1 The EPA Administrator signed the following final rule on May 11, 2004. It is being submitted for publication in the Federal Register. While EPA has taken steps to ensure the accuracy of this Internet version, it is not the official version of the rule. Please refer to the official version in a forthcoming Federal Register publication and on GPO's Web Site. The rule will likely be published in the Federal Register around the end of May 2004. You can access the Federal Register at: http:// www. access. gpo. gov/ su_ docs/ aces/ aces140. html. When using this site, note that " text" files may be incomplete because they don't include graphics. Instead, select " Adobe Portable Document File" ( PDF) files.

ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 9, 69, 80, 89, 94, 1039, 1048, 1051, 1065, and 1068 [ OAR 2003 0012; FRL XXXX X] RIN 2060 AK27 Control of Emissions of Air Pollution from Nonroad Diesel Engines and Fuel AGENCY: Environmental Protection Agency ( EPA). ACTION: Final Rule. SUMMARY: Nonroad diesel engines contribute considerably to our nation's air pollution. These engines, used primarily in construction, agricultural, and industrial applications, are projected to continue to contribute large amounts of particulate matter, nitrogen oxides, and sulfur oxides, all of which contribute to serious public health problems in the United States. These problems include premature mortality, aggravation of respiratory and cardiovascular disease, aggravation of existing asthma, acute respiratory symptoms, chronic bronchitis, and decreased lung function. We believe that diesel exhaust is likely to be carcinogenic to humans by inhalation.

Today, EPA is adopting new emission standards for nonroad diesel engines and sulfur reductions in nonroad diesel fuel that will dramatically reduce harmful emissions and will directly help States and local areas recently designated as 8 hour ozone nonattainment areas to improve their air quality. This comprehensive national program regulates nonroad diesel engines and diesel fuel as a system. New engine standards will begin to take effect in the 2008 model year, phasing in over a number of years. These standards are based on the use of advanced exhaust emission control devices. We estimate particulate matter reductions of 95 percent, nitrogen oxides reductions of 90 percent, and the virtual elimination of sulfur oxides from nonroad engines meeting the new standards. Nonroad diesel fuel sulfur reductions of more than 99 percent from existing levels will provide significant health benefits as well as facilitate the introduction of highefficiency catalytic exhaust emission control devices as these devices are damaged by sulfur. These fuel controls will be phased in starting in mid 2007. Today's nonroad final rule is largely based on the Environmental Protection Agency's 2007 highway diesel program.

To better ensure the benefits of the standards are realized in use and throughout the useful life of these engines, we are also adopting new test procedures, including not to exceed requirements, and related certification requirements. The rule also includes provisions to facilitate the transition to the new engine and fuel standards and to encourage the early introduction of 2 clean technologies and clean nonroad diesel fuel. We have also developed provisions for both the engine and fuel programs designed to address small business considerations.

The requirements in this rule will result in substantial benefits to public health and welfare through significant reductions in emissions of nitrogen oxides and particulate matter, as well as nonmethane hydrocarbons, carbon monoxide, sulfur oxides, and air toxics. We are now projecting that by 2030, this program will reduce annual emissions of nitrogen oxides and particulate matter by 738,000 and 129,000 tons, respectively. These emission reductions will prevent 12,000 premature deaths, over 8,900 hospitalizations, and almost a million work days lost, and will achieve other quantifiable benefits every year. The total benefits of this rule will be approximately $ 80 billion annually by 2030. The substantial health and welfare benefits we are projecting for this final action exceed those we anticipated at the time of this proposal. Costs for both the engine and fuel requirements will be many times less, at approximately $ 2 billion annually.

DATES: This final rule is effective on [ insert date 60 days after publication in the Federal Register].

The incorporation by reference of certain publications listed in this regulation is approved by the Director of the Federal Register as of [ insert date 60 days after publication in the Federal Register].

ADDRESSES: EPA has established a docket for this action under Docket ID Nos. OAR 2003 0012 and A 2001 28. All documents in the docket are listed in the EDOCKET index at http:// www. epa. gov/ edocket. Although listed in the index, some information is not publicly available, i. e., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically in EDOCKET or in hard copy at the Air Docket in the EPA Docket Center, EPA/ DC, EPA West, Room B102, 1301 Constitution Ave., NW, Washington, DC. The Public Reading Room is open from 8: 30 a. m. to 4: 30 p. m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is ( 202) 566 1744, and the telephone number for the Air Docket is ( 202) 566 1742.

FOR FURTHER INFORMATION CONTACT: Carol Connell, Assessment and Standards Division, Office of Transportation and Air Quality, Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105; telephone number: ( 734) 214 4349; fax number: ( 734) 214 4050; e mail address: connell. carol@ epa. gov, or Assessment and Standards Division Hotline; telephone number: ( 734) 214 4636; e mail address: asdinfo@ epa. gov.

SUPPLEMENTARY INFORMATION: Does this action apply to me? 3 This action may affect you if you produce or import new diesel engines which are intended for use in nonroad vehicles or equipment, such as agricultural and construction equipment, or if you produce or import such nonroad vehicles or equipment. It may also affect you if you convert nonroad vehicles or equipment, or the engines used in them, to use alternative fuels. It may also affect you if you produce, import, distribute, or sell nonroad diesel fuel.

The following table gives some examples of entities that may have to follow the regulations. But because these are only examples, you should carefully examine the regulations in 40 CFR parts 80, 89, 1039, 1065, and 1068. If you have questions, call the person listed in the FOR FURTHER INFORMATION CONTACT section of this preamble:

Category NAICS codesa SIC codesb Examples of potentially regulated entities Industry..... 333618 3519 Manufacturers of new nonroad diesel engines Industry..... 333111 3523 Manufacturers of farm machinery and equipment Industry..... 333112 3524 Manufacturers of lawn and garden tractors ( home)

Industry..... 333924 3537 Manufacturers of industrial trucks Industry..... 333120 3531 Manufacturers of construction machinery Industry..... 333131 3532 Manufacturers of mining machinery and equipment Industry..... 333132 3533 Manufacturers of oil and gas field machinery and equipment Industry..... 811112 811198 7533 7549 Commercial importers of vehicles and vehicle components Industry..... 324110 2911 Petroleum refiners Industry..... 422710 422720 5171 5172 Diesel fuel marketers and distributors Industry..... 484220 484230 4212 4213 Diesel fuel carriers Notes: a North American Industry Classification System ( NAICS). b Standard Industrial Classification ( SIC) system code.

How Can I Get Copies of This Document and Other Related Information? Docket. EPA has established an official public docket for this action under Docket ID No. OAR 2003 0012 at http:// www. epa. gov/ edocket. The official public docket consists of the documents specifically referenced in this action, any public comments received, and other information related to this action. Although a part of the official docket, the public docket does 4 not include Confidential Business Information ( CBI) or other information whose disclosure is restricted by statute. The official public docket is the collection of materials that is available for public viewing at the Air Docket in the EPA Docket Center, ( EPA/ DC) EPA West, Room B102, 1301 Constitution Ave., NW, Washington, DC. The EPA Docket Center Public Reading Room is open from 8: 30 a. m. to 4: 30 p. m., Monday through Friday, excluding legal holidays. The telephone number for the Reading Room is ( 202) 566 1742, and the telephone number for the Air Docket is ( 202) 566 1742.

Electronic Access. You may access this Federal Register document electronically through the EPA Internet under the " Federal Register" listings at http:// www. epa. gov/ fedrgstr/.

An electronic version of the public docket is available through EPA's electronic public docket and comment system, EPA Dockets. You may use EPA Dockets at http:// www. epa. gov/ edocket/ to view public comments, access the index listing of the contents of the official public docket, and to access those documents in the public docket that are available electronically. Although not all docket materials may be available electronically, you may still access any of the publicly available docket materials through the docket facility identified above. Once in the system, select " search," then key in the appropriate docket identification number.

Outline of This Preamble I. Overview A. What is EPA Finalizing? B. Why Is EPA Taking this Action?

II. Nonroad Engine Standards A. What Are the New Engine Standards? B. Are the New Standards Feasible? C. Why Do We Need 15ppm Sulfur Diesel Fuel?

III. Requirements for Engine and Equipment Manufacturers A. Averaging, Banking, and Trading B. Transition Provisions for Equipment Manufacturers C. Engine and Equipment Small Business Provisions ( SBREFA) D. Certification Fuel E. Temporary In Use Compliance Margins F. Test Cycles G. Other Test Procedure Issues H. Engine Power I. Auxiliary Emission Control Devices and Defeat Devices J. Not To Exceed Requirements K. Investigating and Reporting Emission Related Defects L. Compliance with the Phase In Provisions 5 M. Incentive Program for Early or Very Low Emission Engines N. Labeling and Notification Requirements O. General Compliance P. Other Issues Q. Highway Engines R. Changes That Affect Other Engine Categories IV. Our Program for Controlling Nonroad, Locomotive and Marine Diesel Fuel Sulfur A. Nonroad, Locomotive and Marine Diesel Fuel Quality Standards B. Hardship Relief Provisions for Qualifying Refiners C. Special Provisions for Alaska and the Territories D. NRLM Diesel Fuel Program Design E. How Are State Diesel Fuel Programs Affected by the Sulfur Diesel Program? F. Technological Feasibility of the 500 and 15 ppm Sulfur Diesel Fuel Program G. What Are the Potential Impacts of the 15 ppm Sulfur Diesel Program on Lubricity and Other Fuel Properties? H. Refinery Air Permitting V. Nonroad, Locomotive and Marine Diesel Fuel Program: Details of the Compliance and Enforcement Provisions A. Special Fuel Provisions and Exemptions B. Additional Requirements for Refiners and Importers C. Requirements for Parties Downstream of the Refinery or Import Facility D. Diesel Fuel Sulfur Sampling and Testing Requirements E. Selection of the Marker for Heating Oil F. Fuel Marker Test Method G. Requirements for Record keeping, Reporting, and PTDs H. Liability and Penalty Provisions for Noncompliance I. How Will Compliance with the Sulfur Standards Be Determined?

VI. Program Costs and Benefits A. Refining and Distribution Costs B. Cost Savings to the Existing Fleet from the Use of Low Sulfur Fuel C. Engine and Equipment Cost Impacts D. Annual Costs and Cost Per Ton E. Do the Benefits Outweigh the Costs of the Standards? F. Economic Impact Analysis VII. Alternative Program Options Considered A. Summary of Alternatives B. Introduction of 15 ppm Nonroad Diesel Sulfur Fuel in One Step C. Applying the 15 ppm Sulfur Cap to Locomotive and Marine Diesel Fuel D. Other Alternatives 6 VIII. Future Plans A. Technology Review B. Test Procedure Issues C. In use Testing D. Engine Diagnostics E. Future NO X Standards for Engines in Mobile Machinery Over 750 hp F. Emission Standards for Locomotive and Marine Diesel Engines G. Retrofit Programs H. Reassess the Marker Specified for Heating Oil IX. Public Participation X. Statutory and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review B. Paperwork Reduction Act C. Regulatory Flexibility Act ( RFA), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 ( SBREFA), 5 USC 601 et. seq D. Unfunded Mandates Reform Act E. Executive Order 13132: Federalism F. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments G. Executive Order 13045: Protection of Children from Environmental Health and Safety Risks H. Executive Order 13211: Actions that Significantly Affect Energy Supply, Distribution, or Use I. National Technology Transfer Advancement Act J. Congressional Review Act XI. Statutory Provisions and Legal Authority 7 I. Overview EPA today is completing the third recent major program to reduce emissions from the nation's mobile sources. Today's final rule establishes standards for nonroad diesel engines and fuel and builds on the recently adopted Tier 2 program for cars and light trucks and the 2007 highway diesel program for on highway diesel engines. These three programs have in common large reductions in sulfur levels in fuel that will not only achieve public health benefits but also facilitate the introduction of advanced emissions control technologies. In 1996, emissions from land based nonroad, marine, and locomotive diesel engines were estimated to be about 40 percent of the total mobile source inventory of PM 2.5 ( particulate matter less than 2.5 microns in diameter) and 25 percent of the NO X ( nitrogen oxides) inventory. Without today's final rule, these contributions would be expected to grow to 44 percent and 47 percent by 2030 for PM 2.5 and NO X, respectively. By themselves, land based nonroad diesel engines are a very large part of the diesel mobile source PM 2.5 inventory, contributing about 47 percent in 1996, and growing to 70 percent of this inventory by 2020 without today's final rule. In order to meet the Clean Air Act's goal of cleaning up the nation's air, emissions reductions from the nonroad sector are necessary.

This program begins to get important emission reductions in 2008, and by 2030 we estimate that this program will reduce over 129,000 tons PM 2.5 and 738,000 tons of NO X annually. These emission reductions will be directly helpful to the 474 counties nationwide that have been recently designated as nonattainment areas for the 8 hour ozone standard and for counties that will be designated as nonattainment for PM 2.5 later this year. The resulting ambient PM 2.5 and NO X reductions correspond to public health improvements in 2030 including approximately 12,000 fewer premature mortalities, 15,000 fewer heart attacks, 1 million fewer lost days of work due to adults with respiratory symptoms, 5.9 million fewer days when adults have to restrict their activities due to respiratory symptoms, and almost 6,000 emergency room visits for asthma attacks in children. Our projections in this final rule for public health and welfare improvements are greater than estimated at proposal.

This final rule sets out emission standards for nonroad diesel engines  engines used mainly in construction, agricultural, industrial and mining operations  that will achieve reductions in PM and NO X emissions levels in excess of 95 percent and 90 percent respectively. This action also regulates nonroad diesel fuel for the first time by reducing sulfur levels in this fuel more than 99 percent to 15 parts per million ( ppm). These provisions mirror those already in place for highway diesel engines, which will lead to the introduction of 15 ppm sulfur diesel fuel, followed by stringent engine standards in that sector beginning in 2007 based on advanced aftertreatment technologies. We believe it is highly appropriate to bring the same types of expected advanced aftertreatment technologies to the nonroad market as soon as possible and we believe today's nonroad fuel and engine program represents the next step in a feasible progression in the application of clean technologies to nonroad diesel engines and the associated diesel fuel. 8 As we did with the proposed nonroad rulemaking, we followed specific principles when developing this final rule. First, the program achieves reductions in NO X, sulfur oxides ( SO X), and PM emissions as early as possible. Second, it does so by implementing the fuel program as soon as possible while at the same time not interfering with the implementation and expected benefits of introducing ultra low sulfur fuel ( diesel fuel containing no greater than 15 ppm sulfur) in the highway market as required by the 2007 highway diesel rule. Next, we are generally treating vehicles and fuels as a system, that is promulgating engine and fuel standards in tandem in order to cost effectively achieve the greatest emission reductions. Lastly, the program provides sufficient lead time to allow the migration of advanced emissions control technologies from the highway sector to nonroad diesel engines as well as the expansion of ultra low sulfur diesel fuel production to the nonroad market.

The May 2003 proposed rulemaking culminated a multi year effort to develop control strategies for nonroad engines. EPA worked collaboratively with stakeholders from industry, state and local government, and public health organizations in putting together its comprehensive ( and widely praised) new engine standards and sulfur fuel controls. We received about 150,000 comments on the proposal, almost all of them in support. We held three public hearings on the proposal and have participated in scores of meetings with commenters in developing the provisions of today's final rule. An important aspect of this collaborative development effort has been EPA's coordination with other governments in helping to further world harmonization of nonroad engine controls and fuel sulfur levels. Information gathered in these comments and discussions, taken in context with the principles described above, has been the basis for our action today.

In summary, this rule sets out engine standards and emission test procedures ( including not to exceed requirements) for new nonroad diesel engines, and sulfur control requirements for diesel fuel used in land based nonroad, locomotive, and marine engines ( NRLM fuel). Beginning in 2008, the new Tier 4 engine standards for five power categories for engines from under 25 horsepower ( hp) to above 750 horsepower will be phased in. New engine emissions test procedures will be phased in along with these new standards to better ensure emissions control over real world engine operation and to help provide for effective compliance determination. The sulfur reductions to land based nonroad diesel fuel will be accomplished in two steps, with an interim step from currently uncontrolled levels to a 500 ppm cap starting in June, 2007 and the final step to 15 ppm in June, 2010. This change in fuel quality will directly lead to important health and welfare benefits associated with the reduced generation of sulfate PM and SO X. Even more important, introduction of 15 ppm sulfur nonroad diesel fuel facilitates the introduction of advanced aftertreatment devices for nonroad engines.

Although we did not propose to control locomotive and marine diesel fuel sulfur levels to 15 ppm in the NPRM, recognizing the important environmental and public welfare benefits that such a program could enable, we have decided to finalize this second step to 15 ppm sulfur fuel control program for locomotive and marine diesel fuel beginning in 2012. Locomotive and marine diesel fuel will first be reduced from current uncontrolled levels to a 500 ppm cap starting in June 1 EPA is issuing an Advanced Notice of Proposed Rulemaking for locomotive and marine engine standards as part of this effort.

9 2007 and the second step down to a 15 ppm cap will take place in June, 2012. While we have chosen to reduce sulfur levels in locomotive and marine diesel fuel to 15 ppm in this rulemaking without adopting corresponding engine controls, we note that the Agency has already begun work to promulgate appropriate new standards for these engines. 1 The monetized health and welfare benefits associated with further sulfur reduction to 15 ppm outweigh the costs of the sulfur reductions. Also, doing so now allows for the promulgation of a single integrated fuel program and provides the refining industry with long term predictability for sulfur control.

The requirements in this rule will result in substantial benefits to public health and welfare and the environment through significant reductions in NO X and PM as well as nonmethane hydrocarbons ( NMHC), carbon monoxide ( CO), SO X, and air toxics. As noted, by 2030 this program will reduce annual emissions of NO X and PM by 738,000 and 129,000 tons, respectively. We estimate these annual emission reductions will prevent 12,000 premature deaths, over 8,900 hospitalizations, 15,000 nonfatal heart attacks, and approximately 1 million days that people miss work because of respiratory symptoms, among quantifiable benefits. The overall quantifiable benefits will total $ 83 billion annually by 2030 using a 3 percent discount rate and $ 78 billion using a 7 percent discount rate at a cost of approximately $ 2 billion, with a 30 year net present value for the benefits of $ 805 billion at 3 percent discounting and $ 352 billion at 7 percent discounting at a net present value cost of $ 27 billion at 3 percent discounting and $ 14 billion at 7 percent discounting. Clearly the benefits of this program dramatically outweigh its cost at a ratio of approximately 40: 1 in 2030.

A. What is EPA Finalizing?

As part of the proposed rulemaking, we set out very detailed provisions for new engine exhaust emission controls, sulfur limitations in nonroad and locomotive/ marine diesel fuels, test procedures, compliance requirements, and other information. We also looked at a number of alternative program options, such as requiring refiners to reduce sulfur from uncontrolled levels to 15 ppm in one step in 2008. We continue to believe that the main program options set out in the proposal are feasible and the most cost effective requirements, taking into account other factors such as lead time and interaction with the highway diesel program, so we are generally adopting the engine and fuel provisions which we proposed.

1. Nonroad Diesel Engine Emission Standards Today's action adopts Tier 4 standards for nonroad diesel engines of all horsepower ratings. These standards are technology neutral in the sense that manufacturers are the responsible party in determining which emission control technologies will be needed to meet the requirements. Applicable emissions standards are determined by model year for each of five engine power band categories. For engines less than 25 hp, we are adopting a new engine 10 standard for PM of 0.30 g/ bhp hr ( grams per brake horsepower hour) beginning in 2008, and leaving the previously set 5.6 g/ bhp hr combined standard for NMHC+ NO X in place. For engines of 25 to 75 hp, we are adopting standards reflecting approximately 50 percent reductions in PM control from today's engines, again applicable beginning in 2008. Then, starting in 2013, standards of 0.02 g/ bhp hr for PM and 3.5 g/ bhp hr for NMHC+ NO X will apply for this power category. For engines of 75 to 175 hp, the standards will be 0.01 g/ bhp hr for PM, 0.30 g/ bhp hr for NO X and 0.14 g/ bhp hr for NMHC starting in 2012, with the NO X and NMHC standards phased in over a period of three to four years in order to address lead time, workload, and feasibility considerations. These same standards will apply to engines of 175 to 750 hp as well starting in 2011, with a similar phase in. These PM, NO X, and NMHC standards and phase in schedules are similar in stringency to the 2007 highway diesel standards and are expected to require the use of high efficiency aftertreatment systems to ensure compliance.

For engines above 750 hp, we are requiring PM and NMHC control to 0.075 g/ bhp hr and 0.30 g/ bhp hr, respectively, starting in 2011. More stringent standards take effect in 2015 with PM standards of 0.02 g/ bhp hr ( for engines used in generator sets) and 0.03 g/ bhp hr ( for nongenerator set engines), and an NMHC standard of 0.14 g/ bhp hr. The NO X standard in 2011 will be 0.50 g/ bhp hr for generator set engines above 1200 hp, and 2.6 g/ bhp hr for all other engines in the above 750 hp category. This application of advanced NO X emission control technologies to generator set engines above 1200 hp will provide substantial NO X reductions and will occur earlier than we had proposed in the NPRM. In 2015, the 750 1200 hp generator set engines will be added to the stringent 0.50 g/ bhp hr NO X requirement as well. The long term NO X standard for engines not used in generator sets ( mobile machinery) will be addressed in a future action ( we are currently considering such an action in the 2007 time frame).

We are also continuing the averaging, banking, and trading provisions engine manufacturers can use to demonstrate compliance with the standards. We also are continuing provisions providing flexibilities which equipment manufacturers may use to facilitate transition to compliance with the new standards. In addition, we are including turbocharged diesels in the existing regulation of crankcase emissions, effective in the same year that the new standards first apply in each power category.

As discussed at length in the proposal, new test procedures and compliance provisions, especially the not to exceed and transient tests, are necessary to ensure the benefits of the standards being adopted today are achieved when the aftertreatment based standards go into place. We are therefore adopting the proposed test procedures and compliance provisions, with slight modifications designed to better implement the provisions, in today's rule. We continue to believe the new transient test, cold start transient test, and not to exceed test procedures and standards will all help achieve our goal of emissions reductions being achieved in actual engine operation.

As noted, the final rule also continues, and in some cases modifies, existing provisions that will facilitate the transition to the new engine and fuel standards. Many of these provisions will 11 help small business engine and equipment manufacturers meet the requirements. They will also aid manufacturers in managing their development of engines and equipment that will meet our new standards.

2. Nonroad, Locomotive, and Marine Diesel Fuel Quality Standards The fuel program requirements are very similar to those included in the proposal, with two notable exceptions. The first involves the standards themselves with the inclusion of locomotive and marine diesel fuel in the 15 ppm standard. The second addresses the compliance provisions designed to ensure the effectiveness of the program.

We are adopting the two step approach to sulfur control, with all land based nonroad, locomotive, and marine diesel fuel going from uncontrolled sulfur levels of approximately 3,000 ppm sulfur to 500 ppm in June, 2007. The interim step will by itself achieve significant PM and SO X emission reductions with associated important health benefits as early as is practicable. Then, in June 2010, the sulfur cap for land based nonroad engine diesel fuel will be reduced to the final standard of 15 ppm. Two years later, in 2012, the 15 ppm cap for locomotive and marine engine diesel fuel will go into effect. The reduction to 15 ppm sulfur provides additional direct control of PM and SO X emissions and is an enabling technology for the application of advanced catalyst based emission control technologies.

Although we did not propose to control locomotive and marine diesel fuel to 15 ppm in the NPRM, after careful consideration and reviewing substantial comments from stakeholders, we have decided to include fuel used in locomotive and marine applications in the final step to 15 ppm beginning in 2012. The incremental PM health and welfare benefits associated with this standard outweigh the costs. The locomotive and marine diesel fuel program provides a nearterm positive impact on public health and welfare. Also, the 15 ppm sulfur diesel fuel provides an opportunity that may enable the application of advanced catalyst based emission control technologies to locomotive and marine diesel engines. We are issuing an Advance Notice of Proposed Rulemaking for locomotive and marine diesel engines that investigates this potential. Recognizing the value that a locomotive and marine fuel program could have for public health and welfare, State and local authorities and public health advocacy organizations provided a large number of comments encouraging us to take action in this rulemaking to address emissions from this category.

Including locomotive and marine fuel in the 15 ppm sulfur diesel fuel pool also simplifies the overall design of the fuel program and will simplify the distribution of diesel fuel. At the same time, we have finalized this standard with flexibilities designed specifically to address fuel program implementation issues raised in the comments.

Noting that sulfur levels in highway diesel fuel will generally be at or below 15 ppm starting in 2006 and not wanting to reduce the benefits of introducing this clean fuel, we spent considerable time developing a compliance assurance scheme for introducing our nonroad diesel 12 sulfur program to mesh with the highway program requirements. We initially thought that a " baseline" approach essentially requiring refiners to maintain a constraint on sulfur levels of various distillate fuels, based on historical production volumes, was the most appropriate mechanism. Subsequently we learned that the other mechanism we discussed in the proposal, a " designate and track" type approach, is better suited to address our priorities and commitments for the nonroad diesel sulfur control program. This approach allows refiners to designate volumes of nonroad fuel into various categories and these designations would follow the fuel throughout the distribution system. We have successfully worked through our enforceability and other concerns with this approach and are now including it as our compliance mechanism for the fuel standards of today's program.

B. Why Is EPA Taking this Action?

As we have discussed extensively in both the proposal and today's action, EPA strongly believes it is appropriate to take steps now to reduce future emissions from nonroad, locomotive, and marine diesel engines. Emissions from these engines contribute greatly to a number of serious air pollution problems and would continue to do so in the future absent further reduction measures. Such emissions lead to adverse health and welfare effects associated with ozone, PM, NO X, SO X, and volatile organic compounds, including toxic compounds. In addition, diesel exhaust is of specific concern because it is likely to be carcinogenic to humans by inhalation as well as posing a hazard from noncancer respiratory effects. Ozone, NO X, and PM also cause significant public welfare harm such as damage to crops, eutrophication, regional haze, and soiling of building materials.

Millions of Americans continue to live in areas with unhealthy air quality that may endanger public health and welfare. As discussed in more detail below, there are approximately 159 million people living in areas that either do not meet the 8 hour ozone National Ambient Air Quality Standards ( NAAQS) or contribute to violations in other counties as noted in EPA's recent nonattainment designations for part or all of 474 counties. In addition, approximately 65 million people live in counties where air quality measurements violate the PM 2.5 NAAQS. These numbers do not include the tens of millions of people living in areas where there is a significant future risk of failing to maintain or achieve the ozone or PM 2.5 NAAQS. Federal, state, and local governments are working to bring ozone and PM levels into compliance with the NAAQS attainment and maintenance plans and the reductions included in today's rule will play a critical part in these actions. Reducing regional emissions of SO X is critical to this strategy for attaining the PM NAAQS and meeting regional haze goals in our treasured national parks. SO X levels can themselves pose a respiratory hazard.

Although controlling air pollution from nonroad diesel exhaust is challenging, we strongly believe it can be accomplished through the application of high efficiency emissions control technologies. As discussed in much greater detail in section II, very large emission reductions ( in excess of 90 percent) are possible, especially through the use of catalytic emission control devices installed in the nonroad equipment's exhaust system and integrated with the engine controls. To 13 meet the standards being adopted today, application of such technologies for both PM and NO X control will be needed for most engines. High efficiency PM exhaust emission control technology has been available for several years, and it is the same technology we expect to be applied to meet the PM standards for highway diesel engines in 2007. For NO X, we expect the same highefficiency technologies being developed for the 2007 highway diesel engine program will be used to meet our new nonroad requirements. All of these technologies are dependent on the 15 ppm maximum sulfur levels for nonroad diesel fuel being adopted today. The fuel control program being adopted today also yields significant and important reductions in SO X from these sources.

1. Basis For Action Under the Clean Air Act Section 213 of the Clean Air Act (" the Act" or CAA) gives us the authority to establish emissions standards for nonroad engines and vehicles. Section 213( a)( 3) authorizes the Administrator to set standards for NO X, volatile organic compounds ( VOCs), and CO which " standards shall achieve the greatest degree of emission reduction achievable through the application of technology which the Administrator determines will be available for the engines or vehicles." As part of this determination, the Administrator must give appropriate consideration to cost, lead time, noise, energy, and safety factors associated with the application of such technology. The standards adopted today for NO X implement this provision. Section 213( a)( 4) authorizes the Administrator to establish standards to control emissions of pollutants ( other than those covered by section 213( a)( 3)) which " may reasonably be anticipated to endanger public health and welfare." Here, the Administrator may promulgate regulations that are deemed appropriate for new nonroad vehicles and engines which cause or contribute to such air pollution, taking into account costs, noise, safety, and energy factors. EPA believes the new controls for PM in today's rule are an appropriate exercise of EPA's discretion under the authority of section 213( a)( 4).

We believe the evidence provided in section II of this preamble and in the Regulatory Impact Analysis ( RIA) indicates that the stringent emission standards adopted today are feasible and reflect the greatest degree of emission reduction achievable in the model years to which they apply. We have given appropriate consideration to costs in promulgating these standards. Our review of the costs and cost effectiveness of these standards indicate that they will be reasonable and comparable to the cost effectiveness of other emission reduction strategies for the same pollutants that have been required or could be required in the future. We have also reviewed and given appropriate consideration to the energy factors of this rule in terms of fuel efficiency and effects on diesel fuel supply, production, and distribution, as discussed below, as well as any safety factors associated with these new standards.

The information in this section and chapters 2 and 3 of the RIA regarding air quality and the contribution of nonroad, locomotive, and marine diesel engines to air pollution provides strong evidence that emissions from such engines significantly and adversely impact public health or welfare. First, as noted earlier, there is a significant risk that several areas will fail to attain or maintain compliance with the NAAQS for 8 hour ozone concentrations or the NAAQS for PM 2.5 2 See Clean Air Act section 213( b).

14 during the period that these new vehicle and engine standards will be phased into the vehicle population, and that nonroad, locomotive, and marine diesel engines contribute to such concentrations, as well as to concentrations of other criteria pollutants. This risk will be significantly reduced by the standards adopted today, as also noted above. However, the evidence indicates that some risk remains even after the reductions achieved by these new controls on nonroad diesel engines and nonroad, locomotive, and marine diesel fuel. Second, EPA believes that diesel exhaust is likely to be carcinogenic to humans. The risk associated with exposure to diesel exhaust includes the particulate and gaseous components among which are benzene, formaldehyde, acetaldehyde, acrolein, and 1,3 butadiene, all of which are known or suspected human or animal carcinogens, or have noncancer health effects. Moreover, these compounds have the potential to cause health effects at environmental levels of exposure. Third, emissions from nonroad diesel engines ( including locomotive and marine diesel engines) contribute to regional haze and impaired visibility across the nation, as well as to odor, acid deposition, polycyclic organic matter ( POM) deposition, eutrophication and nitrification, all of which are serious environmental welfare problems.

EPA has already found in previous rules that emissions from new nonroad diesel engines contribute to ozone and CO concentrations in more than one area which has failed to attain the ozone and CO NAAQS ( 59 FR 31306, June 17, 1994). EPA has also previously determined that it is appropriate to establish standards for PM from new nonroad diesel engines under section 213( a)( 4), and the additional information on diesel exhaust carcinogenicity noted above reinforces this finding. In addition, we have already found that emissions from nonroad engines significantly contribute to air pollution that may reasonably be anticipated to endanger public welfare due to regional haze and visibility impairment ( 67 FR 68242  68243, Nov. 8, 2002). We find here, based on the information in this section of the preamble and chapters 2 and 3 of the RIA, that emissions from the new nonroad diesel engines covered by this final action likewise contribute to regional haze and to visibility impairment that may reasonably be anticipated to endanger public welfare. Taken together, these findings indicate the appropriateness of the nonroad diesel engine standards adopted today for purposes of section 213( a)( 3) and ( 4) of the Act. These findings were unchallenged by commenters.

These standards must take effect at the " the earliest possible date considering the lead time necessary to permit development and application of the requisite technology," giving " appropriate consideration" to cost, energy, and safety. 2 The compliance dates we are adopting reflect careful consideration of these factors. The averaging, banking, and trading ( ABT), equipment manufacturer flexibilities, and phase in provisions for NO X are elements in our determination that we have selected appropriate lead times for the standards.

Section 211( c) of the CAA allows us to regulate fuels where emission products of the fuel either: 1) cause or contribute to air pollution that reasonably may be anticipated to endanger public health or welfare, or 2) will impair to a significant degree the performance of any emission 15 control device or system which is in general use, or which the Administrator finds has been developed to a point where in a reasonable time it will be in general use were such a regulation to be promulgated. This rule meets both of these criteria. Sulfur dioxide ( SO 2) and sulfate PM emissions from nonroad, locomotive, marine and diesel vehicles are due to sulfur in diesel fuel. As discussed above, emissions of these pollutants cause or contribute to ambient levels of air pollution that endanger public health and welfare. Control of sulfur to 15 ppm for this fuel through a two step program would lead to significant, cost effective reductions in emissions of these pollutants. Control of sulfur to 15 ppm in nonroad diesel fuel will also enable emissions control technology that will achieve significant, cost effective reduction in emissions of these pollutants, as discussed in section I. B. 2 below. The substantial adverse effect of high sulfur levels on the performance of diesel emission control devices or systems that would be expected to be used to meet the nonroad standards is discussed in detail in section II. Control of sulfur to 15 ppm for locomotive and marine diesel fuel, as with nonroad diesel fuel, will provide meaningful additional benefits that outweigh the costs. In addition, our authority under section 211( c) is discussed in more detail in Appendix A to chapter 5 of the RIA.

2. What Is the Air Quality Impact of this Final Rule?

a. Public Health and Environmental Impacts With this rulemaking, we are acting to extend advanced emission controls to another major source of diesel engine emissions: nonroad land based diesel engines. This final rule sets out emission standards for nonroad land based diesel engines  engines used mainly in construction, agricultural, industrial and mining operations  that will achieve reductions in PM and NO X standards in excess of 95 percent and 90 percent, respectively for this class of vehicles. This action also regulates nonroad diesel fuel for the first time by reducing sulfur levels in this fuel more than 99 percent to 15 ppm. The diesel fuel sulfur requirements will decrease PM and SO 2 emissions for land based diesel engines, as well as for three other nonroad source categories: commercial marine diesel vessels, locomotives, and recreational marine diesel engines.

These sources are significant contributors to atmospheric pollution of ( among other pollutants) PM, ozone and a variety of toxic air pollutants. In 1996, emissions from these four source categories were estimated to be 40 percent of the mobile source inventory for PM 2.5 and 25 percent for NO X, and 10 percent and 13 percent of overall emissions for these potential health hazards, respectively. Without further controls beyond those we have already adopted, these sources will emit 44 percent of PM 2.5 from mobile sources and 47 percent of NO X emissions from mobile sources by the year 2030.

Nonroad engines, and most importantly nonroad diesel engines, contribute significantly to ambient PM 2.5 levels, largely through direct emissions of carbonaceous and sulfate particles in the fine ( and even ultrafine) size range. Nonroad diesels also currently emit high levels of NO X which react in the atmosphere to form secondary PM 2.5 ( namely ammonium nitrate) as well as ozone. Nonroad diesels also emit SO 2 and hydrocarbons which react in the atmosphere to form 3 Note this analysis does not include the effects of the proposed Rule to Reduce Interstate Transport of Fine Particulate Matter and Ozone ( Interstate Air Quality Rule). 69 FR 4566 ( January 30,

2004). See http:// www. epa. gov/ interstateairquality/ rule. html 16 secondary PM 2.5 ( namely sulfates and organic carbonaceous PM 2.5). This section summarizes key points regarding the nonroad diesel engine contribution to these pollutants and their impacts on human health and the environment. EPA notes that we are relying not only on the information presented in this preamble, but also on the more detailed information in chapters 2 and 3 of the RIA and technical support documents, as well as information in the preamble, RIA, and support documents for the proposed rule.

When fully implemented, this final rule will reduce nonroad ( equipment such as construction, agricultural, and industrial), diesel PM 2.5 and NO X emissions by 95 percent and 90 percent, respectively. It will also virtually eliminate nonroad diesel SO 2 emissions, which amounted to approximately 234,000 tons in 1996, and would otherwise grow to approximately 326,000 tons by 2020. These dramatic reductions in nonroad emissions are a critical part of the effort by federal, state and local governments to reduce the health related impacts of air pollution and to reach attainment of the NAAQS for PM and ozone, as well as to improve other environmental effects such as atmospheric visibility. Based on the most recent data available for this rule, such problems are widespread in the United States. There are almost 65 million people living in 120 counties with monitored PM 2.5 levels ( 2000 2002) exceeding the PM 2.5 NAAQS, and 159 million people living in areas recently designated as exceeding 8 hour ozone NAAQS. Figure I 1 illustrates the widespread nature of these problems. Shown in this figure are counties exceeding the PM 2.5 NAAQS or designated for nonattainment with the 8 hour ozone NAAQS plus mandatory Federal Class I areas, which have particular needs for reductions in atmospheric haze.

Our air quality modeling also indicates that similar conditions are likely to continue to persist in the future in the absence of additional controls and that the emission reductions would assist areas with attainment and future maintenance of the PM and ozone NAAQS. 3 For example, in 2020, based on emission controls currently adopted, we project that 66 million people will live in 79 counties with average PM 2.5 levels above 15 micrograms per cubic meter ( ug/ m3). In 2030, the number of people projected to live in areas exceeding the PM 2.5 standard is expected to increase to 85 million in 107 counties. An additional 24 million people are projected to live in counties within 10 percent of the standard in 2020, which will increase to 64 million people in 2030. Furthermore, for ozone, in 2020, based on emission controls currently adopted, the number of counties violating the 8 hour ozone standard is expected to decrease to 30 counties where 43 million people are projected to live. Thereafter, exposure to unhealthy levels of ozone is expected to begin to increase again. In 2030 the number of counties violating the 8 hour ozone NAAQS is projected to increase to 32 counties where 47 million people are projected to live. In addition, in 2030, 82 counties where 44 million people are projected to live will be within 10 percent of violating the ozone 8 hour NAAQS. 17 Figure I 1. Air Quality Problems are Widespread 4 The following are sample comments from states and state associations on the proposed rule,

which corroborate that this rule is a critical element in States' NAAQS attainment efforts. Fuller information can be found in the Summary and Analysis of Comments.

 " Unless emissions from nonroad diesels are sharply reduced, it is very likely that many areas of the country will be unable to attain and maintain health based NAAQS for ozone and PM."

( STAPPA/ ALAPCO)

 " Adoption of the proposed regulation ... is necessary for the protection of public health in California and to comply with air quality standards... The need for 15 ppm sulfur diesel fuel cannot be overstated." ( California Air Resources Board)

 " The EPA's proposed regulation is necessary if the West is to make reasonable progress towards improving visibility in our nation's Class I areas." ( Western Regional Air Partnership ( WRAP))

 " Attainment of the NAAQS for ozone and PM2.5 is of immediate concern to the states in the northeast region.... Thus, programs ... such as the proposed rule for nonroad diesel engines are essential." ( NESCAUM)

5 U. S. EPA ( 1996.) Air Quality Criteria for Particulate Matter  Volumes I, II, and III, EPA,

Office of Research and Development. Report No. EPA/ 600/ P 95/ 001a cF. This material is available 18 EPA is still developing the implementation process for bringing the nation's air into attainment with the PM 2.5 and 8 hour ozone NAAQS. Based on section 172( a) provisions in the Act, designated areas will need to attain the PM 2.5 NAAQS in the 2010 ( based on 2007  2009 air quality data) to 2015 ( based on 2012 to 2014 air quality data) time frame, and then be required to maintain the NAAQS thereafter. Similarly, we expect that most areas covered under subpart 1 and 2 will attain the ozone standard in the 2007 to 2014 time frame, depending on an area's classification and other factors, and then be required to maintain the NAAQS thereafter.

Since the emission reductions expected from this final rule would begin in this same time frame, the projected reductions in nonroad emissions would be used by states in meeting the PM 2.5 and ozone NAAQS. In their comments on the proposal, states told EPA that they need nonroad diesel engine reductions in order to be able to meet and maintain the PM 2.5 and ozone NAAQS as well as to make progress toward visibility requirements. 4 Furthermore, this action would ensure that nonroad diesel emissions will continue to decrease as the fleet turns over in the years beyond 2014; these reductions will be important for maintenance of the NAAQS following attainment.

Scientific studies show ambient PM is associated with a series of adverse health effects. These health effects are discussed in detail in the EPA Criteria Document for PM as well as the draft updates of this document released in the past year. 5, 6 EPA's " Health Assessment Document electronically at http:// www. epa. gov/ ttn/ oarpg/ ticd. html.

6 U. S. EPA ( 2003). Air Quality Criteria for Particulate Matter  Volumes I and II ( Fourth External Review Draft) This material is available electronically at http:// cfpub. epa. gov/ ncea/ cfm/ partmatt. cfm.

7 U. S. EPA ( 2002). Health Assessment Document for Diesel Engine Exhaust.

EPA/ 600/ 8 90/ 057F Office of Research and Development, Washington DC. This document is available electronically at http:// cfpub. epa. gov/ ncea/ cfm/ recordisplay. cfm? deid= 29060.

8 Dockery, DW; Pope, CA, III; Xu, X; et al. ( 1993) An association between air pollution and mortality in six U. S. cities. N Engl J Med 329: 1753 1759.

9 Pope, CA, III; Burnett, RT; Calle, EE; et al. ( 2002) Lung cancer, cardiopulmonary mortality,

and long term exposure to fine particulate air pollution. JAMA 287: 1132 1141.

19 for Diesel Engine Exhaust," ( the " Diesel HAD") also reviews health effects information related to diesel exhaust as a whole including diesel PM, which is one component of ambient PM. 7 In the Diesel HAD, we note that the particulate characteristics in the zone around nonroad diesel engines are likely to be substantially the same as published air quality measurements made along busy roadways. This conclusion supports the relevance of health effects associated with highway diesel engine generated PM to nonroad applications.

As described in these documents, health effects associated with short term variation in ambient PM have been indicated by epidemiologic studies showing associations between exposure and increased hospital admissions for ischemic heart disease, heart failure, respiratory disease, including chronic obstructive pulmonary disease ( COPD) and pneumonia. Short term elevations in ambient PM have also been associated with increased cough, lower respiratory symptoms, and decrements in lung function. Additional studies have associated changes in heart rate and/ or heart rhythm in addition to changes in blood characteristics with exposure to ambient PM. Short term variations in ambient PM have also been associated with increases in total and cardiorespiratory mortality. Studies examining populations exposed to different levels of air pollution over a number of years, including the Harvard Six Cities Study and the American Cancer Society Study, suggest an association between long term exposure to ambient PM 2.5 and premature mortality, including deaths attributed to lung cancer. 8, 9 Two studies further analyzing the Harvard Six Cities Study's air quality data have also established a specific influence of mobile source related PM 2.5 on daily mortality and a concentration response function for mobile source associated PM 2.5 and daily mortality. Another recent study in 14 U. S. cities examining the effect of PM 10 ( particulate matter less than 10 microns in diameter) on daily hospital admissions for cardiovascular disease found that the effect of PM 10 was significantly greater in areas with a larger proportion of PM 10 10 Janssen, NA; Schwartz J; Zanobetti A; et al. ( 2002) Air conditioning and source specific particles as modifiers of the effect of PM10 on hospital admissions for heart and lung disease. Environ Health Perspect 110( 1): 43 49.

11 Hoek, G; Brunekreef, B; Goldbohm, S; et al. ( 2002) Association between mortality and indicators of traffic related air pollution in the Netherlands: a cohort study. Lancet 360( 9341): 1203 1209.

12 Brunekreef, B; Janssen NA; de Hartog, J; et al. ( 1997) Air pollution from traffic and lung function in children living near motor ways. Epidemiology ( 8): 298 303.

13 Delfino RJ. ( 2002) Epidemiologic evidence for asthma and exposure to air toxics: linkages between occupational, indoor, and community air pollution research. Env Health Perspect Suppl 110( 4):

573 589.

14 Yifang Zhu, William C. Hinds, Seongheon Kim, Si Shen and Constantinos Sioutas Zhu Y; Hinds WC; Kim S; et al. ( 2002) Study of ultrafine particles near a major highway with heavy duty diesel traffic. Atmos Environ 36( 27): 4323 4335.

20 coming from motor vehicles, indicating that PM 10 from these sources may have a greater effect on the toxicity of ambient PM 10 when compared with other sources. 10 Of particular relevance to this rule is a recent cohort study which examined the association between mortality and residential proximity to major roads in the Netherlands. Examining a cohort of 55 to 69 year olds from 1986 to 1994, the study indicated that long term residence near major roads, an index of exposure to primary mobile source emissions ( including diesel exhaust), was significantly associated with increased cardiopulmonary mortality. 11 Other studies have shown children living near roads with high truck traffic density have decreased lung function and greater prevalence of lower respiratory symptoms compared to children living on other roads. 12 A recent review of epidemiologic studies examining associations between asthma and roadway proximity concluded that some coherence was evident in the literature, indicating that asthma, lung function decrement, respiratory symptoms, and other respiratory problems appear to occur more frequently in people living near busy roads. 13 As discussed later, nonroad diesel engine emissions, especially particulate, are similar in composition to those from highway diesel vehicles. Although difficult to associate directly with PM 2.5, these studies indicate that direct emissions from mobile sources, and diesel engines specifically, may explain a portion of respiratory health effects observed in larger scale epidemiologic studies. Recent studies conducted in Los Angeles have illustrated that a substantial increase in the concentration of ultrafine particles is evident in locations near roadways, indicating substantial differences in the nature of PM immediately near mobile source emissions. 14 For additional information on health effects, see the RIA.

In addition to its contribution to ambient PM concentrations, diesel exhaust is of specific concern because it has been judged to pose a lung cancer hazard for humans as well as a hazard 15 U. S. EPA ( 2002). National Scale Air Toxics Assessment. This material is available electronically at http:// www. epa. gov/ ttn/ atw/ nata/.

16 U. S. EPA ( 2002). Health Assessment Document for Diesel Engine Exhaust.

EPA/ 600/ 8 90/ 057F Office of Research and Development, Washington DC. This document is available electronically at http:// cfpub. epa. gov/ ncea/ cfm/ recordisplay. cfm? deid= 29060.

21 from noncancer respiratory effects. In this context, diesel exhaust PM is generally used as a surrogate measure for diesel exhaust. Further, nonroad diesel engine emissions also contain several substances known or suspected as human or animal carcinogens, or that have noncancer health effects as described in the Diesel HAD. Moreover, these compounds have the potential to cause health effects at environmental levels of exposure. These other compounds include benzene, 1,3 butadiene, formaldehyde, acetaldehyde, acrolein, dioxin, and POM. For some of these pollutants, nonroad diesel engine emissions are believed to account for a significant proportion of total nation wide emissions. All of these compounds were identified as national or regional " risk drivers" in the 1996 NATA. 15 That is, these compounds pose a significant portion of the total inhalation cancer risk to a significant portion of the population. Mobile sources contribute significantly to total emissions of these air toxics. As discussed in more detail in the RIA, this final rulemaking will result in significant reductions of these emissions.

In EPA's Diesel HAD, 16 diesel exhaust was classified as likely to be carcinogenic to humans by inhalation at environmental exposures, in accordance with the revised draft 1996/ 1999 EPA cancer guidelines. A number of other agencies ( National Institute for Occupational Safety and Health, the International Agency for Research on Cancer, the World Health Organization, California EPA, and the U. S. Department of Health and Human Services) have made similar classifications.

EPA generally derives cancer unit risk estimates to calculate population risk more precisely from exposure to carcinogens. In the simplest terms, the cancer unit risk is the increased risk associated with average lifetime exposure of 1 ug/ m3. EPA concluded in the Diesel HAD that it is not possible currently to calculate a cancer unit risk for diesel exhaust due to a variety of factors that limit the current studies, such as lack of an adequate dose response relationship between exposure and cancer incidence.

However, in the absence of a cancer unit risk, the EPA Diesel HAD sought to provide additional insight into the significance of the cancer hazard by estimating possible ranges of risk that might be present in the population. The possible risk range analysis was developed by comparing a typical environmental exposure level for highway diesel sources to a selected range of occupational exposure levels and then proportionally scaling the occupationally observed risks according to the exposure ratios to obtain an estimate of the possible environmental risk. A number of calculations are needed to accomplish this, and these can be seen in the EPA Diesel HAD. The outcome was that environmental risks from diesel exhaust exposure could range from 17 U. S. EPA ( 1996). Air Quality Criteria for Ozone and Related Photochemical Oxidants,

EPA/ 600/ P 93/ 004aF. Docket No. A 99 06. Document Nos. II A 15 to 17.

18 U. S. EPA. ( 1996). Review of National Ambient Air Quality Standards for Ozone, Assessment of Scientific and Technical Information, OAQPS Staff Paper, EPA 452/ R 96 007. Docket No. A 99 06.

Document No. II A 22.

19 U. S. EPA ( 1996). Air Quality Criteria for Ozone and Related Photochemical Oxidants,

EPA/ 600/ P 93/ 004aF. Docket No. A 99 06. Document Nos. II A 15 to 17.

20 U. S. EPA. ( 1996). Review of National Ambient Air Quality Standards for Ozone, Assessment of Scientific and Technical Information, OAQPS Staff Paper, EPA 452/ R 96 007. Docket No. A 99 06.

Document No. II A 22.

22 a low of 10 4 to 10 5 or be as high as 10 3 this being a reflection of the range of occupational exposures that could be associated with the relative and absolute risk levels observed in the occupational studies. Because of uncertainties, the analysis acknowledged that the risks could be lower than 10 4 or 10 5 and a zero risk from diesel exhaust exposure was not ruled out. Although the above risk range is based on environmental exposure levels for highway mobile sources only, the 1996 NATA estimated exposure for nonroad diesel sources as well. Thus, the exposure estimates were somewhat higher than those used in the risk range analysis described above. The EPA Diesel HAD, therefore, stated that the NATA exposure estimates result in a similar risk perspective.

The ozone precursor reductions expected as a result of this rule are also important because of health and welfare effects associated with ozone, as described in the Air Quality Criteria Document for Ozone and Other Photochemical Oxidants. Ozone can irritate the respiratory system, causing coughing, throat irritation, and/ or uncomfortable sensation in the chest. 17, 18 Ozone can reduce lung function and make it more difficult to breathe deeply, and breathing may become more rapid and shallow than normal, thereby limiting a person's normal activity. Ozone also can aggravate asthma, leading to more asthma attacks that require a doctor's attention and/ or the use of additional medication. In addition, ozone can inflame and damage the lining of the lungs, which may lead to permanent changes in lung tissue, irreversible reductions in lung function, and a lower quality of life if the inflammation occurs repeatedly over a long time period ( months, years, a lifetime). People who are of particular concern with respect to ozone exposures include children and adults who are active outdoors. Those people particularly susceptible to ozone effects are people with respiratory disease, such as asthma, and people with unusual sensitivity to ozone, and children. Beyond its human health effects, ozone has been shown to injure plants, which has the effect of reducing crop yields and reducing productivity in forest ecosystems. 19, 20 21 New Ozone Health and Environmental Effects References, Published Since Completion of the Previous Ozone AQCD, National Center for Environmental Assessment, Office of Research and Development, U. S. Environmental Protection Agency, Research Triangle Park, NC 27711 ( 7/ 2002)

Docket No. A 2001 28, Document II A 79.

23 New research suggests additional serious health effects beyond those that were known when the 8 hour ozone health standard was set. Since 1997, over 1,700 new health and welfare studies relating to ozone have been published in peer reviewed journals. 21 Many of these studies investigate the impact of ozone exposure on such health effects as changes in lung structure and biochemistry, inflammation of the lungs, exacerbation and causation of asthma, respiratory illnessrelated school absence, hospital and emergency room visits for asthma and other respiratory causes, and premature mortality. EPA is currently evaluating these and other studies as part of the ongoing review of the air quality criteria and NAAQS for ozone. A revised Air Quality Criteria Document for Ozone and Other Photochemical Oxidants will be prepared in consultation with EPA's Clean Air Science Advisory Committee ( CASAC). Key new health information falls into four general areas: development of new onset asthma, hospital admissions for young children, school absence rate, and premature mortality. In all, the new studies that have become available since the 8 hour ozone standard was adopted in 1997 continue to demonstrate the harmful effects of ozone on public health and the need for areas with high ozone levels to attain and maintain the NAAQS.

Finally, nonroad diesel emissions contribute to nine categories of non health impacts: visibility impairment, soiling and material damage, acid deposition, eutrophication of water bodies, plant and ecosystem damage from ozone, water pollution resulting from deposition of toxic air pollutants with resulting effects on fish and wildlife, and odor. In particular, EPA determined that nonroad engines contribute significantly to unacceptable visibility conditions where people live, work and recreate, including contributing to visibility impairment in Federally mandated Class I areas that are given special emphasis in the Clean Air Act ( 67 FR 68242, November 8, 2002). Visibility is impaired by fine PM and precursor emissions from nonroad diesel engines subject to this final rule. Reductions in emissions from this final rule will improve visibility as well as other environmental outcomes as described in the RIA.

As supplementary information, we have made estimates using air quality modeling to illustrate the types of change in future PM 2.5 and ozone levels that we would expect to result from a final rule like this as described in chapter 2 of the RIA. That modeling shows that control of nonroad emissions would produce nationwide air quality improvements in PM 2.5 and ozone levels as well as visibility improvements. On a population weighted basis, the average modeled change in future year PM 2.5 annual averages is projected to decrease by 0.42 µ g/ m3 ( 3.3%) in 2020, and 0.59 µ g/ m3 ( 0.6%) in 2030. In addition, the population weighted average modeled change in future year design values for ozone would decrease by 1.8 parts per billion ( ppb) in 2020, and 2.5 ppb in 2030. Within areas predicted to violate the ozone NAAQS in the projected base case, the average decrease would be somewhat higher: 1.9 ppb in 2020 and 3.0 ppb in 2030. 22 We are also adopting a few minor adjustments of a technical nature to current CO standards.

Emissions effects from these standards are discussed in the RIA.

23 The estimates of baseline emissions and emissions reductions from the final rule reported here for nonroad land based, recreational marine, locomotive, and commercial marine vessel diesel engines are based on 50 state emissions inventory estimates. A 48 state inventory was used for air quality modeling that EPA conducted for this rule, of which Alaska and Hawaii are not a part. In cases where land based nonroad diesel engine emissions are compared with non mobile source portions of the inventory, we use a 48 state emissions inventory, to match the 48 state nature of those other inventories.

24 Please see the Summary and Analyses of Comments document for discussions of issues raised about the emission inventory estimates during the comment period for the NPRM.

24 The PM air quality improvements expected from this final rule are anticipated to produce major benefits to human health and welfare, with a combined value in excess of half a trillion dollars between 2007 and 2030. For example, in 2030, we estimate that this program will reduce approximately 129,000 tons PM 2.5 and 738,000 tons of NO X. The resulting ambient PM reductions correspond to public health improvements in 2030, including 12,000 fewer premature mortalities, 15,000 fewer heart attacks, 200,000 fewer asthma exacerbations in children, and 1 million fewer days when adults miss work due to their respiratory symptoms, and 5.9 million fewer days when adults have to restrict their activities due to respiratory symptoms. The reductions will also improve visibility and reduce diesel odor. For further details on the economic benefits of this rule, please refer to the benefit cost discussion in section VI of this preamble and chapter 9 of the RIA.

b. Emissions From Nonroad Diesel Engines The engine and fuel standards in this final rule will affect emissions of direct PM 2.5, SO 2, NO X, VOCs, and air toxics for land based nonroad diesel engines. 22 For locomotive, commercial marine vessel ( CMV), and recreational marine vessel ( RMV) engines, the final fuel standards will affect direct PM 2.5 and SO 2 emissions. Each sub section below discusses one of these pollutants, 23 including expected emission reductions associated with the final standards. 24 Table I. B 1 summarizes the impacts of this rule for 2020 and 2030. Further details on our inventory estimates, including results for other years, are available in chapter 3 of the RIA. 25 Table I. B 1.   Estimated National ( 50 State) Reductions in Emissions From Nonroad Land Based, Locomotive, Commercial Marine, and Recreational Marine Diesel Engines Pollutant [ short tons] 2020 2030 Direct PM2.5 PM2.5 Emissions Without Rule 167,000 181,000 PM2.5 Emissions With 500 ppm Sulfur in 2007 and No Other Controls 144,000 155,000 PM2.5 Emissions With 15 ppm Sulfur in 2012 and No Other Controls 141,000 152,000 PM2.5 Emissions With Entire Rule 81,000 52,000 PM2.5 Reductions Resulting from this Rule 86,000 129,000 SO2 SO2 Emissions Without Rule 326,000 379,000 SO2 Emisions With 500 ppm Sulfur in 2007 37,000 43,000 SO2 Emissions With Entire Rule ( 15 ppm Sulfur in 2012) 3,000 3,000 SO2 Reductions Resulting from this Rule 323,000 376,000 NOX  Land Based Nonroad Engines Onlya NOX Emissions Without Rule 1,125,000 1,199,000 NOX Emissions With Rule 681,000 461,000 NOX Reductions Resulting from this Rule 444,000 738,000 VOC  Land Based Nonroad Engines Onlya VOC Emissions Without Rule 98,000 97,000 VOC Emissions With Rule 75,000 63,000 VOC Reductions Resulting from this Rule 23,000 34,000 Notes: a NOX and VOC numbers only include emissions for land based nonroad diesel engines because the Tier 4 controls will not be applied to locomotive, commercial marine, and recreational marine engines; and no NOX and VOC emission reductions are generated through the lowering of fuel sulfur levels.

i. Direct PM 2.5 As described earlier, the Agency believes that reductions of diesel PM 2.5 emissions are needed as part of the nation's progress toward clean air. Direct PM 2.5 emissions from land based nonroad diesel engines amount to increasingly large percentages of total man made diesel PM 2.5. Between 1996 and 2030, we estimate that the percentage of total man made diesel PM 2.5 25 Highway fuel is currently used in a significant fraction of land based nonroad equipment,

locomotives, and marine vessels, reducing the in use average sulfur level from about 3,000 ppm for uncontrolled high sulfur fuel to 2,300 or 2,400 ppm.

26 emissions coming from land based nonroad diesel engines will increase from about 46 percent to 72 percent ( based on a 48 state inventory).

Emissions of direct PM 2.5 from land based nonroad diesel engines based on a 50 state inventory are shown in table I. B 1, along with our estimates of the reductions in 2020 and 2030 we expect would result from our final rule for a PM 2.5 exhaust emission standard and from changes in the sulfur level in land based nonroad, locomotive, and marine diesel fuel. Land based nonroad, locomotive, and marine diesel fuel sulfur levels will be lowered to about 340 ppm in use ( 500 ppm maximum) in 2007. Land based nonroad diesel fuel sulfur will be lowered further to about 11 ppm in use ( 15 ppm maximum) in 2010 and locomotive and marine diesel fuel sulfur will be lowered to the same level in 2012. In addition to PM 2.5 emissions estimates with the final rule, emissions estimates based on lowering diesel fuel sulfur without any other controls are shown in table I. B 1 for 2020 and 2030.

Figure I. B 1a shows our estimate of PM 2.5 emissions between 2000 and 2030 both without and with the final standards and fuel sulfur requirements of this rule. We estimate that PM 2.5 emissions from this source would be reduced by 71 percent in 2030.

ii. SO 2 We estimate that land based nonroad, CMV, RMV, and locomotive diesel engines emitted about 234,000 tons of SO 2 in 1996, accounting for about 33 percent of the SO 2 from mobile sources ( based on a 48 state inventory). With no reduction in diesel fuel sulfur levels, we estimate that these emissions will continue to increase, accounting for about 44 percent of mobile source SO 2 emissions by 2030.

As part of this final rule, sulfur levels in fuel will be significantly reduced, leading to large reductions in nonroad, locomotive, and marine diesel SO 2 emissions. By 2007, the sulfur in diesel fuel used by all land based nonroad, locomotive, and marine diesel engines will be reduced from the current average in use level of between 2,300 to 2,400 ppm25 to an average in use level of about 340 ppm, with a maximum level of 500 ppm. By 2010, the sulfur in diesel fuel used by land based nonroad engines will be reduced to an average in use level of 11 ppm with a maximum level of 15 ppm. Sulfur in diesel fuel used by locomotive and marine engines will be reduced to the same level by 2012. Table II. B 1 and figure II. B 1b show the estimated reductions from these sulfur changes. 27 iii. NO X Table I. B 1 shows the 50 state estimated tonnage of NO X emissions for 2020 and 2030 without the final rule and the estimated tonnage of emissions eliminated with the final rule in place. These results are shown graphically in Figure I. E 1c at the end of this section. We estimate that NO X emissions from these engines will be reduced by 62 percent in 2030.

We note that the magnitude of NO X reductions determined in the final rule analysis is somewhat less than what was reported in the proposal's preamble and RIA, especially in the later years when the fleet has mostly turned over to Tier 4 designs. The greater part of this is due to the fact that we have deferred setting a long term NO X standard for mobile machinery over 750 horsepower to a later action. When this future action is completed, we would expect roughly equivalent reductions between the proposal and the overall final program, though there are some other effects reflected in the differing NO X reductions as well, due to updated modeling assumptions and the adjusted NO X standards levels for engines over 750 horsepower. Section II. A. 4 of this preamble contains a detailed discussion of the NO X standards we are adopting for engines over 750 horsepower as well as the basis for those standards.

iv. VOCs and Air Toxics Based on a 48 state emissions inventory, we estimate that land based nonroad diesel engines emitted over 221 thousand tons of VOC in 1996. Between 1996 and 2030, we estimate that land based nonroad diesel engines will contribute about 2 to 3 percent of mobile source VOC emissions. Without further controls, land based nonroad diesel engines will emit about 97 thousand tons/ year of VOC in 2020 and 2030 nationally.

Table I. B 1 shows our projection of the reductions in 2020 and 2030 for VOC emissions that we expect from implementing the final NMHC standards. This estimate is based on a 50 state emissions inventory. By 2030, VOC emissions from this category would be reduced by 35 percent from baseline levels.

While we are not adopting any specific gaseous air toxics standards in today's rule, air toxics emissions would nonetheless be significantly reduced through the NMHC standards included in the final rule. By 2030, we estimate that emissions of air toxics pollutants, such as benzene, formaldehyde, acetaldehyde, 1,3 butadiene, and acrolein, would be reduced by 35 percent from land based nonroad diesel engines. Diesel PM reductions were discussed above. For specific air toxics reduction estimates, see chapter 3 of the RIA. 28 Figure I. B 1a: Estimated PM2.5 Reductions From Nonroad Land Based Diesel Engine Standard and Diesel Fuel Sulfur Reductions 0 50,000 100,000 150,000 200,000 250,000 2000 2005 2010 2015 2020 2025 2030 Year Short Tons/

Year Uncontrolled 50 State Controlled 50 State Figure I. B 1b: Estimated SO2 Reductions From Lowering Diesel Fuel Sulfur For Land Based Nonroad Engines,

CMVs, RMVs, and Locomotives 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 2000 2005 2010 2015 2020 2025 2030 Year Short Tons/

Year Uncontrolled 50 State Controlled 50 State Figure I. B 1c: Estimated NOx Reductions From Land

Based Nonroad Diesel Engine Standard 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2000 2005 2010 2015 2020 2025 2030 Year Short Tons/

Year Uncontrolled 50 State Controlled 50 State II. Nonr oad Engine Standards In this section we describe the emission standards for nonroad diesel engines that we are setting to address the serious air quality problems discussed in section I. These Tier 4 standards, which take effect starting in 2008, are very similar to those proposed, and obtain very similar emissions reductions. The long term PM filter based standards that apply to all engines over 25 hp, combined with the fuel change and new requirements to ensure robust control in the field, will yield PM reductions of over 95% from the in use levels of 26 Consistent with past EPA rulemakings for nonroad diesel engines, our regulations express standards, power ratings, and other quantities in international SI ( metric) units kilowatts, gram per 29 today's cleanest Tier 2 engines. Likewise, the long term NO X standards we are adopting for nearly all engines above 75 hp will yield NO X reductions of about 90% from the NO X levels expected from even the low emitting Tier 3 engines due to first reach the market in 2006 or later. The Tier 4 standards will bring about large reductions in toxic hydrocarbon emissions as well.

In this final rule we are largely adopting the standards and timing we proposed, with the exception of those that apply to engines over 750 hp. We restructured and modified the standards and timing for these engines to address technical concerns and to focus on achieving comparable emission reductions through the introduction of advanced technology as early as feasible from specific applications within this power category. See section II. A. 4 for a detailed discussion. We also are not adopting the proposed minor adjustments to the CO standard levels for some engines under 75 hp, as explained in section II. A. 6. In addition, there are minor changes from the proposal in the phase in approach we are adopting for NO X and NMHC standards, as detailed in this section.

In this section we discuss: ° The Tier 4 engine standards, and the schedule for implementing them; ° The feasibility of the Tier 4 standards ( in conjunction with the low sulfur nonroad diesel fuel requirement discussed in section IV); and ° How diesel fuel sulfur affects an engine's ability to meet the new standards.

Additional provisions for engine and equipment manufacturers are discussed in detail in section III. These include: ° The averaging, banking, and trading ( ABT) program. ° The transition program for equipment manufacturers. ° The addition of a " not to exceed" program to ensure in use emissions control. This program includes new emission standards and related test procedures to supplement the standards discussed in this section. ° The test procedures and other compliance requirements associated with the emission standards. ° Special provisions to aid small businesses in implementing our requirements. ° An incentive program to encourage innovative technologies and the early introduction of new technologies.

A. What Are the New Engine Standards?

The Tier 4 exhaust emissions standards for PM, NO X, and NMHC are summarized in tables II. A 1, 2, and 4.26 Crankcase emissions control requirements are discussed in section kilowatt hour, etc. This aids in achieving harmonization with standards setting bodies outside the U. S.,

and in laboratory operations in which these units are the norm. However, in this preamble and in other rulemaking documents for the general reader, we have chosen to use terms more common in general usage in the U. S. Hence standards are expressed in units of grams per brake horsepower hour, power ratings in horsepower, etc. In any compliance questions that might arise from differences in these due to,

for example, rounding conventions, the regulations themselves establish the applicable requirements.

30 II. A. 7. Previously adopted CO emission standards continue to apply as well. All of these standards apply to covered nonroad engines over the useful life periods specified in our regulations, except where temporary in use compliance margins apply as discussed in section III. E. To help ensure that these emission reductions will be achieved in use, we have adopted test procedures for measuring compliance with these standards tailored to both steady state and transient nonroad engine operating characteristics. These test procedures are discussed in several subsections of section III. Another component of our program to ensure control of emissions inuse is the new " not to exceed" ( NTE) emission standards and associated test procedures, discussed in section III. J.

Table II. A 1.   Tier 4 PM Standards ( g/ bhp hr) and Schedule Engine Power Model Year 2008 2009 2010 2011 2012 2013 hp < 25 ( kW < 19) 0.30 a 25

hp < 75 ( 19

kW < 56) 0.22 b 0.02 75

hp < 175 ( 56

kW < 130) 0.01 175

hp

750 ( 130

kW

560) 0.01 hp 750 ( kW > 560) see table II. A 4 Notes:

a For air cooled, hand startable, direct injection engines under 11 hp, a manufacturer may instead delay implementation until 2010 and demonstrate compliance with a less stringent PM standard of 0.45 g/ bhp hr,

subject also to additional provisions discussed in section II. A. 3. a.

b A manufacturer has the option of skipping the 0.22 g/ bhp hr PM standard for all 50 75 hp engines. The 0.02 g/ bhp hr PM standard would then take effect one year earlier for all 50 75 hp engines, in 2012. 27 Note that we are grouping all standards in this rule, including those that take effect in 2008,

under the general designation of " Tier 4 standards." As a result, there are no " Tier 3" standards in the multi tier nonroad program for engines below 50 hp or above 750 hp.

31 Table II. A. 2   Tier 4 NOX and NMHC Standards and Schedule Engine Power Standard ( g/ bhp hr) Phase in Schedule ( model year)

NOX NMHC 2011 2012 2013 2014 25

hp < 75 ( 19

kW < 56) 3.5 NMHC+ NOX a 100%

75

hp < 175 ( 56

kW < 130) 0.30 0.14 50% b 50% b 100% b 175

hp

750 ( 130

kW

560) 0.30 0.14 50% 50% 50% 100%

hp > 750 ( kW > 560) see table II. A 4 Notes: Percentages indicate production required to comply with the Tier 4 standards in the indicated model year.

a This is the existing Tier 3 combined NMHC+ NOX standard level for the 50 75 hp engines in this category.

In 2013 it applies to the 25 50 hp engines as well.

b Manufacturers may use banked Tier 2 NMHC+ NOX credits from engines at or above 50 hp to demonstrate compliance with the 75 175 hp engine NOX standard in this model year. Alternatively, manufacturers may forego this special banked credit option and instead meet an alternative phase in requirement of 25/ 25/ 25% in 2012, 2013, and 2014 through December 30, with 100% compliance required beginning December 31, 2014.

See sections III. A and II. A. 2. b.

The long term 0.01 and 0.02 g/ bhp hr Tier 4 PM standards for 75   750 hp and 25   75 hp engines, respectively, combined with the fuel change and new requirements to ensure robust control in the field, represent a reduction of over 95% from in use levels expected with Tier 2/ Tier 3 engines. 27 The 0.30 g/ bhp hr Tier 4 NO X standard for 75   750 hp engines represents a NO X reduction of about 90% from in use levels expected with Tier 3 engines. Emissions reductions from engines over 750 hp are discussed in section II. A. 4.

In general, there was widespread support in the comments for the proposed Tier 4 engine standards and for the timing we proposed for them. Some commenters raised category specific concerns, especially for the smaller and the very large engine categories. These comments are discussed below. 28 " Nonroad Diesel Emissions Standards Staff Technical Paper," EPA420 R 01 052, October 2001.

32 1. Standards Timing a. 2008 Standards The timing of the Tier 4 engine standards is closely tied to the timing of fuel quality changes discussed in section IV, in keeping with the systems approach we are taking for this program. The earliest Tier 4 engine standards take effect in model year 2008, in conjunction with the introduction of 500 ppm maximum sulfur nonroad diesel fuel in mid 2007. This fuel change serves a dual environmental purpose. First, it provides a large immediate reduction in PM and SO X emissions for the existing fleet of engines in the field. Second, its widespread availability by the end of 2007 aids engine designers in employing emissions controls capable of achieving the Tier 4 standards for model year 2008 and later engines; this is because the performance and durability of such technologies as exhaust gas recirculation ( EGR) and diesel oxidation catalysts is improved by lower sulfur fuel. 28 The reduction of sulfur in nonroad diesel fuel will also provide sizeable economic benefits to machine operators as it will reduce wear and corrosion and will allow them to extend oil change intervals ( see section VI. B). These economic benefits will occur for all diesel engines using the new fuel, not just for those built in 2008 or later.

As we proposed, these 2008 Tier 4 engine standards apply only to engines below 75 hp. We are not setting Tier 4 standards taking effect in 2008 for larger engines. The reasons for this differ depending on the engines' hp rating. Setting Tier 4 2008 standards for engines at or above 100 hp would provide an insufficient period of stability ( an element of lead time) between Tier 2/ 3 and Tier 4, and so would not be appropriate. This is because these engines become subject to existing Tier 2 or 3 NMHC+ NO X standards in 2006 or 2007. Setting new 2008 standards for them thus would provide only one or two years of Tier 2/ Tier 3 stability before another round of design changes would have to be made in 2008 for Tier 4.

It is also inappropriate to establish 2008 Tier 4 standards for engines of 75   100 hp. The stability issue just noted for larger engines is not present for these engines, because these engines are subject to Tier 3 NMHC+ NO X standards starting in 2008, so that our setting a Tier 4 PM standard for them in the same year would not create the situation in which engines have to be redesigned twice to comply with new standards within a space of one or two years. However, EPA believes the more significant concern for these engines is meeting the stringent aftertreatment based standards for PM and NO X in 2012. We are concerned that adopting interim 2008 standards for these engines would divert resources needed to achieve these 2012 standards and indeed jeopardize attaining them. Thus, although early emission reductions from these engines in 2008 would of course be desirable, we felt that the focus we are putting on obtaining much larger reductions from them in 2012, together with the fact that we already have a Tier 3 NMHC+ NO X standard taking effect for 75   100 hp engines in 2008, warrants our not adding additional control requirements for these engines during this interim period. 33 We note that the 50 75 hp engines also have a Tier 3 NMHC+ NO X standard taking effect in 2008 and, as noted above, we are setting a new Tier 4 2008 PM standard for them. Unlike the larger 75   100 hp engines, however, the 50 75 hp engines have one additional year, until 2013, before filter based PM standards take effect, and also have no additional NO X control requirement being set beyond the 2008 Tier 3 standard. These differences justify including the interim Tier 4 PM standard for these engines. We note too that achieving the 2008 PM standard is enabled in part by the large reduction in certification fuel sulfur that applies in 2008 ( see section III. D). Fuel sulfur has a known correlation to PM generation, even for engines without aftertreatment. Moreover, for any manufacturers who believe that accomplishing this PM pull ahead will hamper their Tier 3 compliance efforts for these engines, there is an alternative Tier 4 compliance option. Instead of meeting new Tier 4 PM standards in both 2008 and 2013, manufacturers may skip the Tier 4 2008 PM standard, and instead focus design efforts on introducing PM filters for these engines one year earlier, by complying with the aftertreatment based standard for PM in 2012. These options are discussed in more detail in section II. A. 3. b.

We view the 2008 portion of the Tier 4 program as highly important because it provides substantial PM and SO X emissions reductions during the several years prior to 2011. Initiating Tier 4 in 2008 also fits well with the lead time ( including stability), cost, and technology availability considerations of the overall program. Initiating the Tier 4 engine standards in 2008 provides three to four years of stability after the start of Tier 2 for engines under 50 hp. As mentioned above, it also coincides with the start date of Tier 3 NMHC+ NO X standards for 50   75 hp engines and so introduces no stability issues for these engines ( as redesign for both PM and NO X occurs at the same time). The 2008 start date provides almost 4 years of lead time to accomplish redesign and testing. The evolutionary character of the 2008 standards, based as they are on proven technologies, and the fact that some certified engines already meet these standards as discussed in section II. B, leads us to conclude that the standards are appropriate within the meaning of section 213( a)( 4) of the Clean Air Act and that we are providing adequate lead time to achieve those standards.

Engine and equipment manufacturers argued in their comments that the PM pull ahead option for 50   75 hp engines is inappropriate because it constitutes a re opening of the Tier 3 rule, involving as it does a Tier 4 PM standard in 2008, the same year that the Tier 3 NMHC+ NO X takes effect. They further argued that the non pull ahead option is not a real option because PM aftertreatment cannot be implemented for these engines in 2012.

We disagree with both contentions. We determined, as part of our feasibility analysis for Tier 4, that it is feasible to design engines to meet the 2008 PM standard in the same year that a Tier 3 NMHC+ NO X standard takes effect. See section II. B and RIA sections 4.1.4 and 4.1.5. One reason is that a substantial part of the 2008 PM emission reductions do not result from engine redesign, but rather are due to the reduction in certification test fuel maximum sulfur levels from 2000 to 500 ppm that results from the fuel change in the field. This reduction in sulfur levels also aids engine designers in employing emission control technologies that are detrimentally affected by sulfur, not only for PM control, but also for NMHC and NO X control. Examples of 34 these sulfur sensitive technologies are oxidation catalysts, which can substantially reduce PM and NMHC, and EGR, which is effective at reducing NO X. We note further that designing engines to meet the 2008 PM standard is also made less difficult by our not requiring engine designers to consider the transient test, cold start, and not to exceed requirements that are otherwise part of the Tier 4 program. These requirements do not take effect for these engines until the 0.02 g/ bhphr standard is implemented in 2012 or 2013. See section III. F for details.

We also believe that the second option ( compliance with the aftertreatment based PM standard in 2012, with no interim 2008 standard) is viable, and may be an attractive choice especially for engine families on the higher side of the 50 75 hp range that share a design platform with larger engines being equipped with PM filters to meet the Tier 4 standard for 75   175 hp engines in 2012. We believe 75 hp is the appropriate cutpoint for setting and timing emissions standards ( see section II. A. 5), but it obviously is not a hard and fast separator between engine platforms for all manufacturers in all product lines. Even for many 50   75 hp engines that do not share a design platform with larger engines, we believe that a 2012 implementation date for PM filter technology may be practical, considering the 4 year lead time it affords after Tier 3 begins for these engines ( in 2008), 8 year lead time after the last PM standard change ( in 2004), and 5 year lead time after full scale PM filter technology implementation on highway engines ( in 2007).

Engine manufacturers also commented that the two options approach would cause their customers to switch engine suppliers in 2012 to get the least expensive engines possible in every year, thus compromising the environmental objectives and creating market disruptions. We have addressed these concerns as discussed in section II. A. 3. b.

b. 2011 and Later Standards The second fuel change for nonroad diesel fuel, to 15 ppm maximum sulfur in mid 2010, and the related engine standards for PM, NO X, and NMHC that begin to phase in in the 2011 model year, provide most of the environmental benefits of the program. Like the 2008 standards, these standards are timed to provide adequate lead time for engine and equipment manufacturers. They also are phased in over time to allow for the orderly transfer of technology from the highway sector, and to spread the overall workload for engine and equipment manufacturers engaged in redesigning a large number and variety of products for Tier 4.

As we explained at proposal, we believe that the high efficiency exhaust emission control technologies being developed to meet our 2007 emission standards for heavy duty highway diesel engines can be adapted to most nonroad diesel applications. The engines for which we believe this adaptation from highway applications will be most straightforward are those in the 175   750 hp power range, and thus these engines are subject to new standards requiring high efficiency exhaust emission controls as soon as the 15 ppm sulfur diesel fuel is widely available, that is, in the 2011 model year. Engines of 75   175 hp are subject to the new standards in the following model year, 2012, reflecting the need to spread the redesign workload and, to some extent, the greater effort that may be involved in adapting highway technologies to these engines. Engines 35 between 25 and 75 hp are subject to new standards for PM based on high efficiency exhaust emission controls in 2013, reflecting again the need to spread the workload and the challenge of adapting this technology to these engines which typically do not have highway counterparts. Engines over 750 hp involve a number of special considerations, necessitating an implementation approach unique to these engines as explained in section II. A. 4. Lastly , there are additional provisions discussed in sections III. B. 2 and III. M to encourage early technology introduction and to further draw from the highway technology experience.

This approach of implementing Tier 4 standards by power category over 2011   2013 provides for the orderly migration of technology and distribution of redesign workload over three model years, as EPA provided in Tier 3. Overall, this approach provides 4 to 6 years of real world experience with the new technology in the highway sector, involving millions of engines ( in addition to the several additional years provided by demonstration fleets on the road in earlier years), before the new standards take effect. We consider the implementation of Tier 4 standard start dates over 2011   2013 as described above to be responsive to the technology migration and workload distribution concerns.

2. Phase In of NO X and NMHC Standards for 75   750 hp Engines a. Percent of Production Phase In for NO X and NMHC We are finalizing the percent of production phase in for NO X and NMHC that we proposed for 75   750 hp engines. Because Tier 4 NO X emissions control technology is expected to be derived from technology first introduced in highway heavy duty diesels, we proposed to adopt the implementation pattern for the Tier 4 NO X standard which we adopted for the heavyduty highway diesel program. This will help to ensure a focused, orderly development of robust high efficiency NO X control in the nonroad sector and will also help to ensure that manufacturers are able to take maximum advantage of the highway engine development program, with resulting cost savings.

The heavy duty highway rule allows for a gradual phase in of the NO X and NMHC requirements over multiple model years: 50% of each manufacturer's U. S. directed production volume must meet the new standard in 2007 2009, and 100% must do so by 2010. Through the use of emissions averaging, this phase in approach also provides the flexibility for highway engine manufacturers to meet that program's environmental goals by allowing somewhat less efficient NO X controls on more than 50% of their production during the 2007   2009 phase in years.

We follow the same pattern in this rule. As proposed, we are phasing in the NO X standards for nonroad diesels over 2011   2013 as indicated in table II. A 2, based on compliance with the Tier 4 standards for 50% of a manufacturer's U. S. directed production in each power category between 75 and 750 hp in each phase in model year. The phase in of standards for engines over 750 hp is discussed in section II. A. 4. With a NO X phase in, all manufacturers are able to introduce their new technologies on a limited number of engines, thereby gaining valuable 36 experience with the technology prior to implementing it on their entire product line. In tandem with the equipment manufacturer transition program discussed in section III. B, the phase in ensures timely progress to the Tier 4 standard levels while providing a great degree of implementation flexibility for the industry.

This " percent of production phase in" is intended to take maximum advantage of the highway program technology development. It adds a new dimension of implementation flexibility to the staggered " phase in by power category" used in the nonroad program for Tiers 1   3 ( and also in this Tier 4) which, though structured to facilitate technology development and transfer, is more aimed at spreading the redesign workload. Because the Tier 4 program involves challenges in addressing both technology development and redesign workload, we believe that incorporating both of these phase in mechanisms into the program is warranted, resulting in the coordinated phase in plan shown in table II. A 2, which we are finalizing essentially as proposed. Note that this results in the new NO X requirements for 75   175 hp engines taking effect starting in the second year of the 2011 2013 general phase in, in effect creating a 50 50% phase in in 2012   2013 for this category. This then staggers the Tier 4 start years by power category as in past tiers: 2011 for engines at or above 175 hp, 2012 for 75   175 hp engines, and 2013 for 25   75 hp engines ( for which no NO X adsorber based standard and thus no percentage phase in is being adopted), while still providing a production based phase in for advanced NO X control technologies.

Comments from the States and environmental organizations argued for the completion of the phase in by the end of 2012, contending that technology progress for NO X control in the highway sector has been good to date and would support an accelerated phase in in the nonroad sector. However, our assessment continues to show unique ( though surmountable) challenges in adapting advanced technologies to nonroad engines, especially for engines least like highway diesels, and it is these engines that would be most affected by a truncated phase in schedule. Furthermore, even if we were to conclude that advanced technologies will be ready earlier than expected, we would not be able to move up the start of phase in dates because these dates also depend on low sulfur fuel availability. Thus an end of 2012 phase in completion date would result in phase ins as short as one year, thus degrading the industry's opportunity to distribute the redesign workload and departing from the pattern set by the highway program. Both of these are critical factors in our assessment that the proposed engine standards are feasible, and so a change to shorter phase ins would jeopardize achievement of our environmental objectives for nonroad diesels. Therefore we are not adopting the suggested earlier completion of the phase in.

As proposed, we are phasing in the Tier 4 NMHC standard for 75   750 hp engines with the NO X standard, as is being done in the highway program. Engines certified to the new NO X requirement would be expected to certify to the NMHC standard as well. The " phase out" engines ( those not certified to the new Tier 4 NO X and NMHC standards) would continue to be certified to the applicable Tier 3 NMHC+ NO X standard. As discussed in section II. B, we believe that the NMHC standard is readily achievable through the application of PM traps to meet the PM standard, which does not involve such a phase in. However, in the highway program we chose to 29 Note exceptions to the percent phase in requirements during the phase in model years discussed in sections III. L and III. M. These deal with differences between a manufacturer's actual and projected production levels, and with incentives for early or very low emission engine introductions.

37 phase in the NMHC standard with the NO X standard to simplify the phase in under the percentof production approach taken there, thus avoiding subjecting the " phase out" engines to separate standards for NMHC and NMHC+ NO X ( which could lead to increased administrative costs with essentially no different environmental result). The same reasoning applies here because, as in the highway program, the previous tier standards are combined NMHC+ NO X standards. No commenters objected to this approach.

Because of the tremendous variety of engine sizes represented in the nonroad diesel sector, we are finalizing our proposed requirement that the phase in requirement be met separately in both of the power categories with a phase in ( 75   175 hp and 175   750 hp). 29 For example, a manufacturer that produces 1000 engines for the 2011 U. S. market in the 175 to 750 hp range would have to demonstrate compliance with the NO X and NMHC standards on at least 500 of these engines, regardless of how many complying engines the manufacturer produces in the 75   175 hp category. ( Note however that we are allowing averaging of emissions between these engine categories through the use of power weighted ABT program credits.) We believe that this restriction reflects the availability of emissions control technology, and is needed to avoid erosion of environmental benefits that might occur if a manufacturer with a diverse product offering were to meet the phase in with relatively low cost smaller engines, thereby delaying compliance on larger engines with much higher lifetime emissions potential. Even so, the horsepower ranges for these power categories are fairly broad, so this restriction allows ample freedom to manufacturers to structure compliance plans in the most cost effective manner. There were no adverse comments on this approach.

b. Special Considerations for the 75   175 hp Category As discussed in the proposal, the 75   175 hp category of engines and equipment may involve added workload challenges for the industry to develop and transfer technology. Though spanning only 100 hp, this category represents a great diversity of applications, and comprises a disproportionate number of the total nonroad engine and machine models. Some of these engines, though having characteristics comparable to many highway engines such as turbocharging and electronic fuel control, are not directly derived from highway engine platforms and so are likely to require more development work than larger engines to transfer emission control technology from the highway sector. Furthermore, the engine and equipment manufacturers have greatly varying market profiles in this category, from focused one or two product offerings to very diverse product lines with a great many models.

Therefore, in addition to the flexibility provided through the phase in mechanism, we proposed two optional measures to provide added flexibility in implementing the Tier 4 NO X 38 standards, while keeping a priority on bringing PM emissions control into this diverse power category as quickly as possible. First, we proposed to allow manufacturers to use NMHC+ NO X credits generated by any Tier 2 engines over 50 hp ( in addition to any other allowable credits) to demonstrate compliance with the Tier 4 requirement for 75   175 hp engines in 2012, 2013, and 2014 only. Second, we proposed allowing a manufacturer to instead demonstrate compliance with a reduced phase in requirement of 25% for NO X and NMHC in each of 2012, 2013, and the first 9 months of 2014. Full compliance ( 100% phase in) with the Tier 4 standards would have needed to be demonstrated beginning October 1, 2014.

Engine manufacturers reinforced the points we made in the proposal regarding added workload challenges for this diverse category of engines and machines. However, they suggested that the first of the proposed options to address these challenges ( allowing use of Tier 2 credits) is not likely to be used due to a lack of available Tier 2 credits, and therefore should be dropped, and that the second option ( allowing a slower phase in) provided too short a stability period, and should be modified to delay final compliance by an additional 3 months, to December 31, 2014 or January 1, 2015. In addition to describing the very large redesign workload, they pointed out that engines and machines in this category typically do not have a model year that differs from the calendar year, and so the substantial changes required for Tier 4 compliance in October 2014 could force the need to change the product for all of 2014, effectively shortening the phase in to two years. One manufacturer argued that the compliance date for the 75   100 hp engines in this category should be delayed an additional year, to 2016, and that the start of the phase in for these engines should be likewise delayed from 2012 to 2013.

We do not feel that the first option ( allowing use of Tier 2 credits) should be dropped, as it provides an alternative flexibility mechanism for a power category in which flexibility is clearly important, and is environmentally helpful as it provides an option for manufacturers to achieve NO X emission reductions earlier than under the second option. By providing an opportunity to use Tier 2 credits in the 75   175 hp category, it coordinates well with the Tier 2 credit use opportunity we are providing for the 50   75 hp engines meeting the 2008 PM standard ( see section III. A), and allows for coordinated redesign and credit use planning by a manufacturer over this wide power range over many years. Nonetheless, recognizing that the second option may be more attractive to manufacturers, and considering the comments they provided on it, we have concluded that a three month phase in extension until the end of 2014 is warranted to address the workload burden and to align product cycle dates. Thus we are adopting the December 31, 2014 implementation date suggested in comments for completion of the 75   175 hp engine phase in.

We do not agree that an additional year of delay is appropriate for the 75   100 hp engines in this category. The comment expressing interest in our doing so did not provide any basis for it in technological feasibility or in workload burden, and we do not see any basis for it ourselves.

Therefore, we are adopting both of the proposed optional measures for the 75   175 hp engine phase in, except that in the second option, full compliance ( 100% phase in) with the Tier 4 standards will need to be demonstrated beginning December 31, 2014. As proposed, 30 See the recently published " Highway Diesel Progress Review Report 2," EPA420 R 04 004,

available at http:// www. epa. gov/ otaq/ diesel. htm# progreport2.

39 manufacturers using this reduced phase in option will not be allowed to generate NO X credits from engines in this power category in 2012, 2013, and 2014, except for use in averaging within the 75   175 hp category ( that is, no banking or trading, or averaging with engines in other power categories). We believe that this restriction on credit use is appropriate, considering that larger engine categories will be required to demonstrate a substantially greater degree of compliance with the 0.30 g/ bhp hr NO X standard several years earlier than engines built under this option. As the purpose of this option is to aid manufacturers in implementing Tier 4 NO X standards for this challenging power category, we do not want any manufacturers who might be capable of building substantially greater numbers of cleaner engines to use this option as an easy and copious source of credits ( owing to its slower phase in of stringent standards) that in turn can be used to delay building clean engines in other categories or model years.

c. Alternative Phase In Standards To ensure that Tier 4 engine development is able to take maximum advantage of highway diesel technology advances, we proposed to adopt nonroad diesel provisions in the averaging, banking, and trading program that would parallel the heavy duty highway engine program's " split family provisions" ( see 68 FR 28470, May 23, 2003). In essence, these allow a manufacturer to declare an engine family during the phase in years that is certified at NO X levels roughly midway between the phase out standard and phase in standard, without the complication of tracking credit generation and use. Because they constitute a calculational simplification of the emissions averaging provisions, these split family provisions do not result in a loss in environmental benefits compared to what the phase in can achieve.

The nonroad proposal also included specific emission levels for these split families, rather than just describing how they are calculated. Commenters suggested that we go one step further still and express these levels as alternative standards. They argued that this would facilitate attempts at harmonizing standards globally, especially for standards setting bodies such as the European Commission that do not have emissions averaging programs. We are also aware that most manufacturers of highway diesel engines are now planning to comply with our 2007 standards using this emissions averaging approach, increasing the significance of comments on the topic from nonroad engine manufacturers, many of whom also make highway engines. 30 After carefully considering the issues involved, we agree that the proposed approach lends itself to expression in terms outside of the averaging, banking, and trading program and that it makes sense to do so. We are creating such an alternative in the final regulations accordingly. These alternative standards do not substantively change our Tier 4 program from what we proposed, but rather respond to manufacturers' suggestions for administrative simplifications to what is essentially an averaging based flexibility option in demonstrating compliance with the percent of production NO X phase in. The alternative NO X phase in standards are shown in table 40 II. A 3. They apply only during the NO X phase in years. Manufacturers may use both approaches within a power category if desired, certifying some engines to the alternative standards, with the rest subject to the phase in percentage requirement. Note that engines under 75 hp subject to Tier 4 NO X standards do not have an alternative standard because they do not have a NO X phasein and engines over 750 hp do not have an alternative standard because of the separate standards we are adopting for these engines ( explained in section II. A. 4).

Table II. A 3.   Tier 4 Alternative NOX Phase in Standards ( g/ bhp hr)

Engine Power NO X Standard ( g/ bhp hr)

75

hp < 175 ( 56

kW < 130) 1.7 a 175

hp

750 ( 130

kW

560) 1.5 Notes: a Under the option identified in footnote b of table II. A 2, by which manufacturers may meet an alternative phase in requirement of 25/ 25/ 25% in 2012, 2013, and 2014 through December 30, the corresponding alternative NOX standard is 2.5 g/ bhp hr.

The engines certified under these standards will of course also need to meet the Tier 4 PM and crankcase control requirements that take effect for all engines in the first phase in year. They will also need to comply with all Tier 4 provisions that would apply to phase in engines, including the 0.14 g/ bhp hr NMHC standard and the NTE and transient test requirements for all pollutants. We recognize that this differs from what is required under the phase in approach, in which these requirements would not apply to the 50% of engines categorized as " phase out" engines. However, under the alternative standards approach, what would have been two different engine families ( one meeting phase in requirements and one meeting phase out requirements, with NO X and PM emissions averaging allowed between them under the ABT provisions) are replaced by a single engine family meeting the one set of alternative standards. Therefore all of the engines in this family must by default meet the phase in requirements for provisions that lack any sort of averaging mechanism ( NMHC standard, NTE, etc). As a result, any manufacturer choosing to design to the alternative standards rather than using the phase in approach provides some additional environmental benefit as an indirect result of choosing this approach.

We also believe that this alternative standards provision makes appropriate a further adjustment to the NO X phase in scheme to better preserve both the advanced technology phase in approach, for those manufacturers choosing that compliance path, and the alternative standards approach, for those choosing that path. Under the proposal, the provision for certifying a split engine family at a pre designated NO X level would not allow credit generation by or credit use on engines in the split family ( other than for averaging within the family). This was consistent with our goal of providing a simple, single average NO X standard level for the family, equivalent to arbitrarily designating a portion of the engines in the family as " phase out" engines ( credit 41 generators) and the rest as " phase in" engines ( credit users) with a net credit balance of zero, while avoiding the burden of actually calculating and tracking credits. This was also consistent with our approach under the 2007 highway engine program from which this concept is derived.

However, because this split family provision has evolved into a set of alternative standards, there is no longer a need to prohibit the generation and use of ABT credits for these engines to preserve a de facto net zero credit balance, and so, considering that it is also not environmentally detrimental, we believe it is appropriate to allow credit use and generation for these engines as for other engines. A consequence of doing so, consistent with all of our ABT programs, is the adoption of NO X FEL caps for these engines. To maintain the character of this compliance path as producing engines during the phase in years that emit at NO X levels which are roughly averaged between Tier 3 and final Tier 4 levels, we are setting NO X FEL caps for these engines at levels reasonably close to the alternative standards. ( See section III. A for details.) Because we are also maintaining the original phase in/ phase out compliance path, a manufacturer wishing to build engines with NO X levels higher than these FEL caps, at or approaching the Tier 3 levels, could still do so; in fact these would in actuality fit the description of a phase out engine. This manufacturer would also, of course, have to produce a corresponding number of phase in engines meeting the aftertreatment based Tier 4 NO X standards.

We also observe that the creation of alternative standards provides the opportunity to adjust the phase in/ phase out provisions so as to reinforce their focus on introducing highefficiency NO X aftertreatment technology during the phase in years, which is, of course, their aim. We are doing this by setting NO X family emission limit ( FEL) caps for phase in engines at the same low levels as for Tier 4 engines produced in the post phase in years. ( Again, see section III. A for details.) Although the engine manufacturers indicated in their comments that they did not believe it likely that anyone would choose this phase in/ phase out compliance path, we believe that preserving it and focusing it on encouraging very low NO X engines as early as possible provides a potentially useful and environmentally desirable alternative path. Thus these two concepts have been developed to provide complementary compliance paths obtaining equivalent overall NO X reductions, one focused on phasing in high efficiency NO X aftertreatment and the other on achieving NO X control for all subject engines during the phase in years at an average level between the Tier 3 and final Tier 4 standards levels.

3. Standards for Smaller Engines a. Engines under 25 hp We are finalizing the Tier 4 program we proposed for engines under 25 hp. In the proposal we presented our view that standards based on the use of PM filters should not be set at this time for the very small diesel engines below 25 hp. We also discussed our plan to reassess the appropriate long term standards in a technology review. However, for the nearer term, we concluded that other proven PM reducing technologies such as diesel oxidation catalysts and engine optimization could be applied to engines under 25 hp. Accordingly, we proposed Tier 4 42 PM standards to take effect beginning in 2008 for these engines based on use of these technologies.

In contrast to our proposals for other engine categories, the proposed Tier 4 standards for this category elicited very little comment from the engine manufacturers other than an expression of support for deferring consideration of any more stringent standards pending results of a future technology review. The States and environmental organizations expressed disappointment that EPA had not proposed more stringent standards for these engines, given the very large number of these engines in the field and the significant risk they pose due to individuals' exposure to diesel PM and air toxics. They urged more stringent 2008 PM standards and the adoption of standards obtaining emission reductions of 90% or more by the end of 2012. Emissions control manufacturers argued that more stringent 2008 standards based on the use of more efficient oxidation catalysts are feasible.

As discussed in section II. B. 4, we continue to believe that the standards we proposed for engines under 25 hp are feasible, and commenters in the nonroad diesel industry provided no comments to the contrary. Our reasons for not proposing more stringent Tier 4 standards for these engines based on the use of PM filters and NO X aftertreatment were mainly focused on the cost of equipping these relatively low cost engines with such devices, especially considering the prerequisite need for electronic fuel control systems to facilitate regeneration. The comments supporting more stringent standards were not convincing, as they did not address these cost issues. However, we do agree that these small engines likely have a large impact on human health, and, as discussed in section VIII. A, we are reaffirming the plan we described in the proposal to reassess the appropriate long term standards for these engines in a technology review to take place in 2007. We will set more stringent standards for these engines at that time, if appropriate.

We also disagree with comments supporting more stringent 2008 standards that would require the use of diesel oxidation catalysts on all small engines. Although we agree that these catalysts can be applied so as to achieve emission reductions on some small engines, the emissions performance data we have analyzed do not support our setting a more stringent standard. Section 4.1.5 of the RIA summarizes such data showing a very wide range of engine out PM emissions in this power category. Applying oxidation catalyst technology to these engines, though capable of some PM reduction if properly designed and matched to the application, is limited by sulfur in the diesel fuel. Specifically, precious metal oxidation catalysts ( which have the greatest potential for reducing PM) can oxidize the sulfur in the fuel and form particulate sulfates. Even with the 500 ppm maximum sulfur fuel available after 2007, the sulfate production potential is large enough to limit what can be done to set more stringent 2008 PM standards through the use of these catalysts. The 15 ppm maximum sulfur fuel available after 2010 will greatly improve the potential for use of oxidation catalysts, but as we discussed above, we believe that the much larger potential reduction afforded by PM filter technology warrants our waiting until the technology review in 2007 to evaluate the appropriate long term standards for these engines. See section II. B. 5 and RIA section 4.1.5 for further discussion. 43 When implemented, the Tier 4 PM standard and related provisions we are adopting today for engines under 25 hp will yield an in use PM reduction of over 50% for these engines, and large reductions in toxic hydrocarbons as well. Achieving these emission reductions is very important, considering the fact that many of these smaller engines operate in populated areas and in equipment without closed cabs in mowers, portable electric power generators, small skid steer loaders, and the like.

We are also adopting the alternative compliance option that we proposed for air cooled, direct injection engines under 11 hp that are startable by hand, such as with a crank or recoil starter. As we explained in the proposal, the alternative is justified due ( among other things) to these engines' need for loose design fit tolerances, their small cylinder displacement and bore sizes, and the difficulty in obtaining components for them with tight enough tolerances ( 68 FR 28363, May 23, 2003). This alternative allows manufacturers of these engines to delay Tier 4 compliance until 2010, and in that year to certify them to a PM standard of 0.45 g/ bhp hr, rather than to the 0.30 g/ bhp hr PM standard applicable beginning in 2008 to the other engines in this power category. As proposed, engines certified under this alternative compliance requirement will not be allowed to generate credits as part of the ABT program, although credit use by these engines will still be allowed.

We received no adverse comments on this proposed alternative for qualifying engines under 11 hp. Euromot commented that there are hand startable engines in the 11   25 hp range, and that we should extend the alternative compliance option to these engines as well. However, hand startability is not the sole defining feature of engines for which we established this alternative. Rather, the alternative is for a class of engines typified by a combination of characteristics ( very small, air cooled, direct injection, hand startable), which give rise to the potential technical difficulties noted above. To extend the alternative to other engines simply because they have a hand start is not justified, because they do not share these technical difficulties ( or do not share them to the same degree). Such an extension could also potentially encourage manufacturers of the many models of these larger engines to market a hand start option simply to avoid more stringent standards.

b. Standards for 25   75 hp Engines We proposed a 0.22 g/ bhp hr PM standard for 25   75 hp engines, to take effect in 2008. We also proposed a filter based 0.02 g/ bhp hr PM standard for these engines, to take effect in 2013, the year in which filter based technology for these engines is expected to be applicable on a widespread basis ( see section II. A. 1). Also in 2013, the 25   50 hp engines would be subject to the 3.5 g/ bhp hr NMHC+ NO X standard already adopted for 50   75 hp engines ( taking effect in 2008 as part of Tier 3). We are adopting all of these proposed standards in this final rule.

The 2008 PM standard for these engines should maximize reduction of PM emissions using technology available in that year. We believe that the 2008 PM standard is feasible for these engines, based on the same engine or oxidation catalyst technologies feasible for engines under 25 31 " Nonroad Diesel Emissions Standards Staff Technical Paper," EPA420 R 01 052, October 2001.

44 hp in 2008, following the introduction of nonroad diesel fuel with sulfur levels reduced below 500 ppm. We expect in use PM reductions for these engines of over 50% ( and large reductions in toxic hydrocarbons as well) over the five model years this standard would be in effect ( 2008   2012). These engines will constitute a large portion of the in use population of nonroad diesel engines for many years after 2008. Although we are finalizing the 2013 standards for 25   75 hp engines today, we are also reaffirming our commitment to conducting a technology review for these standards in 2007. This planned review is discussed in section VIII. A. Additional discussion of our feasibility assessment for the 2008 and 2013 standards can be found in section II. B. 4 and RIA section 4.1.4.

In comments, emissions controls manufacturers argued that more stringent 2008 standards for PM and NMHC based on the use of more efficient oxidation catalysts are feasible and should be adopted. Environmental organizations argued that PM and NO X standards for 2008 should be set at more stringent levels, based on the use of oxidation catalysts and improved engine optimization. The California Air Resources Board argued for more stringent 2008 standards for HC+ NO X, PM and toxics, based on the use of oxidation catalysts.