Marine SI engines. See Sections III
through V for testing issues that are specific to the particular engine
categories. In addition, we are proposing to allow manufacturers to use
the provisions of part 1065 even before the proposed new standards take
effect. This would allow manufacturers to migrate to the new test
procedures sooner. This may involve upgrading to different types of
analyzers that are specified in part 1065 but not in part 90 or part
91. It may also involve recoding computers to do modal calculations
specified in part 1065 instead of the weight-based calculations in part
90 or part 91. At the same time, this would allow EPA to do
confirmatory testing using the upgraded procedures without waiting for
the proposed new standards to apply. This is important because EPA
testing facilities are used for many different programs and the
conversion to testing according to part 1065 specifications is well
underway. We are aware that the new test specifications regarding
engine mapping, generating duty cycles, and applying cycle-validation
criteria would affect the emission measurements so we would follow the
manufacturers' methods for these parameters in any case. For any other
parameters, we would understand any differences between test procedures
specified in parts 90, 91, and 1065 either to have no effect on
emission measurements or to improve the accuracy of the measurement.
    We have identified various provisions in part 90 and part 91 that
may need correction or adjustment. We request comment on the following
possible changes:
     Changing the standard temperature condition for volume-
related calculations in Sec.  90.311(a)(2) and Sec.  91.311(a)(2) from
25 [deg]C to 20 [deg]C. This would be consistent with EPA's test
regulations, including the specifications in Sec.  1065.640.
     Removing the requirement to derive calibration and span
gas concentrations from NIST Standard Reference Materials in Sec.
90.312(c) and Sec.  91.312(c). This goes beyond the traceability
requirements of other EPA test regulations and standard lab practices.
We could instead refer to Sec.  1065.750 for calibration and span gas
concentrations.
     Changing the direction for specifying gas concentrations
in Sec.  90.312(c)(3) and Sec.  91.312(c)(3) from a volumetric basis to
a molar basis.
     Correcting inconsistent requirements related to gas
dividers. The regulations at Sec.  90.312(c)(4) and Sec.  91.312(c)(4)
specify an accuracy of 2 percent, while Sec.  90.314(c) and
Sec.  91.314(c) specify an accuracy of 1.5 percent. We
could select one of these values, or we could refer to the gas divider
specifications in Sec.  1065.248 and Sec.  1065.307.
     Correcting inconsistent specifications related to the
timing of CO interference checks. The regulations at Sec.  90.317(b)
and Sec.  91.317(b) specify that interference checks occur as part of
annual maintenance, Sec.  90.325(a) and Sec.  91.325(a) specify that
interference checks occur after any major repairs that could affect
analyzer performance. We believe it would be most appropriate to make
these consistent based on the specification in Sec.  1065.303, which
calls for interference checks to occur after major maintenance.
    As we have done in previous programs, we are proposing specific
test procedures to define how measurements are to be made but would
allow the use of alternate procedures if they are shown to be
equivalent to our specified procedures.\98\ The test procedures
proposed in part 1065 are derived from our test procedures in 40 CFR
part 86 for highway heavy-duty gasoline engines and light-duty
vehicles. The procedures have been simplified (and to some extent
generalized) to better fit nonroad engines. The procedures in part 1065
currently apply to recreational vehicles and to nonroad spark-ignition
engines above 19 kW. We request comment on all aspects of these
proposed test procedures. We also request comment regarding whether any
additional parts of the test procedures contained in 40 CFR part 86
(for highway vehicles and engines), in other parts that apply to
nonroad engines, or

in ISO 8178 should be incorporated into the final test procedures.
---------------------------------------------------------------------------

    \98\ Note that the published procedures still apply if we
approve a manufacturer's use of an alternative procedure. EPA
testing may be done using the published procedures or the alternate
procedures approved for a given engine family.
---------------------------------------------------------------------------

A. Overview

    Part 1065 is organized by subparts as shown below:
     Subpart A: General provisions; global information on
applicability, alternate procedures, units of measure, etc.
     Subpart B: Equipment specifications; required hardware for
testing
     Subpart C: Measurement instruments
     Subpart D: Calibration and verifications; for measurement
systems
     Subpart E: Engine selection, preparation, and maintenance
     Subpart F: Test protocols; step-by-step sequences for
laboratory testing and test validation
     Subpart G: Calculations and required information
     Subpart H: Fuels, fluids, and analytical gases
     Subpart I: Oxygenated fuels; special test procedures
     Subpart J: Field testing and portable emissions
measurement systems
     Subpart K: Definitions, references, and symbols
    The regulations prescribe scaled specifications for test equipment
and measurement instruments by parameters such as engine power, engine
speed and the emission standards to which an engine must comply. That
way this single set of specifications will cover the full range of
engine sizes and our full range of emission standards. Manufacturers
will be able to use these specifications to determine what range of
engines and emission standards may be tested using a given laboratory
or field testing system.
    The content already adopted in part 1065 is mostly a combination of
material from our most recent updates to other test procedures and from
test procedures specified by the International Organization for
Standardization (ISO). There are also some provisions we created
specifically for part 1065, generally to address very recent advances
such as measuring very low concentrations of emissions, using new
measurement technology, using portable emissions measurement systems,
and performing field testing.
    The content in part 1065 also reflects a shift in our approach for
specifying measurement performance. In the past we specified numerous
calibration accuracies for individual measurement instruments, and we
specified some verifications for individual components such as
NO2-to-NO converters. We have shifted our focus away from
individual instruments and toward the overall performance of complete
measurement systems. We did this for several reasons. First, some of
what we specified in the past precluded the implementation of new
measurement technologies. These new technologies, sometimes called
``smart analyzers,'' combine signals from multiple instruments to
compensate for interferences that were previously tolerable at higher
emissions levels. These analyzers are useful for detecting low
concentrations of emissions. They are also useful for detecting
emissions from raw exhaust, which can contain high concentrations of
interferences, such as water vapor. This is particularly important for
field testing, which will most likely rely upon raw exhaust
measurements. Second, this new ``systems approach'' requires periodic
verifications for complete measurement systems, which we feel will
provide a more robust assurance that a measurement system as a whole is
operating properly. Third, the systems approach provides a direct
pathway to demonstrate that a field test system performs similarly to a
laboratory system. Finally, we feel that our systems approach will lead
to a more efficient way of ensuring measurement performance in the
laboratory and in the field. We believe this efficiency will stem from
less frequent calibrations of individual instruments and higher
confidence that a complete measurement system is operating properly.
    Below is a brief description of the content of each subpart. The
discussion highlights some recent changes to part 1065. We are not
proposing any changes to part 1065 as part of this proposal, but we
intend to make various changes to part 1065 as part of a concurrent
rulemaking to set new emission standards for marine diesel and
locomotive engines. Manufacturers of engines that are the subject of
this proposal are encouraged to stay abreast of testing changes that we
propose in this other rulemaking.
(1) Subpart A General Provisions
    In Subpart A we identify the applicability of part 1065 and
describe how procedures other than those in part 1065 may be used to
comply with a standard-setting part. In Sec.  1065.10(c)(1) we specify
that testing must be conducted in a way that represents in-use engine
operation, such that in the rare case where provisions in part 1065
result in unrepresentative testing, we may cooperate with manufacturers
to work out alternative testing approaches for demonstrating compliance
with emission standards. Another aspect of representative testing
relates to the desire to maintain consistency between certification
testing and in-use testing. If we or manufacturers test in-use engines,
we would expect the engine to be removed from the equipment and
installed on an engine dynamometer for testing with no changes to the
engine (including the governor, fuel system, exhaust system and other
components).
    In Sec.  1065.10(c)(7) and Sec.  1065.12 we describe a process by
which we may approve alternative test procedures that we determine to
be equivalent to (or more accurate than) the specified procedures.
Given the new testing specifications in part 1065 and the standard-
setting parts, and this more detailed approach to approving alternative
test procedures, we will not allow manufacturers to continue testing
based on any earlier approvals for alternative testing under part 90 or
part 91. Any manufacturer wishing to continue testing with any method,
device, or specification that departs from that included in this
proposal would need to request approval for such testing under Sec.
1065.10(c)(7).
    Other information in this subpart includes a description of the
conventions we use regarding units and certain measurements and we
discuss recordkeeping. We also provide an overview of how emissions and
other information are used for determining final emission results. The
regulations in Sec.  1065.15 include a figure illustrating the
different ways we allow brake-specific emissions to be calculated.
    In this same subpart, we describe how continuous and batch sampling
may be used to determine total emissions. We also describe the two ways
of determining total work that we approve. Note that the figure
indicates our default procedures and those procedures that require
additional approval before we will allow them.
(2) Subpart B Equipment Specifications
    Subpart B first describes engine and dynamometer related systems.
Many of these specifications are scaled to an engine's size, speed,
torque, exhaust flow rate, etc. We specify the use of in-use engine
subsystems such as air intake systems wherever possible to best
represent in-use operation when an engine is tested in a laboratory.
    Subpart B also describes sampling dilution systems. These include
specifications for the allowable components, materials, pressures, and
temperatures. We describe how to sample crankcase emissions.
    The regulations in Sec.  1065.101 include a diagram illustrating
all the available equipment for measuring emissions.

(3) Subpart C Measurement Instruments
    Subpart C specifies the requirements for the measurement
instruments used for testing. These specifications apply to both
laboratory and field testing. In subpart C we recommend accuracy,
repeatability, noise, and response time specifications for individual
measurement instruments, but note that we require that overall
measurement systems meet the calibrations and verifications in Subpart
D.
    In some cases we allow new instrument types to be used where we
previously did not allow them. For example, we now allow the use of a
nonmethane cutter for NMHC measurement, a nondispersive ultraviolet
analyzers for NOX measurement, zirconia sensors for
O2 measurement, various raw-exhaust flow meters for
laboratory and field testing measurement, and an ultrasonic flow meter
for CVS systems.
(4) Subpart D Calibrations and Verifications
Subpart D describes what we mean when we specify accuracy,
repeatability and other parameters in Subpart C. These specifications
apply to both laboratory and field testing. We are adopting
calibrations and verifications that scale with engine size and with the
emission standards to which an engine is certified. We are replacing
some of what we have called ``calibrations'' in the past with a series
of verifications, such as a linearity verification, which essentially
verifies the calibration of an instrument without specifying how the
instrument must be initially calibrated. Because new instruments have
built-in routines that linearize signals and compensate for various
interferences, our existing calibration specifications sometimes
conflicted with an instrument manufacturer's instructions. In addition,
there are new verifications in subpart D to ensure that the new
instruments we specify in Subpart C are used correctly.
(5) Subpart E Engine Selection, Preparation, and Maintenance
    Subpart E describes how to select, prepare, and maintain a test
engine. We updated these provisions to include both gasoline and diesel
engines.
(6) Subpart F Test Protocols
    Subpart F describes the step-by-step protocols for engine mapping,
test cycle generation, test cycle validation, pre-test preconditioning,
engine starting, emission sampling, and post-test validations. We
adopted an improved way to map and generate cycles for constant-speed
engines that would better represent in-use engine operation. We adopted
a more streamlined set of test cycle and validation criteria. We allow
modest corrections for drift of emission analyzer signals within a
certain range.
(7) Subpart G Calculations and Required Information
    Subpart G includes all the calculations required in part 1065. We
adopted definitions of statistical quantities such as mean, standard
deviation, slope, intercept, t-test, F-test, etc. By defining these
quantities mathematically we intend to resolve any potential ambiguity
when we discuss these quantities in other subparts. We have written all
calculations for calibrations and emission calculations in
international units to comply with 15 CFR part 1170, which removes the
voluntary aspect of the conversion to international units for federal
agencies. Furthermore, Executive Order 12770 (56 FR 35801, July 29,
1991) reinforces this policy by providing Presidential authority and
direction for the use of the metric system of measurement by Federal
agencies and departments. For our standards that are not completely in
international units (i.e., grams/horsepower-hour, grams/mile), we
specify in part 1065 the correct use of internationally recognized
conversion factors.
    We also specify emission calculations based on molar quantities for
flow rates instead of volume or mass. This change eliminates the
frequent confusion caused by using different reference points for
standard pressure and standard temperature. Instead of declaring
standard densities at standard pressure and standard temperature to
convert volumetric concentration measurements to mass-based units, we
declare molar masses for individual elements and compounds. Since these
values are independent of all other parameters, they are known to be
universally constant.
(8) Subpart H Fuels, Fluids, and Analytical Gases
    Subpart H specifies test fuels, lubricating oils and coolants, and
analytical gases for testing. We are not identifying any detailed
specification for service accumulation fuel. Instead, we specify that
service accumulation fuel must be either a test fuel or a commercially
available in-use fuel. This helps ensure that testing is representative
of in-use engine operation. We are adding a list of ASTM specifications
for in-use fuels as examples of appropriate service accumulation fuels.
Compared to the proposed regulatory language, we have clarified that
Sec.  1065.10(c)(1) does not require test fuels to be more
representative than the specified test fuels. We have added an
allowance to use similar test fuels that do not meet all of the
specifications provided they do not compromise the manufacturer's
ability to demonstrate compliance. We also now allow the use of ASTM
test methods specified in 40 CFR part 80 in lieu of those specified in
part 1065. We did this because we may more frequently review and update
the ASTM methods in part 80 versus those in part 1065.
    Proper testing requires the use of good engineering judgment to
maintain the stability of analytical gases.
(9) Subpart I Oxygenated Fuels
    Subpart I describes special procedures for measuring certain
hydrocarbons whenever oxygenated fuels are used. We updated the
calculations for these procedures in Subpart G. We have made some
revisions to the proposed text to make it consistent with the original
content of the comparable provisions in part 86. We have also added an
allowance to use the California NMOG test procedures to measure
alcohols and carbonyls.
(10) Subpart J Field Testing and Portable Emissions Measurement Systems
    Portable Emissions Measurement Systems (PEMS) for field testing for
marine spark-ignition engines must generally meet the same
specifications and verifications that laboratory instruments must meet
according to subparts B, C, and D. However, we allow some deviations
from laboratory specifications. In addition to meeting many of the
laboratory system requirements, a PEMS must meet an overall
verification relative to laboratory measurements. This verification
involves repeating a duty cycle several times. The duty cycle itself
must have several individual field-test intervals (e.g., NTE events)
against which a PEMS is compared to the laboratory system. This is a
comprehensive verification of a PEMS. We also adopted a procedure for
preparing and conducting a field test and adopted drift corrections for
emission analyzers. Given the evolving state of PEMS technology, the
field-testing procedures provide for a number of known measurement
techniques. We have added provisions and conditions for using PEMS in
an engine dynamometer laboratory to conduct laboratory testing.

(11) Subpart K Definitions, References, and Symbols
    Subpart K includes all the defined terms, identification of
reference materials, and lists of acronyms and abbreviations used
throughout part 1065.

B. Special Provisions for Nonroad Spark-Ignition Engines

    While part 1065 defines a wide range of specifications to define
appropriate test procedures, several parameters are unique to each
program. For example, each category of engines has one or more duty
cycles that describe exactly how to operate each engine during the
test. These category-specific provisions are described in part 1045,
subpart F, for Marine SI engines and in part 1054, subpart F, for Small
SI engines.
    Manufacturers may run the specified steady-state duty cycle either
as a series of discrete modes or as a ramped-modal cycle. The ramped-
modal cycle specifies the same engine speeds and loads as in
conventional discrete-mode testing, but the modes are connected by
gradual ramps in engine speed and torque for a single, continuous
emission-sampling period. The different modes are connected with
twenty-second linear speed and torque transitions during which
emissions are measured. Emission sampling therefore starts at the
beginning of a ramped-modal cycle and does not stop until its last mode
is completed.
    Ramped-modal cycles involve a different sequence of modes than is
specified for discrete-mode testing. For example, the first mode, which
is engine idle, is split so that half the idle mode occurs at the
beginning of the test and half occurs at the end of the test. This
helps facilitate certain technical aspects of emission sampling.
Instead of using weighting factors for each steady-state mode, a
ramped-modal cycle specifies different time durations for each mode.
Time durations of the modes and transitions are proportioned to the
established modal weighting factors for the specified cycle.
    There are several advantages to ramped-modal testing. Using
discrete-mode testing, manufacturers sample emissions for an
unspecified time duration near the end of each individual mode. The
result is several separate measurements that must be combined
mathematically to yield an overall emission result in g/kW-hr. The
ramped-modal cycle has a single emission-sampling period. This
decreases testing variability and reduces the overall cost of running
tests. Ramped-modal testing also enables the use of batch sampling
systems such as bag samplers.

X. Energy, Noise, and Safety

    Section 213 of the Clean Air Act directs us to consider the
potential impacts on safety, noise, and energy when establishing the
feasibility of emission standards for nonroad engines. Furthermore,
section 205 of EPA's 2006 Appropriations Act requires us to assess
potential safety issues, including the risk of fire and burn to
consumers in use, associated with the proposed emission standards for
nonroad spark-ignition engines below 50 horsepower.\99\ As further
detailed in the following sections, we expect that the proposed exhaust
and evaporative emission standards will either have no adverse affect
on safety, noise, and energy or will improve certain aspects of these
important characteristics. A more in depth discussion of these topics
relative to the proposed exhaust and evaporative emission standards is
contained in Chapters 4 and 5 of the Draft RIA, respectively. Also, our
conclusions relative to safety are fully documented in our
comprehensive safety study which is discussed in the next section.
---------------------------------------------------------------------------

    \99\ Department of the Interior, Environment, and Related
Agencies Appropriations Act, 2006, Pub. L. 109-54, Title II, sec.
205, 119 Stat. 499, 532 (August 2, 2005).
---------------------------------------------------------------------------

A. Safety

    We conducted a comprehensive, multi-year safety study of spark-
ignition engines that focused on the four areas where we are proposing
new emission standards.\100\ These areas are:
---------------------------------------------------------------------------

    \100\ ``EPA Technical Study on the Safety of Emission Controls
for Nonroad Spark-Ignition Engines <  50 Horsepower,'' Office of
Transportation and Air Quality, U.S. Environmental Protection
Agency, Washington, DC, EPA420-R-06-006, March 2006. This document
is available in Docket EPA-HQ-OAR-2004-0008. This report was also
subject to peer review, as described in a peer review report that is
also available in the docket.
---------------------------------------------------------------------------

     New catalyst-based HC+NOX exhaust emission
standards for Class I and Class II nonhandheld spark-ignition engines;
     New fuel evaporative emission standards for nonhandheld
and handheld equipment;
     New HC+NOX exhaust emission standards for
outboard and personal watercraft engines and vessels, and a new CO
exhaust emission standard for nonhandheld engines used in marine
auxiliary applications; and
     New fuel evaporative emission standards for outboard and
personal watercraft engines and vessels.
    Each of these four areas is discussed in greater detail in the next
sections.
(1) Exhaust Emission Standards for Small Spark-Ignition Engines
    The technology approaches that we assessed for achieving the
proposed Small SI engine standards included exhaust catalyst
aftertreatment and improvements to engine and fuel system designs. In
addition to our own testing and development effort, we also met with
engine and equipment manufacturers to better understand their designs
and technology and to determine the state of technological progress
beyond EPA's Phase 2 emission standards.
    The scope of our safety study included Class I and Class II engine
systems that are used in residential walk-behind and ride-on lawn mower
applications, respectively. Residential lawn mower equipment was chosen
for the following reasons.
     Lawn mowers and the closely-related category of lawn
tractors overwhelmingly represent the largest categories of equipment
using Class I and Class II engines.
     Consumer Product Safety Commission (CPSC) data indicate
that more thermal burn injuries are associated with lawn mowers than
occur with other nonhandheld equipment; lawn mowers therefore represent
the largest thermal burn risk for these classes of engines.
     General findings regarding advanced emission control
technologies for residential lawn and garden equipment carry over to
commercial lawn and turf care equipment as well as to other nonhandheld
equipment using Class I and Class II engines.
    We conducted the technical study of the incremental risk on several
fronts. First, working with CPSC, we evaluated their reports and
databases and other outside sources to identify those in-use situations
which create fire and burn risk for consumers. The outside sources
included meetings, workshops, and discussions with engine and equipment
manufacturers. From this information, we identified ten scenarios for
evaluation that covered a comprehensive variety of in-use conditions or
circumstances which potentially could lead to an increased risk in
burns or fires.
    Second, we conducted extensive laboratory and field testing of both
current technology (Phase 2) and prototype catalyst-equipped advanced-
technology engines and equipment (Phase 3) to assess the emission
control performance and thermal characteristics of the engines and
equipment. This testing included a comparison of exhaust system,
engine, and equipment

surface temperatures using still and full motion video thermal imaging
equipment.
    Third, we conducted a design and process Failure Mode and Effects
Analyses (FMEA) comparing current Phase 2 and Phase 3 compliant engines
and equipment to evaluate incremental changes in risk probability as a
way of evaluating the incremental risk of upgrading Phase 2 engines to
meet Phase 3 emission standards.\101\ This is an engineering analysis
tool to help engineers and other professional staff to identify and
manage risk. In an FMEA, potential failure modes, causes of failure,
and failure effects are identified and a resulting risk probability is
calculated from these results. This risk probability is used by the
FMEA team to rank problems for potential action to reduce or eliminate
the causal factors. Identifying these causal factors is important
because they are the elements that a manufacturer can consider to
reduce the adverse effects that might result from a particular failure
mode.
---------------------------------------------------------------------------

    \101\ ``EPA Technical Study on the Safety of Emission Controls
for Nonroad Spark-Ignition Engines <  50 Horsepower,'' Office of
Transportation and Air Quality, U.S. Environmental Protection
Agency, Washington, DC, EPA420-R-06-006, March 2006. This document
is available in Docket EPA-HQ-OAR-2004-0008.
---------------------------------------------------------------------------

    Our technical work and subsequent analysis of all of the data and
information strongly indicate that effective catalyst-based standards
can be implemented without an incremental increase in the risk of fire
or burn to the consumer either during or after using the equipment.
Similarly, we did not find any increase in the risk of fire during
refueling or in storage near typical combustible materials. For
example, our testing program demonstrated that properly designed
catalyst-mufflers could, in some cases, actually result in systems that
were significantly cooler than many current original equipment
mufflers. A number of design elements appear useful to properly
managing heat loads including: (1) The use of catalyst designs that
minimize CO oxidation through careful selection of catalyst size,
washcoat composition, and precious metal loading; (2) positioning the
catalyst within the cooling air flow of the engine fan or redirecting
some cooling air over the catalyst area with a steel shroud; (3)
redirecting exhaust flow through multiple chambers or baffles within
the catalyst-muffler; and (4) larger catalyst-muffler volumes than the
original equipment muffler.
(2) Fuel Evaporative Emission Standards for Nonhandheld and Handheld
Engines and Equipment
    We reviewed the fuel line and fuel tank characteristics for
nonhandheld and handheld equipment and evaluated control technology
which could be used to reduce evaporative emissions from these two
subcategories. The available technology is capable of achieving
reductions in fuel tank and fuel line permeation without an adverse
incremental impact on safety. For fuel lines and fuel tanks, the
applicable consensus safety standards, manufacturer specific test
procedures and EPA requirements are sufficient to ensure that there
will be no increase in the types of fuel leaks that lead to fire and
burn risk during in-use operation. Instead, these standards will reduce
vapor emissions both during operation and in storage. That reduction,
coupled with some expected equipment redesign, is expected to lead to
reductions in the risk of fire or burn without affecting component
durability.
    The Failure Mode and Effects Analyses, which was described in the
previous section, also evaluated permeation and running loss controls
on nonhandheld engines. We found that these controls would not increase
the probability of fire and burn risk from those expected with current
fuel systems, but could in fact lead to directionally improved systems
from a safety perspective. Finally, the running loss control program
being proposed for nonhandheld equipment will lead to changes that are
expected to reduce risk of fire during in-use operation. Moving fuel
tanks away from heat sources, improving cap designs to limit leakage on
tip over, and requiring a tethered cap will all help to eliminate
conditions which lead to in-use problems related to fuel leaks and
spillage. Therefore, we believe the application of emission control
technology to reduce evaporative emissions from these fuel lines and
fuel tanks will not lead to an increase in incremental risk of fires or
burns and in some cases is likely to at least directionally reduce such
risks.
(3) Exhaust Emission Standards for Outboard and Personal Watercraft
Marine Engines and Vessels and Marine Auxiliary Engines
    Our analysis of exhaust emission standards for OB/PWC engines and
marine auxiliary engines found that the U. S. Coast Guard (USCG) has
comprehensive safety standards that apply to engines and fuel systems
used in these vessels. Additionally, organizations such as the Society
of Automotive Engineers, Underwriters Laboratories, and the American
Boat and Yacht Council (ABYC) also have safety standards that apply in
this area. We also found that the four-stroke and two-stroke direct
injection engine technologies which are likely to be used to meet the
exhaust emission standards contemplated for OB/PWC engines are in
widespread use in the vessel fleet today. These more sophisticated
engine technologies are replacing the traditional two-stroke carbureted
engines. The four-stroke and two-stroke direct injection engines meet
applicable USCG and ABYC safety standards and future products will do
so as well. The proposed emission standards must be complementary to
existing safety standards and our analysis indicates that this will be
the case. There are no known safety issues with the advanced
technologies compared with two-stroke carbureted engines. The newer-
technology engines arguably provide safety benefits due to improved
engine reliability and range in-use. Based on the applicability of USCG
and ABYC safety standards and the good in-use experience with advanced-
technology engines in the current vessel fleet, we believe new emission
standards would not create an incremental increase in the risk of fire
or burn to the consumer.
(4) Fuel Evaporative Emission Standards for Outboard and Personal
Watercraft Engines and Vessels
    We reviewed the fuel line and fuel tank characteristics for marine
vessels and evaluated control technology which could be used to reduce
evaporative emissions from boats. With regard to fuel lines, fuel
tanks, and diurnal controls, there are rigorous USCG, ABYC, United
Laboratories, and Society of Automotive Engineers standards which
manufacturers will continue to meet for fuel system components. All of
these standards are designed to address the in-use performance of fuel
systems, with the goal of eliminating fuel leaks. The low-permeation
fuel lines and tanks needed to meet the Phase 3 requirements would need
to pass these standards and every indication is that they would
pass.\102\
---------------------------------------------------------------------------

    \102\ ``EPA Technical Study on the Safety of Emission Controls
for Nonroad Spark-Ignition Engines <  50 Horsepower,'' Office of
Transportation and Air Quality, U.S. Environmental Protection
Agency, Washington, DC, EPA420-R-06-006, March 2006. This document
is available in Docket EPA-HQ-OAR-2004-0008.
---------------------------------------------------------------------------

    Furthermore, the EPA permeation certification requirements related
to emissions durability will add an additional layer of assurance. Low-
permeation fuel lines are used safely

today in many marine vessels. Low-permeation fuel tanks and diurnal
emission controls have been demonstrated in various applications for
many years without an increase in safety risk. Furthermore, a properly
designed fuel system with fuel tank and fuel line permeation controls
and diurnal emission controls would reduce the fuel vapor in the boat,
thereby reducing the opportunities for fuel related fires. In addition,
using improved low-permeation materials coupled with designs meeting
USCG and ABYC requirements should reduce the risk of fuel leaks into
the vessel. We believe the application of emission control technologies
on marine engines and vessels for meeting the proposed fuel evaporative
emission standards would not lead to an increase in incremental risk of
fires or burns, and in many cases may incrementally decrease safety
risk in certain situations.

B. Noise

    As automotive technology demonstrates, achieving low emissions from
spark-ignition engines can correspond with greatly reduced noise
levels. Direct-injection two-stroke and four-stroke OB/PWC have been
reported to be much quieter than traditional carbureted two-stroke
engines. Catalysts in the exhaust act as mufflers which can reduce
noise. Additionally, adding a properly designed catalyst to the
existing muffler found on all Small SI engines can offer the
opportunity to incrementally reduce noise.

C. Energy

(1) Exhaust Emission Standards
    Adopting new technologies for controlling fuel metering and air-
fuel mixing, particularly the conversion of some carbureted engines to
advanced fuel injection technologies, will lead to improvements in fuel
consumption. This is especially true for OB/PWC engines where we expect
the proposed standards to result in the replacement of old technology
carbureted two-stroke engines with more fuel-efficient technologies
such as two-stroke direct injection or four-stroke engines. Carbureted
crankcase-scavenged two-stroke engines are inefficient in that 25
percent or more of the fuel entering the engine may leave the engine
unburned. EPA estimates that conversion to more fuel efficient
recreational marine engines would save 61 million gallons of gasoline
per year in 2030. The conversion of some carbureted Small SI engines to
fuel injection technologies is also expected to improve fuel economy.
We estimate approximately 18 percent of the Class II engines will be
converted to fuel injection and that this will result in a fuel savings
of about 10 percent for each converted engine. This translates to a
fuel savings of about 56 million gallons of gasoline in 2030 when all
of the Class II engines used in the U.S. will comply with the proposed
Phase 3 standards. By contrast, the use of catalyst-based control
systems on Small SI engines is not expected to change their fuel
consumption characteristics.
(2) Fuel Evaporative Emission Standards
    We anticipate that the proposed fuel evaporative emission standards
will have a positive impact on energy. By capturing or preventing the
loss of fuel due to evaporation, we estimate that the lifetime average
fuel savings would be about 1.6 gallons for an average piece of Small
SI equipment and 32 gallons for an average boat. This translates to a
fuel savings of about 41 million gallons for Small SI equipment and 30
million gallons for Marine SI vessels in 2030 when most of the affected
equipment used in the U.S. would be expected to have evaporative
emission controls.

XI. Proposals Affecting Other Engine and Vehicle Categories

    We are proposing to make several regulatory changes that would
affect engines, equipment, and vessels other than Small SI and Marine
SI. These changes are described in the following sections. We request
comment on all aspects of these proposed changes.

A. State Preemption

    Section 209(e) of the Clean Air Act prohibits states and their
political subdivisions from adopting or enforcing standards and other
requirements relating to the control of emissions from nonroad engines
or vehicles. Section 209(e) authorizes EPA to waive this preemption for
California for standards and other requirements for nonroad engines and
vehicles, excluding new engines that are smaller than 175 horsepower
used in farm or construction equipment or vehicles and new locomotives
or new engines used in locomotives. States other than California may
adopt and enforce standards identical to California standards
authorized by EPA.
    EPA promulgated regulations implementing section 209(e) on July 20,
1994 (59 FR 36987). EPA subsequently promulgated revised regulations
implementing section 209(e) on December 30, 1997 (62 FR 67733). See 40
CFR part 85, subpart Q. We are proposing to create a new part 1074 that
would describe the federal preemption of state and local emission
requirements. This is being done as part of EPA's ongoing effort to
write its regulations in plain language format in subchapter U of title
40 of the CFR. The proposed regulations are based directly on the
existing regulations in 40 CFR part 85, subpart Q. With the exception
of the simplification of the language and specific changes described in
this section, we are not changing the meaning of these regulations.
    Pursuant to section 428 of the 2004 Consolidated Appropriations
Act, we are proposing to add regulatory language to implement the
legislative restriction on states other than California adopting, after
September 1, 2003, standards or other requirements applicable to spark-
ignition engines smaller than 50 horsepower. We are also proposing to
add, pursuant to that legislation, criteria for EPA's consideration in
authorizing California to adopt and enforce standards applicable to
such engines.\103\
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    \103\ See section 428 of the Appropriations Act for 2004.
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    On July 12, 2002, the American Road and Transportation Builders
Association (ARTBA) petitioned EPA to amend EPA's rules implementing
section 209(e) of the Act.\104\ In particular, ARTBA petitioned EPA to
amend its regulations and interpretive rule regarding preemption of
state and local requirements ``that impose in-use and operational
controls or fleet-wide purchase, sale or use standards on nonroad
engines.''\105\
---------------------------------------------------------------------------

    \104\ ``Petition to Amend Rules Implementing Clean Air Act
section 209(e),'' American Road and Transportation Builders
Association (ARTBA), July 12, 2002. Also, EPA received an additional
communication from ARTBA urging EPA to grant the petition after the
decision of the U.S. Supreme Court in EMA v. SCAQMD, 541 U.S. 246
(2004). See ``ARTBA Petition,'' L. Joseph, ARTBA, to D. Dickinson &
R. Doyle, EPA, April 30, 2004. These documents are available in
Docket EPA-HQ-OAR-2004-0008.
    \105\ In 1994, EPA promulgated an interpretive rule at Appendix
A to subpart A of 40 CFR part 89. The appendix provides that state
restrictions on the use and operation of nonroad engines are not
preempted under section 209.
---------------------------------------------------------------------------

    ARTBA believes such controls should be preempted. As we are already
revising the preemption provisions to a certain extent in this rule, we
believe it is appropriate to respond to ARTBA's petition in the context
of this rule, while giving the public the ability to respond to provide
comments regarding ARTBA's petition. EPA is not proposing to adopt the
explicit changes requested by ARTBA in its petition; however, EPA will
continue to review the arguments raised by ARTBA's petition, as well as
all further arguments provided by ARTBA and other commenters during the
period for notice and comment on

this issue. We will respond to the petition, and if appropriate, make
any changes to the regulations to conform our response to ARTBA and
other commenters in the final rule. We request comment from the public
regarding issues related to ARTBA's petition and how we should respond.

B. Certification Fees

    Under our current certification program, manufacturers pay a fee to
cover the costs associated with various certification and other
compliance activities associated with an EPA issued certificate of
conformity. These fees are based on the actual and/or projected cost to
EPA per emission family. We are proposing to establish a new fees
category for certification related to the proposed evaporative emission
standards. Sections III and VI describe how these fees would apply to
sterndrive/inboard marine engines and equipment and vessels subject to
evaporative emission standards since these products are not currently
required to pay certification fees.
    In addition, we are proposing to create a new part 1027 in title 40
that would incorporate the new and existing fee requirements under a
single part in the regulations. This is being done as part of EPA's
ongoing effort to write its regulations in plain language format in
subchapter U of title 40 of the CFR. The proposed regulations are based
directly on the existing regulations in 40 CFR part 85, subpart Y.
Aside from a variety of specific changes, moving this language to part
1027 is not intended to affect the substance of the existing fee
provisions. We are proposing the following adjustments and
clarifications to the existing regulations:
     Establishing a new fees category for new evaporative
emission standards.
     Eliminating one of the paths for applying for a reduced
fee. The existing regulations specify that applications covering fewer
than six vehicles or engines, each with an estimated retail sales price
below $75,000, shall receive a certificate for five vehicles or
engines. Holders of these certificates are required to submit an annual
model year reduced fee payment report adjusting the fees paid. We are
proposing to eliminate this pathway and the associated report, as they
are complex and have been rarely used.
     Clarifying the obligation to make additional payment on a
reduced fee certificate if the actual final sales price is more than
the projected retail sales price for a reduced fee vehicle or engine.
As before, the final fee payment must also reflect the actual number of
vehicles.
     Applying the calculated fee changes for later years, which
are based on the Consumer Price Index and the total number of
certificates, only after the change in the fee's value since the last
reported change has reached $50. The fee change for the ``Other''
category for calendar year 2005 to 2006 changed from $826 to $839 and
for non-road compression-ignition engines from $1822 to $1831. Under
the proposal, the fee would not change until such time as the fee
increase would be $50.00 or greater. This might not occur after one
year, but after two or more years the calculated increase in a fee
based on the change in the Consumer Price Index might be more than
$50.00. The same applies if the price goes both up and down. For
example, if the fee published in EPA guidance for a category of engine
was $1,000 in 2011 and the calculated fee for 2012 is $990 and in 2013
is $1040, the fee in 2013 would remain at $1,000 since the change from
the 2011 fee is only $40. This would minimize confusion related to
changing fees where the calculated fee is very close to that already
established for the previous year. It will also lessen paperwork and
administrative burdens for manufacturers and EPA in making adjustments
for small fees changes for applications that are completed around the
change in a calendar year. The number of certificates may go up or down
in any given year, while the Consumer Price Index would generally
increase annually. As a result, this change would be revenue-neutral or
would perhaps slightly decrease overall revenues.
     Clarifying that all fee-related records need to be kept,
not just those related to the ``final reduced fee calculation and
adjustment.''
     Adding http://www.Pay.gov or other methods specified in guidance

as acceptable alternative methods for payment and filing of fee forms.
We anticipate several changes in administration of the fees program in
coming months. It is likely that future payment of fees by electronic
funds transfers (other than wire payments through the Federal Reserve)
will be available only through online payments via http://www.Pay.gov. We are

also receiving an increasing number of fee forms through e-mail
submissions, which has proved to be a reliable and convenient method.
We will be establishing a specific e-mail address for these
submissions.
     Establishing a single deadline for all types of refunds:
total, partial for reduced fees, and partial for corrections. In all
cases, refund requests must be received within six months of the end of
the model year. A common type of request is due to an error in the fee
amount paid as a result of changed fees for a new calendar year. We
frequently apply these overpayments to other pending certification
applications. This is less burdensome than applying for a simple
refund, both for EPA and for most manufacturers. Applications to apply
such refunds to other certification applications must also be received
within six months of the end of the model year of the original engine
family or test group.
     Emphasizing with additional cross references that the same
reduced fee provisions that apply to Independent Commercial Importers
also apply to modification and test vehicle certificates under 40 CFR
85.1509 and 89.609: the number of vehicles covered is listed on the
certificate, a revision of the certificate must be applied for and
additional reduced fee payments made if additional vehicles are to be
covered, and the certificate must be revised to show the new total
number of vehicles to be covered.

C. Amendments to General Compliance Provisions in 40 CFR Part 1068

    The provisions of part 1068 currently apply for nonroad diesel
engines regulated under 40 CFR part 1039, Large SI engines regulated
under 40 CFR part 1048, and recreational vehicles regulated under 40
CFR part 1051. We are proposing to apply these provisions also for
Small SI and Marine SI engines, equipment, and vessels. Any changes we
make to part 1068 will apply equally for these other types of engines
and vehicles. We therefore encourage comment from any affected
companies for any of these proposed changes.
    The most significant change we are proposing for part 1068 is to
clarify the language throughout to make necessary distinctions between
engines, equipment, and fuel-system components--and particularly
between equipment using certified engines and equipment that has been
certified to meet equipment-based standards. This becomes necessary
because the evaporative emission standards proposed in this document
apply in some cases to equipment manufacturers and boat builders, while
the exhaust emission standards apply only to engine manufacturers. Some
provisions in part 1068 apply to equipment manufacturers differently if
they hold a certificate of conformity rather than merely installing
certified engines (or certified fuel-system components). The proposed
changes in regulatory language are intended to help make those
distinctions. See Sec.  1068.2 for a

description of the proposed terminology that we intend to use
throughout part 1068.
    We are aware that in some cases manufacturers produce nonroad
engines by starting with a complete or partially complete engine from
another manufacturer and modifying it as needed for the particular
application. This is especially common for Marine SI and Large SI
engines and equipment, but it may also occur for other types of nonroad
engines and equipment. We are concerned that an interpretation of the
prohibited acts in Sec.  1068.101 would disallow this practice because
the original engine manufacturer is arguably selling an engine that is
not covered by a certificate of conformity even though emission
standards apply. We are addressing this first by proposing to define
``engine'' for the purposes of the regulations (see Sec.  1068.30). To
do this, we differentiate between complete engines and partially
complete engines, both of which need to be covered by a certificate.
Partially complete engines would include any engine, consisting of the
engine block plus at least one attached component such that the engine
is not yet in its final, certified configuration. We are also proposing
to allow for a path by which the original engine manufacturer would not
need to certify partially complete engines or request approval for an
exemption (see Sec.  1068.262). To do this though, the original engine
manufacturer would need a written request from a secondary engine
manufacturer who already holds a valid certificate of conformity for
the engine based on its final configuration and application. These
proposed provisions are intended generally to be clarifications of the
existing regulatory provisions, particularly those in Sec.  1068.330
for imported engines.
    One situation involving partially complete engines involves the
engine block as a replacement part where the original engine had major
structural damage. In this case the engine manufacturer will typically
sell an engine block with piston, crankshaft, and other internal
components to allow the user to repower with many of the components
from the original engine. Under the proposed definitions, these short
blocks or three-quarter blocks would be new engines subject to emission
standards. We believe it would be appropriate to address this situation
in the regulations with the replacement engine provisions in Sec.
1068.240, which provides a path for making new engines that are exempt
from current emission standards. We request comment on applying these
replacement-engine provisions to engine blocks as replacement parts.
    We are proposing to further clarify the requirement for engine
manufacturers to sell engines in their certified configuration. The
existing provisions in Sec.  1068.260 describe how manufacturers may
use delegated assembly to arrange for equipment manufacturers to
separately source aftertreatment components for engines that depend on
aftertreatment to meet emission standards. We are proposing to include
language to clarify that we will consider an engine to be in its
certified configuration in certain circumstances even if emission-
related components are not assembled to the engine. This is intended to
reflect common practice that has developed over the years. We are also
proposing to clarify that engines may be shipped without radiators or
other components that are unrelated to emission controls, and that we
may approve requests to ship engines without emission-related
components in some circumstances. This would generally be limited to
equipment-related components such as vehicle-speed sensors. We could
specify conditions that we determine are needed to ensure that shipping
the engine without such components will not result in the engine being
operated outside of its certified configuration.
    We adopted a definition of ``nonroad engine'' that continues to
apply today (see Sec.  1068.30). This definition distinguishes between
portable or transportable engines that may be considered either nonroad
or stationary, depending on the way they will be used. The distinction
between nonroad and stationary engines is most often relevant for new
engines in determining which emission standards apply. However, we have
received numerous questions related to equipment whose usage has
changed so that the original designation no longer applies. The
definition does not address these situations. We are therefore
proposing to adopt provisions that would apply when an engine
previously used in a nonroad application is subsequently used in an
application other than a nonroad application, or when an engine
previous used in a stationary application is moved (see Sec.  1068.31).
    In addition, we are proposing several amendments to part 1068 to
clarify various items. These include:
     Sec.  1068.101(a)(1): Revising the prohibited act to
specify that engines must be ``covered by'' a certificate rather than
``having'' a certificate. The revised language is more descriptive and
consistent with the Clean Air Act.
     Sec.  1068.101(a)(1)(i): Clarifying that engines or
equipment are considered to be uncertified if they are not in a
configuration that is included in the applicable certificate of
conformity. This would apply even if the product had an emission label
stating that it complies with emission standards.
     Sec.  1068.101(a)(2): Clarifying the prohibition on
recordkeeping to apply also to submission of records to the Agency.
     Sec.  1068.101(b)(2): Adding a prohibition against using
engines in a way that renders emission controls inoperative, such as
misfueling or failing to use additives that the manufacturer specifies
as part of the engine's certified configuration. This is more likely to
apply for compression-ignition engines than spark-ignition engines.
     Sec.  1068.101(b)(7): Clarifying the prohibitions related
to warranty to require the submission of specified information in the
application for certification; adding language to identify obligations
related to recall; and preventing the manufacturer from communicating
to users that warranty coverage is conditioned on using authorized
parts or service facilities. These provisions are consistent with
requirements that apply in other EPA programs.
     Sec.  1068.105(a): Revising the regulation to allow
equipment manufacturers to use up normal inventories of previous model
year engines only if it is a continuation of ongoing production with
existing inventories. These provisions would not apply for an equipment
manufacturer starting to produce a new equipment model.
     Sec.  1068.105: Eliminating paragraph (b) related to using
highway certification for nonroad engines or equipment, since these
provisions are spelled out specifically for each nonroad program where
appropriate.
     Sec.  1068.105(b): Clarifying the requirement to follow
emission-related installation instructions to include installation
instructions from manufacturers that certify components to evaporative
emission standards.
     Sec.  1068.120: Clarifying the rebuilding provisions to
apply to maintenance related to evaporative emissions.
     Sec.  1068.240: Clarifying that the scope of the exemption
for new replacement engines is limited to certain engines; also
clarifying that the replacement engine provisions apply for replacing
engines that meet alternate emission standards (such as those produced

under the Transition Program for Equipment Manufacturers).
     Sec.  1068.250: Revising the applicability of the hardship
provisions to small businesses more broadly by referring to a term that
is defined in Sec.  1068.30; this would include small businesses as
identified in the standard-setting part, or any companies that meet the
criteria established by the Small Business Administration.
     Sec.  1068.250: Clarifying the timing related to hardship
approvals, and the ability to get extensions under appropriate
circumstances.
     Sec.  1068.260: Revising the provisions related to
delegated assembly as described in Section XI.F and clarifying that
reduced auditing rates as specified in paragraph (a)(6) should be based
on the number of equipment manufacturers involved rather than the
number of engines; also specifying that manufacturers may itemize
invoices to ensure that the Customs valuation for assessment of import
duties is based on the price of the imported engine without the
aftertreatment components that are being shipped separately. We request
comment on adding a provision allowing for a separate invoice for
aftertreatment components that are shipped separately.
     Sec.  1068.305: Clarifying that the requirement to submit
importation forms applies to all engines, not just nonconforming
engines; also adding a requirement to keep these records for five
years. Both of these changes are consistent with the Customs
regulations at 19 CFR 12.74.
     Part 1068, Appendix I: Clarifying that the fuel system
includes evaporative-related components and that the parts comprising
the engine's combustion chamber are emission-related components.
    Manufacturers have also expressed a concern that the engine
rebuilding provisions in Sec.  1068.120 do not clearly address the
situation in which rebuilt engines are used to repower equipment where
the engine being replaced meets alternate emission standards (such as
those produced under the Transition Program for Equipment
Manufacturers). These engines are not certified to the emission
standards that would otherwise apply for the given model year, so there
may be some confusion regarding the appropriate way of applying these
regulatory requirements.
    In Section V.E.6 we describe several proposed special compliance
provisions that are intended to improve our ability to oversee our
emission control program for Small SI engines. For example, we are
proposing that manufacturers take steps to ensure that they will be
able to honor emission-related warranty claims, meet any compliance- or
enforcement-related obligations that may arise, and import new engines
and equipment in a timely manner after we adopt new standards. We
request comment on the appropriateness of adopting any or all of those
provisions under part 1068 such that they would apply to all engines
and equipment subject to part 1068. We also request comment on any
adjustments to those provisions that would be appropriate for other
categories of engines and equipment, whether we choose to adopt these
provisions in this proposal or in a separate rulemaking.
    In addition, we request comment on early application of the
provisions of part 1068 before the standards proposed in this notice
take effect. For example, for any provisions not directly related to
the emission standards, we could revise the regulations in part 90 and
part 91 to reference the corresponding provisions in part 1068. We
similarly request comment on making these changes for diesel engines
regulated under part 89 (land-based) and part 94 (marine). This would
allow us to accelerate the transition to plain-language regulations and
prevent confusion from maintaining multiple versions of similar
provisions for several years. We would also be able to substantially
decrease printing costs. The provisions most appropriately considered
for early transition to part 1068 include: (1) Selective enforcement
audits, (2) exemptions, (3) importation provisions, (4) defect
reporting and recall, (5) hearing procedures, and (6) treatment of
confidential information.
    We are also seeking comment on revisions to 40 CFR 1068.101.
Section 203 of the Act (42 U.S.C. 7522) states that performing certain
acts, ``and causing thereof,'' constitutes a prohibited act. We are
interested in revising the regulations to specifically include this
prohibition on the ``causing'' of any of the prohibited acts listed in
the statute and the regulations. Adding this clarification would help
people who are subject to the regulations to more fully understand what
actions are prohibited and may potentially subject them to enforcement
proceedings under the Act. The revisions themselves would not be
intended to add new enforcement authorities beyond what is already
specified in the statute.
    If we consider it a violation to cause someone to commit a
prohibited act, then persons causing any prohibited act would also be
subject to the full administrative and judicial enforcement actions
allowable under the Act and the regulations. The prohibition on
``causing'' a prohibited act would apply to all persons and would not
be limited to manufacturers or importers of regulated engines or
equipment.
    If this provision is adopted, EPA would interpret the ``causation''
aspect of section 203 broadly. In assessing whether a person has caused
a prohibited act, EPA would evaluate the totality of circumstances. For
example, in certain circumstances EPA believes a retailer may be
responsible for causing the importation of engines or equipment not
covered by a valid certificate of conformity or otherwise in violation
of our regulations, such as the labeling requirements. In addition to
the prohibitions that apply to manufacturers and importers generally
under section 203, EPA will also consider many factors in assessing
whether a manufacturer, importer, retailer, distributor or other person
has caused a prohibited act, including, but not limited to, the
following: (1) The contractual or otherwise established business
relationship of those persons involved in producing and/or selling new
engines and equipment; (2) the particular efforts or influence of the
alleged violator contributing to, leading to or resulting in the
prohibited act; and (3) the efforts, or lack thereof, of the person to
prevent such a violation. EPA will evaluate the entire circumstances in
determining whether a person caused another person to commit a
prohibited act such as importing engines or equipment in violation of
our regulations.

D. Amendments Related to Large SI Engines (40 CFR Part 1048)

    Manufacturers of Large SI engines are encouraged to review the
proposed changes described in Section XI.C related to 40 CFR part 1068.
    Some of the issues related to Marine SI engines described in
Section III relate to Large SI engines. In particular, the uncertain
availability of certain base engine models from General Motors for use
in nonroad applications poses a challenge for efforts to certify the
engines to the Large SI standards. In particular, the uncertain lead
time associated with getting the new engines and the level of effort
expected for certifying the existing engine models that are planned for
obsolescence make it difficult for companies, especially small
businesses, to go through the certification process and recover costs
for repeated testing. Of greatest concern are requirements related to
developing deterioration factors for these engines. The existing
regulations allow for assigned deterioration factors for small
businesses, but these apply only to companies with fewer than 200

employees. We are therefore proposing to expand the definition of
small-volume engine manufacturer to also include companies with annual
U.S. sales of no more than 2000 Large SI engines. This would align with
the provisions already adopted by California ARB. Similarly, we are
proposing a provision allowing for assigned deterioration factors for
small-volume engine families for Small SI engines (see Section V). A
similar dynamic applies for Large SI engines. Any such allowance would
apply to engine families with projected sales up to 300 or 500 units to
reflect to different production volumes. We request comment on allowing
assigned deterioration factors for small-volume engine families for
Large SI engines, and on the appropriate threshold for this provision.
    We are also proposing to revise the provisions related to
competition engines to align with the proposal for Small SI engines.
Any Small SI engine that is produced under the competition exemption
will very likely exceed 19 kW. As a result, we believe it is
appropriate to make these provisions identical to avoid confusion.
    Manufacturers have notified us that the transient test for
constant-speed engines does not represent in-use operation in a way
that significantly affects measured emission levels. This notification
is required by Sec.  1065.10(c)(1). In particular, manufacturers have
pointed out that the specified operation involves light engine loads
such that combustion and exhaust temperatures do not rise enough to
reach catalyst light-off temperatures. As a result, meeting the
standard using the constant-speed transient test would require the use
of significantly oversized catalysts, which would add significant costs
without a commensurate improvement for in-use emission control. We
faced a similar dilemma in the effort to adopt transient standards for
nonroad diesel engines, concluding that the transient standards should
not apply until we develop a more suitable duty cycle that more
appropriately reflects in-use operation. We are proposing to take this
same approach for Large SI engines, waiving the requirement constant
speed engines to meet the transient standards until we are able to
develop a more appropriate duty cycle. Manufacturers must continue to
meet the standards for steady-state testing and the field-testing
standards continue to apply. We are also proposing to clarify that
manufacturers certifying constant-speed engines should describe their
approach to controlling emissions during transient operation in their
application for certification.
    Manufacturers have also pointed out that a multiplicative
deterioration factor is problematic for engines with very low emission
levels. While the HC+NOX emissions may be as high as 2.7 g/
kW-hr, manufacturers are certifying some engine families with
deteriorated emission levels below 0.1 g/kW-hr. These very low emission
levels are well below the standard, but the measurement systems are
challenged to produce a precisely repeatable emission level at that
point. As a result, measurement variability and minor engine-to-engine
variability can lead to small absolute differences in emission levels
that become magnified by a deterioration factor that reflects the
extremely small low-hour measurement. We are therefore proposing to
specify that manufacturers use an additive deterioration factor if
their low-hour emission levels are below 0.3 g/kW-hr. This change would
accommodate the mathematical and analyzer effects of very low emission
levels without changing the current practice for the majority of
engines that are certified with emission levels closer to the standard.
This change would remove the incentive for manufacturers to increase
their engine's emission levels to avoid an artificially large
deterioration factor. The only exception would be for cases in which
good engineering judgment dictates that a multiplicative deterioration
factor would nevertheless be appropriate for engines with very low
emissions. This may be the case if an engine's deterioration can be
attributed, even at very low emission levels, to proportionally
decreased catalyst conversion of emissions from an aged engine. It is
important to note that Large SI engine manufacturers are subject to in-
use testing to demonstrate that they meet emission standards throughout
the useful life. Should such testing indicate that an additive
deterioration factor does not appropriately reflect actual performance,
we would require manufacturers to revise their deterioration factors
appropriately, as required under the current regulations. If such
discrepancies appear for multiple manufacturers, we would revise the
regulation to again require multiplicative deterioration factors for
all aftertreatment-based systems. We also request comment on a further
refinement of the form of the deterioration factor to more closely
reflect the degradation in catalyst conversion efficiency. For example,
measuring engine-out emissions would allow for calculating catalyst
conversion efficiency, such that changes in this parameter over an
engine's useful life could be factored into a calculation to
characterize an engine's actual rate of deterioration.
    Most Large SI engines are installed in equipment that has metal
fuel tanks. This formed the basis of the regulatory approach to set
evaporative emission standards and certification requirements.
Manufacturers have raised questions about the appropriate steps to take
for systems that rely on plastic fuel tanks. These tanks are able to
meet standards, but questions have been raised about the engine
manufacturer's role in certifying a range of fuel tanks with their
engines. We request comment on the extent to which the current
regulatory requirements might limit the range of fuel tank designs.
    The current permeation standards for Large SI equipment references
Category 1 fuel lines as defined in the version of SAE J2260 that was
issued in November, 1996. In 2004, the Society of Automotive Engineers
(SAE) updated SAE J2260. Manufacturers have asked whether we will
approve fuel lines based on the updated procedures. The new procedures
have two primary differences related to fuel line permeation. First,
the test fuel was changed from CM15 to CE10.\106\ Second, the
associated limits for the different categories of fuel line permeation
were revised. Data presented in Chapter 5 of the Draft RIA suggest that
permeation from low-permeation fuel line materials can be less than
half on CE10 than on CM15. The permeation specification for Category 1
fuel line was revised by SAE from 0-25 g/m\2\/day to 3-10 g/m\2\/day.
(A new Category 0 was added at 0-3 g/m\2\/day.) Directionally, the new
Category 1 permeation limits seem to account for the change in the test
fuel. In addition, ethanol fuel blends are commonly used in-use while
methanol fuel blends are less common. We request comment on updating
the regulations for Large SI equipment to reference the Category 1 fuel
line specifications in the updated version of SAE J2260 (revised
November 2004). We also request comment on whether this new
specification would affect the stringency of the standard or the choice
of fuel line constructions for this equipment.
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    \106\ ``C'' refers to fuel C as specified in ASTM D 412, E10
refers to 10 percent ethanol, and M15 refers to 15 percent methanol.
---------------------------------------------------------------------------

    We are also proposing several technical amendments to part 1048.
Many of these simply correct

typographical errors or add references to the proposed regulatory cites
in part 1054. Several changes are intended merely to align regulatory
language with that of other programs, including those that would be
subject to the standards proposed in this notice. In addition, we are
proposing the following changes:
     Sec.  1048.5: Clarifying that locomotive propulsion
engines are not subject to Large SI emission standards, even if they
use spark-ignition engines. This is based on the separate provisions
that apply to locomotives in Clean Air Act section 213.
     Sec.  1048.101: Clarifying manufacturer's responsibility
to meet emission standards for different types of testing, especially
to differentiate between field-testing standards and duty-cycle
standards.
     Sec.  1048.105: Clarifying that only the permeation
standards of SAE J2260 apply to fuel lines used with Large SI engines.
     Sec.  1048.105: Clarifying that the requirement to prevent
fuel boiling is affected by the pressure in the fuel tank. The
regulation currently characterizes the boiling point of fuel only at
atmospheric pressure. Pressurizing the fuel tank increases the boiling
point of the fuel.
     Sec.  1048.105: Reorganizing the regulatory provisions to
align with the new language in 40 CFR part 1060. This is not intended
to change any of the applicable requirements.
     Sec.  1048.110: Clarifying that ``malfunctions'' relate to
engines failing to maintain emission control and not to diagnostic
systems that fail to report signals; and clarifying that the
malfunction indicator light needs to stay illuminated for malfunctions
or for system errors.
     Sec.  1048.120: Clarifying that the emission-related
warranty covers only those components from 40 CFR part 1068, Appendix
I, whose failure will increase emissions.
     Sec.  1048.125: Clarifying the provisions related to
noncritical emission-related maintenance.
     Sec.  1048.135: Revising the engine labeling requirements
to allow omission of the manufacturing date only if the date is stamped
or engraved on the engine, rather than allowing manufacturers to keep
records of engine build dates. This is important for verifying that
engines comply with standards based on their build date.
     Sec.  1048.205: Removing detailed specifications for
describing auxiliary emission control devices in the application for
certification. This responds to the concern expressed by manufacturers
that the existing, very prescriptive approach requires much more
information than is needed to adequately describe emission control
systems. We are proposing to leave in place a broad requirement to
describe emission control systems and parameters in sufficient detail
to allow EPA to confirm that no defeat devices are employed.
Manufacturers should be motivated to include substantial information to
make such determinations in the certification process, rather than
being subject to this type of investigation for emission control
approaches that are found to be outside of the scope of the application
for certification.
     Sec.  1048.205: Adding requirement to align projected
sales volumes with actual sales from previous years. This does not
imply additional reporting or recordkeeping requirements. It is
intended simply to avoid situations where manufacturers intentionally
mis-state their projected sales volume to gain some advantage under the
regulations.
     Sec.  1048.205: Specifying that manufacturers must submit
modal emission results rather than just submitting a weighted average.
Since this information is already part of the demonstration related to
the field-testing standards, this should already be common practice.
     Sec.  1048.220: Clarifying that if manufacturers change
their maintenance instructions after starting production for an engine
family, they may not disqualify engines for in-use testing or warranty
claims based on the fact that operators did not follow the revised
maintenance instructions.
     Sec.  1048.225: Clarifying the terminology to refer to
``new or modified engine configurations'' rather than ``new or modified
nonroad engines.'' This is necessary to avoid using the term ``new
nonroad engine'' in a way that differs from the definitions in Sec.
1048.801.
     Sec.  1048.230: Clarifying that engine families relate
fundamentally to emission certification and that we would expect
manufacturers to suggest a tailored approach to specifying engine
families under Sec.  1048.230(d) to occur only in unusual
circumstances.
     1048.240: Adding a requirement for design-based
certification for the diurnal standards that fuel tanks need to use
low-permeation materials.
     1048.245: Adding the provision to allow for component
certification for plastic fuel tanks. The revised language clarifies
the requirement related to allowing pressure relief for vacuum
pressures and for controlling permeation rates from plastic fuel tanks.
     Sec.  1048.250: Adding a requirement for manufacturers to
report their sales volumes for an engine family if they are using a
provision that depends on production volumes.
     Sec.  1048.301: Clarifying that engine families with
projected sales volumes below 150 units may have reduced testing rates
for production-line testing. This level of production does not allow
for adequate testing to use the statistical techniques before exceeding
specified maximum testing rates.
     Sec.  1048.305: Clarifying that (1) Tested engines should
be built in a way that represents production engines; (2) the field-
testing standards apply for any testing conducted (this may involve
simply comparing modal results to the field-testing standards); and (3)
we may review a decision to use emission results from a retested engine
instead of the original results.
     Sec.  1048.310: Clarifying the relationship between
quarterly testing and compliance with the annual testing requirements.
     Sec.  1048.315: Correcting the equation for the CumSum
statistic to prevent negative values.
     Sec.  1048.410: Clarifying that repeat tests with an in-
use test engine are acceptable, as long as the same number of repeat
tests are performed for all engines.
     Sec.  1048.415: Clarifying that the provisions related to
defect reporting in 40 CFR 1068.501 apply for in-use testing.
     Sec.  1048.501: Removing specified mapping procedures,
since these are addressed in 40 CFR part 1065.
     Sec.  1048.505: Removing redundant text and removing
sampling times specified in Table 1, since these are addressed in Sec.
1048.505(a)(1).
     Sec.  1048.505: Correcting the mode sequence listed in the
table for the ramped-modal testing.
     Sec.  1048.505: Clarifying that cycle statistics for
discrete-mode testing must be calculated separately for each mode.
     Sec. Sec.  1048.605 and 1048.610: Requiring some
demonstration that the sales restrictions that apply for these sections
are met, and clarifying the provisions related to emission credits for
vehicles that generate or use emission credits under 40 CFR part 86.
     Sec.  1048.801: Revising several definitions to align with
updated definitions adopted (or proposed) for other programs.
    We request comment on changing Sec.  1048.220 to prevent
manufacturers from distributing revised emission-related maintenance
instructions until we have approved them. We are taking this approach
for Small SI and Marine

SI engines in this proposal (see Sec. Sec.  1045.220 and 1054.220)
because we believe it would be inappropriate for manufacturers to
specify increased or decreased emission-related maintenance without EPA
approval of those changes. The same concern applies equally to all
nonroad spark-ignition engines and vehicles, so we would expect to
apply the same policy to all these engines.
    For Small SI and Marine SI engines we are proposing to require
manufacturers of imported engines to include basic information in the
application for certification, including identification of associated
importers, specific ports intended for importation, and testing
facilities where testing could be done in the United States. We request
comment on extending these provisions to Large SI engines. See Sec.
1054.205.

E. Amendments Related To Recreational Vehicles (40 CFR Part 1051)

    Manufacturers of recreational vehicles are encouraged to review the
proposed changes described in Section XI.C related to 40 CFR part 1068.
    We are proposing in this notice to establish a process by which
manufacturers of fuel system components certify that their products
meet emission standards. For recreational vehicles we adopted a program
in which the exhaust and evaporative emission standards apply to the
vehicle so we did not set up a process for certifying fuel-system
components. We continue to believe that evaporative emission standards
should apply to the vehicle. However, we are proposing to allow
manufacturers of fuel-system components to opt in to this program by
certifying their fuel tanks or fuel lines to the applicable standards.
While this would be a voluntary step, any manufacturer opting into the
program in this way would be subject to all the requirements that apply
to certificate holders. While manufacturers of recreational vehicles
would continue to be responsible for meeting standards and certifying
their vehicles, it may be appropriate to simplify their compliance
effort by allowing them to rely on the certification of the fuel-line
manufacturer or fuel-tank manufacturer.
    We also request comment on specifying that vehicle manufacturers
use the certification and testing procedures proposed in 40 CFR part
1060 to meet the evaporative emission standards included in part 1051.
This would not be intended to affect the stringency of current
requirements. This would simply allow us to maintain consistent
requirements across programs and avoid publishing redundant
specifications.
    We are also proposing several technical amendments to part 1051.
Many of these simply correct typographical errors or add references to
the proposed regulatory cites in part 1054. Several changes are
intended merely to align regulatory language with that of other
programs, including those that would be subject to the standards
proposed in this notice.
    In addition, we are proposing the following changes:
     Sec.  1051.1: Revising the speed threshold for offroad
utility vehicles to be subject to part 1051. Changing from ``25 miles
per hour or higher'' to ``higher than 25 miles per hour'' aligns this
provision with the similar threshold for qualifying as a motor vehicle
in 40 CFR 85.1703.
     Sec.  1051.5: Clarifying the status of very small
recreational vehicles to reflect the provisions in the current
regulations in 40 CFR part 90 to treat such vehicles with a dry weight
under 20 kilograms as Small SI engines.
     Sec.  1051.25: Clarifying that manufacturers of
recreational vehicles that use engines certified to meet exhaust
emission standards must still certify the vehicle with respect to the
evaporative emission standards.
     Sec.  1051.120: Clarifying that the emission-related
warranty covers only those components from 40 CFR part 1068, Appendix
I, whose failure will increase emissions.
     Sec.  1051.125: Clarifying the provisions related to
noncritical emission-related maintenance.
     Sec.  1051.135: Revising the labeling requirements to
allow omission of the manufacturing date only if the date is stamped or
engraved on the vehicle, rather than allowing manufacturers to keep
records of vehicle build dates. This is important for verifying that
vehicles comply with standards based on their build date.
     Sec.  1051.135: Adding a requirement to include family
emission limits related to evaporative emissions to the emission
control information label. Since this change may involve some time for
manufacturers to comply, we are proposing to apply this starting with
the 2009 model year.
     Sec.  1051.137: Clarifying how the labeling requirements
apply with respect to the averaging program and selected family
emission limits.
     Sec.  1051.205: Removing detailed specifications for
describing auxiliary emission control devices in the application for
certification. This responds to the concern expressed by manufacturers
that the existing, very prescriptive approach requires much more
information that is needed to adequately describe emission control
systems. We are proposing to leave in place a broad requirement to
describe emission control systems and parameters in sufficient detail
to allow EPA to confirm that no defeat devices are employed.
Manufacturers should be motivated to include substantial information to
make such determinations in the certification process, rather than
being subject to this type of investigation for emission control
approaches that are found to be outside of the scope of the application
for certification.
     Sec.  1051.205: Requirements to align projected sales
volumes with actual sales from previous years. This does not imply
additional reporting or recordkeeping requirements. It is intended
simply to avoid situations where manufacturers intentionally mis-state
their projected sales volume to gain some advantage under the
regulations.
     Sec.  1051.220: Clarifying that if manufacturers change
their maintenance instructions after starting production for an engine
family, they may not disqualify vehicles for warranty claims based on
the fact that operators did not follow the revised maintenance
instructions.
     Sec.  1051.225: Clarifying the terminology to refer to
``new or modified vehicle configurations'' rather than ``new or
modified vehicles.'' This is necessary to avoid confusion with the term
``new vehicle'' as it relates to introduction into commerce.
     Sec.  1051.225: Clarifying the provisions related to
changing an engine family's Family Emission Limit after the start of
production.
     Sec.  1051.255: Adopting a different SAE standard for
specifying low-permeability materials to allow for design-based
certification of metal fuel tanks with gaskets made of polymer
materials. The existing language does not adequately characterize the
necessary testing and material specifications.
     Sec.  1051.230: Clarifying that engine families relate
fundamentally to emission certification and that we would expect
manufacturers to suggest a tailored approach to specifying engine
families under Sec.  1051.230(e) to occur only in unusual
circumstances.
     Sec.  1051.250: Adding a requirement for manufacturers to
report their sales volumes for an engine family if they are using a
provision that depends on production volumes.
     Sec.  1051.301: Clarifying that engine families with
projected sales volumes

below 150 units may be exempted from production-line testing. This
level of production does not allow for adequate testing to use the
statistical techniques before exceeding specified maximum testing
rates.
     Sec.  1051.305: Clarifying that tested vehicles should be
built in a way that represents production vehicles.
     Sec.  1051.310: Clarifying the relationship between
quarterly testing and compliance with the annual testing requirements;
and clarifying the testing provisions that apply for engine families
where the production period is substantially less than a full year.
     Sec.  1051.315: Correcting the equation for the CumSum
statistic to prevent negative values.
     Sec.  1051.325: Clarifying the basis on which we would
approve retroactive changes to the Family Emission Limit for an engine
family that has failed under production-line testing.
     Sec.  1051.505: Clarifying that cycle statistics for
discrete-mode testing must be calculated separately for each mode.
     Sec. Sec.  1051.605 and 1051.610: Requiring some
demonstration that the sales restrictions that apply for these sections
are met.
     Sec.  1051.650: Add a requirement to certify vehicles that
are converted to run on a different fuel. We expect this is a rare
occurrence, but one that we should make subject to certification
requirements (see Section VII.B.3).
     Sec.  1051.701: Clarifying that manufacturers using
emission credits to meet emission standards must base their credit
calculations on their full product line-up, rather than considering
only those engine families with Family Emission Limits above or below
the emission standard. We are also clarifying that a single family may
not generate emission credits for one pollutant while using emission
credits for another pollutant, which is common to all our emission
control programs.
     Sec.  1051.735: Adding a requirement to keep records
related to banked emission credits for as long as a manufacturer
intends for those credits to be valid. This is necessary for us to
verify the appropriateness of credits used for demonstrating compliance
with emission standards in later model years.
     Sec.  1051.801: Revising several definitions to align with
updated definitions adopted (or proposed) for other programs.
    We request comment on changing Sec.  1051.220 to prevent
manufacturers from distributing revised emission-related maintenance
instructions until we have approved them. We are taking this approach
for Small SI and Marine SI engines in this proposal (see Sec. Sec.
1045.220 and 1054.220) because we believe it would be inappropriate for
manufacturers to specify increased or decreased emission-related
maintenance without EPA approval of those changes. The same concern
applies equally to all nonroad spark-ignition engines and vehicles, so
we would expect to apply the same policy to all these engines.
    For Small SI and Marine SI engines we are proposing to require
manufacturers of imported engines to include basic information in the
application for certification, including identification of associated
importers, specific ports intended for importation, and testing
facilities where testing could be done in the United States. We request
comment on extending these provisions to recreational vehicles. See
Sec.  1054.205.

F. Amendments Related to Heavy-Duty Highway Engines (40 CFR Part 85)

    We are proposing to make several adjustments to the provisions
related to delegated assembly specified in Sec.  85.1713. These
adjustments include:
     Removing the provision related to auditing outside the
United States since equipment manufactured in other countries would not
be subject to these provisions