# Phase 2 Emission Standards for New Nonroad Spark-Ignition Handheld Engines At or Below 19 Kilowatts and Minor Amendments to Emission Requirements Applicable to Small Spark-Ignition Engines and Marine Spark-Ignition Engines > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A00-7887 ## Record - **Collection:** Federal Register - **Document type:** Rule - **Published:** April 25, 2000 - **Citation:** 65 FR 24268 ## Text ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 90 and 91 [FRL-6548-2] RIN 2060-AE29 Phase 2 Emission Standards for New Nonroad Spark-Ignition Handheld Engines At or Below 19 Kilowatts and Minor Amendments to Emission Requirements Applicable to Small Spark-Ignition Engines and Marine Spark-Ignition Engines AGENCY: Environmental Protection Agency (EPA). ACTION: Final rule. SUMMARY: In this action, we are finalizing a second phase of regulations to control emissions from new nonroad spark-ignition handheld engines at or below 19 kilowatts (25 horsepower). The engines covered by this action are used principally in handheld lawn and garden equipment applications such as trimmers, leaf blowers, and chainsaws. The standards will result in an estimated 70 percent reduction of emissions of hydrocarbons plus oxides of nitrogen from handheld engine emissions under the current Phase 1 standards by year 2010. The standards will be phased in beginning with the 2002 model year. The standards will result in important reductions in emissions which contribute to excessively high ozone levels in many areas of the United States. We have estimated the cost at approximately $20 to $56 for individual units and significantly air quality benefits of 3.6 millions of HC over the life of the program. In March 1999 we adopted Phase 2 regulations for small spark-ignition engines used in nonhandheld equipment. In this action we are including two provisions for Phase 2 nonhandheld engines that would partially modify the scope of the March 1999 final rule. First, we are adopting standards for two additional classes of nonhandheld engines that apply to engines below 100 cubic centimeters displacement used in nonhandheld equipment applications. Second, we are finalizing an option that allows manufacturers to certify engines greater than 19 kilowatts and less than or equal to one liter in displacement to the small engine Phase 2 standards. With this document, we are also amending the provisions of the existing regulations for small spark-ignition nonroad engines at or below 19 kilowatts and marine spark-ignition nonroad engines. (We proposed these amendments in a separate document, and received no comments objecting to the proposal.) For small spark-ignition nonroad engines at or below 19 kilowatts, we are revising the applicability of the rule to certain engines used in recreational applications and revising the applicability of the handheld emission standards to accommodate cleaner but heavier 4-stroke engines. For marine spark-ignition engines, we are amending the existing regulations to provide compliance flexibility for small volume engine manufacturers during the standards' phase in period. Lastly, we are adopting a minor revision to the existing replacement engine provisions for both small spark-ignition nonroad engines at or below 19 kilowatts and marine spark-ignition nonroad engines to address issues that may arise concerning the importation of such engines. No significant air quality impact is expected from the amendments included in today's action. DATES: The amendments to 40 CFR parts 90 and 91 are effective June 26, 2000. ADDRESSES: Materials relevant to the Phase 2 provisions of this final rule, including the Final Regulatory Impact Analysis are contained in Public Docket A-96-55. Materials relevant to the amendments for small spark-ignition nonroad engines and marine spark-ignition engines are contained in Public Docket A-98-16. Both of these dockets are located at room M-1500, Waterside Mall (ground floor), U.S. Environmental Protection Agency, 401 M Street, SW, Washington, D.C. 20460. The dockets may be inspected from 8:00 a.m. until 5:30 p.m. Monday through Friday. The docket may also be reached by telephone at (202) 260-7548. As provided in 40 CFR part 2, we may charge a reasonable fee for photocopying. For further information on electronic availability of this final rule, see the SUPPLEMENTARY INFORMATION section of this Federal Register . FOR FURTHER INFORMATION CONTACT: For information on the Phase 2 provisions adopted in today's action contact Philip Carlson, U.S. EPA, Office of Air and Radiation, Office of Transportation and Air Quality, Assessment and Standards Division, (734) 214-4270; carlson.philip@epa.gov. For information on the amendments to the existing provisions for small spark-ignition nonroad engines and marine spark-ignition engines contact John Guy, U.S. EPA, Office of Air and Radiation, Office of Transportation and Air Quality, Certification and Compliance Division, (202) 564-9276; guy.john@epa.gov. SUPPLEMENTARY INFORMATION: Regulated Entities Entities potentially regulated by this action are those that manufacture or introduce into commerce new small spark-ignition handheld or nonhandheld nonroad engines or equipment or new marine spark-ignition engines or equipment. Regulated categories and entities include: Category Examples of regulated entities Industry Manufacturers or importers of new nonroad small (at or below 19 kilowatt) spark-ignition handheld or nonhandheld engines and equipment. Manufacturers or importers of new marine spark-ignition outboard, personal watercraft, and jetboat engines and equipment. This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be regulated by this action. This table lists the types of entities that we are now aware could potentially be regulated by this action. Other types of entities not listed in the table could also be regulated. To determine whether your company is regulated by this action, you should carefully examine the applicability criteria in section 90.1 and section 91.1 of title 40 of the Code of Federal Regulations. If you have questions regarding the applicability of this action to a particular entity, consult the people listed in the preceding FOR FURTHER INFORMATION CONTACT section. Obtaining Electronic Copies of the Regulatory Documents The preamble, regulatory language, Final Regulatory Impact Analysis, and Summary and Analysis of Comments are also available electronically from the EPA Internet Web site. This service is free of charge, except for any cost already incurred for Internet connectivity. The electronic version of this final rule is made available on the day of publication on the primary Web site listed below. The EPA Office of Transportation and Air Quality also publishes Federal Register notices and related documents on the secondary Web site listed below. 1. http://www.epa.gov/docs/fedrgstr/EPA-AIR/ (select the desired date or use the “Search” feature) 2. http://www.epa.gov/OMSWWW/ (look in “What's New” or under the specific rulemaking topic) Please note that due to differences between the software used to develop the document and the software into which the document may be downloaded, changes in format, page length, etc ., may occur. Table of Contents I. Introduction A. What Is the Background of This Final Rule? B. What Are the Basic Provisions of This Final Rule? II. Detailed Description of This Final Rule A. What Are the Emission Standards and Other Related Provisions? 1. Class Structure 2. Emission Standards and Implementation Schedule 3. NMHC+NO X Standard for Class I-B Natural Gas-Fueled Engines 4. Useful Life Categories 5. Selection of Useful Life Category 6. Certification Test Procedure B. What Are the Provisions of the Averaging, Banking, and Trading Program? C. What Are the Provisions of the Compliance Program? 1. Certification 2. Production Line Testing—Cumulative Summation Procedure 3. Voluntary In-Use Testing 4. Selective Enforcement Auditing D. What Flexibilities Are Being Adopted for Engine and Equipment Manufacturers? 1. Carry-Over Certification 2. Flexibilities for Small Volume Engine Manufacturers and Small Volume Engine Families 3. Small Volume Engine Manufacturer Definition 4. Small Volume Engine Family Definition 5. Flexibilities for Equipment Manufacturers and Small Volume Equipment Models 6. Small Volume Equipment Manufacturer Definition 7. Small Volume Equipment Model Definition E. Nonregulatory Programs F. General Provisions of This Final Rule 1. Engine Labeling 2. Emission Warranty G. Amendments to the Small Spark-Ignition (SI) Engine and Marine SI Engines Programs 1. Definition of Handheld Engine 2. Engines Used in Recreational Vehicles and Applicability of the Small SI Regulations to Model Airplanes 3. Phase-in Flexibility for Small Volume Marine SI Engine Manufacturers 4. Replacement Engines III. What Are the Projected Impacts of This Final Rule? A. Environmental Benefit Assessment 1. Roles of HC and NOx in Ozone Formation 2. Health and Welfare Effects of Tropospheric Ozone 3. Estimated Emissions Impact of This Final Rule 4. Health and Welfare Effects of CO Emissions 5. Health and Welfare Effects of Hazardous Air Pollutant Emissions B. Cost and Cost-Effectiveness 1. Class I-A and Class I-B Costs 2. Handheld Engine Costs 3. Handheld Equipment Costs 4. Handheld Operating Costs 5. Cost Per Engine and Cost-Effectiveness IV. Public Participation V. Administrative Requirements A. Administrative Designation and Regulatory Analysis B. Regulatory Flexibility C. Paperwork Reduction Act D. Unfunded Mandates Reform Act E. Congressional Review Act F. National Technology Transfer and Advancement Act G. Executive Order 13045: Protection of Children's Health H. Executive Order 13132: Federalism I. Executive Order 13084: Consultation and Coordination With Indian Tribal Governments VI. Statutory Authority I. Introduction A. What Is the Background of This Final Rule? On January 27, 1998, we issued a Notice of Proposed Rulemaking (NPRM) proposing a second phase of regulations to control emissions from new handheld and nonhandheld nonroad spark-ignition (SI) engines at or below 19 kilowatts (kW), hereafter referred to as “small SI engines” (see 63 FR 3950). This action was preceded by a March 27, 1997, Advance Notice of Proposed Rulemaking (see 62 FR 14740). We solicited comment on all aspects of the January 1998 NPRM and held a public hearing on February 6, 1998. The public comment period for the January 1998 NPRM closed March 13, 1998. On March 30, 1999, we finalized Phase 2 standards and compliance program requirements for Class I and Class II nonhandheld engines (see 64 FR 15208). In the final rule for nonhandheld engines, we noted that we planned to address the Phase 2 program for handheld engines in future Federal Register documents. We issued a Supplemental Notice of Proposed Rulemaking (SNPRM) for Phase 2 handheld engines on July 28, 1999 (see 64 FR 40940). We solicited comment on all aspects of the July 1999 SNPRM and held a public hearing on August 17, 1999. The public comment period for the July 1999 SNPRM closed September 17, 1999. The purpose of today's final rule is to adopt Phase 2 standards and compliance program requirements for handheld engines. Today's action also contains two provisions that affect nonhandheld engines. First, we are adopting standards and compliance program requirements for two newly designated classes of nonhandheld engines with displacements below 100 cubic centimeters (cc), hereafter referred to as Class I-A and Class I-B engines. Second, we are adopting an optional provision that allows manufacturers to certify engines above 19 kW with displacement less than or equal to one liter to the Phase 2 small SI engine regulations. Today's action is taken in response to section 213(a)(3) of the Clean Air Act, 42 U.S.C. 7547, which requires our standards for nonroad engines and vehicles to achieve the greatest degree of emission reduction achievable through the application of technology which the Administrator determines will be available, giving appropriate consideration to cost, lead time, noise, energy and safety factors. The standards and other compliance program requirements being adopted today satisfy this Clean Air Act mandate. The development of this regulation started in 1996, shortly after the Phase I standards were finalized. Initially a formal regulatory negotiation process was attempted. After it became clear that the disparate interest of the multiple parties would not result in an agreement, the regulatory negotiation process was abandoned. Instead, at the request of industry, EPA developed the framework for a Phase II rule which was described in a Statement of Principles signed by manufacturers representing a significant portion of the US market. This SOP formed the basis for the Phase 2 NPRM. The January 1998 NPRM contained lengthy discussion of the first set of proposed Phase 2 standards, the expected costs of their implementation, and the technologies that we expected manufacturers would use to meet the standards. The January 1998 NPRM also discussed the potential costs and benefits of adopting more stringent standards such as the second phase of standards that were then under consideration by the California Air Resources Board (ARB). In the January 1998 NPRM, we explicitly asked for comment regarding the level of the proposed standards and the impacts and timing for implementing more stringent standards, so as to allow us to establish the most appropriate standards in the final rule. In particular, we requested comment on the impacts and timing for implementing emission standards that would require the same types of technology as anticipated by proposed rules under consideration at that time by the California ARB. After the close of the comment period on the January 1998 NPRM and upon reviewing information supplied during and after the comment period, we determined that it was desirable to get further details regarding the technological feasibility, cost and lead time implications of meeting standards more stringent than those contained in the January 1998 NPRM. The January 1998 NPRM already contained estimates of the costs and feasibility of more stringent standards. Some commenters had charged that, based on these discussions in the January 1998 NPRM, our proposed standards would not be stringent enough to satisfy the stringency requirements of Clean Air Act section 213(a)(3). For the purpose of gaining additional information on feasibility, cost and lead time implications of more stringent standards, we had several meetings, phone conversations, and written correspondence with specific engine manufacturers, with industry associations representing engine and equipment manufacturers, with developers of emission control technologies and suppliers of emission control hardware, with representatives of state regulatory associations, and with members of Congress. We also sought information relating to the impact on equipment manufacturers, if any, of changes in technology potentially required to meet more stringent standards than were proposed in the January 1998 NPRM. We published a Notice of Availability on December 1, 1998, highlighting the additional information gathered in response to the January 1998 NPRM (see 63 FR 66081) and continued having discussions with various parties regarding low emission technologies for the small SI handheld engine market. Since the publication of the January 1998 NPRM, there have been rapid and dramatic advances in emission reduction technologies for handheld engines. We were not able to fully evaluate these technologies or discuss their possible availability at the time of the January 1998 NPRM. After having reviewed the most up-to-date information available on these new technologies, we believed the information supported Phase 2 standards for handheld engines that were significantly more stringent than those proposed in the January 1998 NPRM and even more stringent than the second phase of California ARB standards. In light of this new information, and in the interest of providing an opportunity for public comment on the stringent levels being considered for the Phase 2 handheld engine emission standards and the potential technologies available for meeting such standards, we reproposed Phase 2 regulations for handheld engines in the July 28, 1999, SNPRM (see 64 FR 40940). The July 1999 SNPRM proposed Phase 2 hydrocarbon plus oxides of nitrogen (HC+NO x ) standards of 50 grams per kilowatt-hour (g/kW-hr) for Class III and Class IV engines and of 72 g/kW-hr for Class V engines, phased in over several years. The proposal also included an averaging, banking, and trading program. The July 1999 SNPRM also proposed revised compliance program requirements for handheld engines. Most of the proposed compliance program changes were intended to make the handheld engine compliance program the same as the requirements finalized for nonhandheld engines in March 1999 and to establish a consistent approach to compliance for all nonroad small SI engines. In addition to the reproposed Phase 2 standards for handheld engines, we also proposed standards for two new classes of small displacement nonhandheld engines in the July 1999 SNPRM. We had requested comment on the need for such standards in the January 1998 NPRM and received comments from a number of engine manufacturers supporting such standards. Originally, we did not propose different standards for small displacement nonhandheld engines citing the availability of the averaging, banking and trading program as a reason for not proposing separate standards. However, because the Phase 2 standards we finalized for nonhandheld Class I engines are more stringent than originally proposed in the January 1998 NPRM and because it is technologically more difficult to meet a given level of emissions (in g/kW-hr) as the engine displacement is decreased, manufacturers who would likely produce such small displacement engines would not likely be able to meet the Phase 2 Class I standards recently finalized and would not be able to produce such small displacement nonhandheld engines even if they could take advantage of the averaging, banking and trading program. Therefore, we proposed standards for two classes of small displacement nonhandheld engines that would take effect upon the effective date of today's final rule. The first small displacement class covered nonhandheld engines with displacements below 66cc and was referred to as Class I-A engines. The second small displacement class covered nonhandheld engines at or above 66cc and below 100cc and was referred to as Class I-B engines. In response to a request from manufacturers of small engines, we also included in the July 1999 SNPRM a proposal to allow manufacturers the option of certifying engines greater than 19 kW and less than or equal to one liter in displacement to the small SI engine Phase 2 regulations for nonhandheld engines beginning with the 2001 model year. Because of their size, these engines are not required to be certified under the current Phase 1 small SI engine program, and they do not have to meet any previously existing Federal requirements because we do not currently regulate spark-ignition engines above 19 kilowatts. However, because there are a small number of these engines that are primarily derivatives of other certified small SI engines at or below 19 kW, we believed it would be appropriate for manufacturers to have the option to certify these engines to the Phase 2 requirements for small SI engines. As noted in the July 1999 SNPRM, engines certified under the proposed option would be required to certify for the longest useful life period of 1,000 hours. The requirements of this option were consistent with those that had already been adopted by the California ARB. We solicited comment on all aspects of the July 1999 SNPRM and held a public hearing on August 17, 1999. The public comment period for the July 1999 SNPRM closed September 17, 1999. In addition to the Phase 2 provisions for small SI nonroad engines highlighted above, today's action adopts several minor amendments to the existing regulations for small SI nonroad engines and marine SI engines. These amendments were included in a separate proposal on February 3, 1999 (see 64 FR 5251). We originally promulgated final regulations applicable to small SI engines on July 3, 1995 (see 60 FR 34582, codified at 40 CFR Part 90) and final regulations applicable to spark-ignition marine outboard and personal watercraft (including jetboat) engines (marine SI engines) on October 4, 1996 (see 61 FR 52088, codified at 40 CFR Part 91). 1 1 The preamble to the final marine SI rule (61 FR 52090) explains that for purposes of the marine SI rule, jetboats are considered as personal watercraft, except where their engines are derived from sterndrive or inboard type marinized automotive blocks. The small SI regulations took effect with model year 1997 for the majority of covered engines and in the 1998 model year for certain higher displacement handheld engines. The marine SI rule took effect with 1998 or 1999 engines, depending upon their usage, and involves a corporate average standard which tightens each year through 2006. (The marine SI rule does not apply to sterndrive or inboard engines. We expect to issue a proposal to regulate such engines in the coming year). Under the regulations, both small SI engine and marine SI engine manufacturers are prohibited from introducing into commerce any engine not covered by a EPA-issued certificate of conformity (40 CFR 90.1003(a)(1)(I); 40 CFR 91.1103(a)(1)(I)). The rules also prohibit equipment and vessel manufacturers from introducing new nonroad equipment and vessels into commerce unless the engine in the equipment or vessel is certified to comply with the applicable nonroad emission requirements (40 CFR 90.1003(a)(5); 40 CFR 91.1103(a)(5)). 2 We added provisions to allow engine manufacturers to produce replacement engines that were not certified to currently applicable standards to each of the two rules described above by a direct final rule issued August 7, 1997 (62 FR 42638). 2 The regulations also prohibit, in the case of any person, the importation of uncertified small SI engines and marine SI engines manufactured after the applicable implementation date for the engine. The regulations also prohibit the importation of equipment containing small SI engines unless the engine is covered by a certificate of conformity. (40 CFR 90.1003(a)(1)(ii) and 40 CFR 91.1103(a)(1)(ii)). B. What Are the Basic Provisions of This Final Rule? The following section provides an overview of the Phase 2 provisions being finalized with today's action as well as the amendments to the current small SI engine and marine SI engine programs. Additional detail explaining the program as well as discussion of information and analyses which led to the selection of these requirements is contained in subsequent sections. Summaries of comments we received on the July 1999 SNPRM (for the Phase 2 program) and the February 1999 NPRM (for the amendments) and detailed responses to those comments are contained in a separate document included in the dockets for today's final rule. Consistent with the Phase 1 regulations for small SI engines, today's action and the recently finalized Phase 2 program for nonhandheld engines distinguish between engines used in handheld equipment and those used in nonhandheld equipment. In today's action, we are adopting Phase 2 emission standards for distinct engine size categories referred to as “engine classes” within the handheld engine equipment designation. Table 1 summarizes the HC+NO X emission standards for Class III, Class IV, and Class V handheld engines and when these standards are scheduled to take effect under this final rule. Table 2 summarizes the CO standards and the effective dates of the CO standards. In response to comments submitted on the July 1999 SNPRM, the standards and implementation schedule contained in today's final rule for handheld engines reflect a four year phase in schedule instead of a five year phase in schedule as proposed in the SNPRM. Table 1. —Phase 2 HC+NO X Emission Standards for Handheld Engines Engine class HC+NO X Standards (g/kW-hr) by model year 2002 2003 2004 2005 2006 2007 and later Class III 238 175 113 50 50 50 Class IV 196 148 99 50 50 50 Class V 143 119 96 72 Table 2. —Phase 2 CO Emission Standards for Handheld Engines Engine class CO standard (g/kW-hr) Effective model year Class III 805 2002 Class IV 805 2002 Class V 603 2004 When fully phased in, these Phase 2 standards are expected to result in an estimated 70 percent annual reduction in combined HC+NO X emissions from small SI handheld engines compared to the Phase 1 emission requirements for such engines. Due to the use of improved technology, CO emissions are also expected to decrease below Phase 1 levels. To help engine manufacturers meet the HC+NO X standards noted in Table 1, we are adopting provisions to include Phase 2 handheld engines in the certification averaging, banking and trading (ABT) program. The combination of the declining Phase 2 handheld standards and the ABT program should allow manufacturers to make an orderly and efficiently transition from their existing Phase 1 engine designs and technologies to those necessary to meet the new Phase 2 requirements and should provide an incentive for the early introduction of clean engines. We believe that the ABT program is an integral part of the Phase 2 HC+NO X standards being adopted for Classes III, IV, and V. (As noted later, the ABT program does not apply to CO emissions.) As noted earlier, we are adopting provisions that will add two new classes of small SI nonhandheld engines. Class I-A will cover engines with displacement less than 66cc that are installed in nonhandheld equipment. Class I-B will cover engines equal to or greater than 66cc but less than 100cc that are installed in nonhandheld equipment. Table 3 contains the HC+NO X standards and CO standards we are adopting for Class I-A and Class I-B engines. The standards contained in today's final rule for Class I-A and Class I-B nonhandheld engines are the same as we proposed in the July 1999 SNPRM. Implementation of the standards for the new classes of Class I-A and Class I-B engines will begin with the 2001 model year. Class I-A and Class I-B engines will also be allowed to participate in the ABT program for small SI engines. Table 3.—Phase 2 Emission Standards for Class I-A and Class I-B Engines Engine class HC+NO X standard (g/kW-hr) CO standard (g/kW-hr) Effective model year Class I-A 50 610 2001 Class I-B 40 610 2001 With today's action, we are also finalizing the provision which will allow manufacturers the option of certifying engines greater than 19 kW and less than or equal to one liter in displacement to the small SI engine Phase 2 regulations beginning with the 2001 model year. Because the power rating of such engines is above 19 kW, we do not currently regulate such engines and therefore the engines are not required to comply with any previously existing emission standards at the federal level. We issued a Notice of Proposed Finding on February 8, 1999, which announced our intent to propose regulations for “large nonroad SI engines” and we are currently developing a NPRM for large nonroad SI engines to be issued in late 2000 (see 64 FR 6008). We expect this proposal would be consistent with actions taken for these engines in today's rule. For the Phase 2 handheld engine program, we are retaining the current test procedure used by manufacturers to certify engines with one modification. The weighting of the two different test modes used for calculating the certification emission levels for handheld engines is being changed to 85 percent wide open throttle and 15 percent idle. (The weighting of the modes for the Phase 1 program is 90 percent wide open throttle and 10 percent idle.) The Phase 2 standards and the compliance program elements being adopted today require engine manufacturers to consider expected in-use deterioration. In contrast to the Phase 1 program which only regulates the emission performance of engines when new, the Phase 2 program will require manufacturers to account for expected deterioration in emission performance as an engine is used. Manufacturers will be required to evaluate the emission deterioration performance of their engine designs and certify their designs to meet the standards after factoring in the anticipated emission deterioration of a typical in-use engine over its useful life. Under today's action, an engine manufacturer will select from one of three different useful life categories based on the type of engine and equipment in which the engine is installed. Handheld engine manufacturers can certify for a useful life period of 50, 125, or 300 hours based on design features and the intended use of the application. For Class I-A engines, we are also adopting useful life periods of 50, 125, and 300 hours. For Class I-B engines, we are adopting useful life periods of 125, 250, or 500 hours. Under the Phase 2 certification program being adopted today, manufacturers are allowed to determine an appropriate methodology for accumulating hours of operation to “age” an engine in a manner which duplicates the same type of wear and other deterioration mechanisms expected under typical consumer use which could affect emission performance. We expect laboratory-based bench testing will often be used to conduct this aging operation because it can save time and perhaps money, but actual in-use operation ( e.g., trimming grass) will also be allowed. Emission tests will be conducted when the engine is new and when it has finished accumulating the equivalent of its useful life. The engine will have to pass the applicable standards both when it is new and at the end of its designated useful life to qualify for certification. Additionally, the new engine and fully aged engine emission test levels will be compared to determine the expected deterioration in emission performance for engines of this design. We are also adopting a Production Line Testing (PLT) program for Phase 2 engines covered by today's action. The PLT program is explained in more detail in a following section but, briefly, the intent is to require a sampling of production line engines to be tested for emission performance to assure that the design intent as certified prior to production has been successfully transferred by the engine manufacturer to mass production. The volume of PLT testing required by the manufacturer would depend on how close the test results from the initial engines tested are to the applicable standards. If the initial test results indicate the design is well below the applicable standards, few engines will need to be tested. For those designs where the test results indicate emission levels are very close to the applicable standards, additional tests will be required to make sure the design is being produced with acceptable emission performance. While the newly adopted Phase 2 compliance program will not require manufacturers to conduct any in-use testing to verify continued satisfactory emission performance in the hands of typical consumers, we are adopting an optional program for such in-use testing with today's action. We believe it is important for manufacturers to conduct in-use testing to monitor the success of their designs and to factor back into their design and/or production process any information suggesting emission problems in the field. While not mandating such a program, today's action will encourage such testing by allowing a manufacturer to avoid the cost of the PLT program for a portion of its product line by instead supplying data from in-use engines. Under this voluntary in-use testing program, up to twenty percent of the engine families certified in a year by a manufacturer can be designated for in-use testing. For these families, no PLT testing will be required for two model years including that model year. Instead, the manufacturer will select a minimum of three engines off the assembly line or from another source of new engines and emissions test them when aged to at least 75 percent of their useful life under typical in-use operating conditions for this engine. The information related to this in-use testing program will need to be shared with us. If any information derived from this program indicates a possible substantial in-use emission performance problem, we anticipate the manufacturer will seek to determine the nature of the emission performance problem and what corrective actions might be appropriate. We plan to offer our assistance in analysis of the reasons for unexpectedly high in-use emission performance and what actions might be appropriate for reducing these high emissions. Separate from the program allowing manufacturers to perform voluntary in-use testing, we could choose to conduct our own in-use compliance program, either generally or on a case-by-case basis. If we determine that such action is appropriate, we expect that we will perform our own in-use testing to determine whether a specific class or category of engines is complying with applicable standards in use. All of the general provisions of the Phase 2 compliance program contained in today's action have been adopted as part of California's compliance program for these classes of small engines. 3 Importantly, the testing and data requirements, engine family descriptors, compliance statements and similar testing and information requirements of these federal Phase 2 handheld regulations are, to the best of our knowledge, the same general compliance program requirements adopted by the California ARB. This will be advantageous to manufacturers marketing the same product designs in California as in the other states, as they would need to prepare only one set of certification application information, supplying one copy to the California ARB for certification in the State of California and one copy to us for federal certification. This similar treatment under the regulations also extends to the PLT program and is also likely to extend to the optional in-use testing program, such that any test data and related information developed for the federal regulatory requirements being adopted today should also satisfy the requirements of the California ARB. 3 While the voluntary in-use test program has not been codified in the California ARB Tier 2 rules for these engines, we have discussed the program with the California ARB. The California ARB supports our voluntary in-use test program provisions as contained in today's action. In addition to the Phase 2 provisions highlighted above, today's action includes special provisions for small volume engine manufacturers, small volume engine families produced by other engine manufacturers, small volume equipment manufacturers who rely on other manufacturers to supply them with these small SI handheld engines, and small volume equipment models. These handheld small volume provisions should help to lessen the demonstration requirements and smooth the transition to these Phase 2 requirements. This is especially important for small volume applications because the eligible manufacturers involved may not have the resources to ensure that engines complying with the Phase 2 standards will be available within the time frames otherwise envisioned under these regulations. Without these provisions, we believe the economic impacts to small volume manufacturers would be increased and the possibility of reduced product offering would be greater, especially for those products intended to serve niche markets which satisfy special needs. Finally, today's action includes amendments to the existing rules for small SI nonroad engines and marine SI engines. First, for small SI engines, we are revising the definition of handheld engine by removing a restriction that may prevent equipment manufacturers from using cleaner, but heavier, engines in certain handheld lawn and garden equipment. Second, we are modifying the applicability of the rule so that a small number of engines used in model aircraft can be considered “recreational” and excluded from coverage. Third, we are adopting provisions that would add phase-in flexibility to reduce the regulatory impact on a few very small manufacturers of marine engines. Lastly, the amendments include provisions for both the small SI engine and marine SI rules that closes a potential loophole that could have led to the abuse of special provisions that exist to permit the sale of uncertified engines for replacement purposes. II. Detailed Description of This Final Rule The following sections provide additional detail on the provisions of the today's action outlined above. A. What Are the Emission Standards and Other Related Provisions? 1. Class Structure With today's action we are retaining the same basic class structure for handheld engines as implemented in the Phase 1 regulations. Phase 2 handheld engines will continue to be categorized as either Class III, Class IV, or Class V engines based on the displacement of the engine. As noted above, we are adopting provisions for two new classes of nonhandheld engines in today's action. The Phase 1 program separated the small engine category into those intended for use in equipment typically carried by the operator during its use, such as chain saws or string trimmers, referred to as handheld equipment, and those engines normally used in equipment which is not carried by the operator, such as lawnmowers and generators, referred to as nonhandheld equipment. Under the Phase 1 program, there are two classes of nonhandheld engines, Class I and Class II. Class I includes all nonhandheld engines with displacements below 225cc. The July 1999 SNPRM contained a proposal to include two new classes of nonhandheld engines below 100cc. The July 1999 SNPRM provisions were based on comments received from the Engine Manufacturers Association (EMA) and several individual engine manufacturers on the January 1998 NPRM. EMA and engine manufacturers requested the creation of smaller displacement classes of nonhandheld engines for several reasons including the need to fill a void in the equipment market left by products that would no longer be able to utilize 2-stroke engines if the Phase 2 Class I standard as proposed at that time was adopted. Manufacturers asserted the infeasibility of the Phase 2 Class I standard proposed at that time for the smallest engines in the class because of the increased difficulty in reducing emissions with small displacement engines. The comments we received regarding Class I-A and Class I-B engines generally supported the addition of the new classes of nonhandheld engines. (Additional discussion of the actual standards being adopted for Class I-A and Class I-B engines is included in the following section of today's action.) Based on the fact that it is generally more difficult for smaller displacement engines to meet the same emission standards as larger displacement engines, we continue to believe that the recently adopted Phase 2 Class I standard which is technically feasible and economically viable for the existing larger displacement 4-stroke engines in Class I (which have displacements typically above 125cc and are used primarily in lawnmowers), could be too costly for manufacturers to be achievable for not currently marketed smaller displacement engines that equipment manufacturers assert they need to use in applications requiring the use of much smaller displacement nonhandheld engines. Therefore, we are adopting the proposed provisions to subdivide the Class I engine category by adding two new nonhandheld engine classes and redesignating the span of displacements covered by Class I. Under today's action, Class I-A will include nonhandheld engines below 66cc, Class I-B will include nonhandheld engines equal to or greater than 66cc but less than 100cc, and Class I will cover engines equal to or greater than 100cc but less than 225cc. In the July 1999 SNPRM, we requested comment regarding the possibility that if the proposed Class I-A and I-B standards were adopted, manufacturers might shift significant production from Class I to the smaller displacement engines. We also requested comment on the potential for 2-stroke engines to meet the proposed Class I-A and I-B standards and the potential for such engines to be used in existing nonhandheld applications such as mowers. We noted that if such a change in the market were to occur, the benefits of the recently finalized Phase 2 program for Class I engines which anticipates a turnover to clean 4-stroke OHV technology would be seriously compromised. Based on the comments submitted on the proposed Class I-A and Class I-B provisions, we do not believe that it is likely manufacturers would shift significant production from Class I to the smaller displacement engines. Neither do we believe that manufacturers could design and market to any appreciable extent significant numbers of 2-stroke engines in nonhandheld applications. In response to a request from manufacturers, we included in the July 1999 SNPRM an option for manufacturers to certify engines above 19 kW with displacements less than or equal to one liter to the small SI standards. As noted earlier, such engines are currently unregulated at the federal level. We received comments from one trade group and one manufacturer supporting the proposed provisions. Therefore, we are adopting the provisions as proposed that allow manufacturers the option of certifying engines above 19 kW and less than or equal to one liter in displacement to the small SI engine program beginning with the 2001 model year. It should be noted that if a manufacturer chooses to certify such engines under the small engine program, the engines will need to be certified to the Phase 2 requirements for the appropriate class of nonhandheld engines, which is expected to be the Class II requirements ( i.e ., engines above 225cc in displacement), for a useful life period of 1,000 hours. We recently issued a Notice of Proposed Finding (see 64 FR 6008) which announced our intent to propose regulations for “large nonroad SI engines” (which include these greater than 19 kW but less than one liter engines). We expect to issue a NPRM for large nonroad SI engines in 2000, and to propose that engines greater than 19 kW and less than one liter in displacement meet small SI nonroad engine requirements. If, however, we do not propose and/or adopt such a requirement for these engines as part of the large SI nonroad program, we would expect to consider reasonable approaches to minimizing disruption, as appropriate, to the affected industry. Such approaches would be addressed in the rulemaking process for large SI nonroad engines. 2. Emission Standards and Implementation Schedule In response to comments submitted on the July 1999 SNPRM, with today's action we are adopting a slightly different schedule of Phase 2 HC+NO X standards compared to those proposed in the SNPRM. (The phase-in standards are changing from the proposal because we are adopting a four year phase-in schedule with today's action instead of the proposed five year phase-in schedule.) The CO standards being adopted with today's action are the same as proposed in the July 1999 SNPRM. The new Phase 2 standards will begin to take effect with the 2002 model year for Classes III and IV and the 2004 model year for Class V. For HC+NO X , engine manufacturers will be required to meet a declining standard that varies by engine class. As proposed in the July 1999 SNPRM, engine manufacturers will be required to meet a HC+NO X standard of 50 g/kW-hr for Classes III and IV and 72 g/kW-hr for Class V SNPRM at the end of the phase in. However, the fleet average standards that a manufacturer is required to meet during the phase-in period differ from those proposed in response to comments that have persuaded EPA that a faster phase-in is more appropriate under the Act. Table 1 and Table 2, presented earlier, contain the full schedule of Phase 2 HC+NO X standards and CO standards, respectively, being adopted today for handheld engines by model year. As described in section II.B., engine manufacturers will be able to use the averaging, banking and trading program to demonstrate compliance with the Phase 2 HC+NO X standards on average. Engine manufacturers will be required to meet the Class III and Class IV CO standard beginning with the 2002 model year and the Class V CO standard beginning with the 2004 model year. Unlike the HC+NOx standards, the CO standards do not decrease over time, and the averaging, banking and trading program does not apply to the CO standards. The Clean Air Act at section 213(a)(3) requires us to adopt standards that result in the greatest emission reductions achievable through the application of technology which the Administrator determines will be available, giving appropriate consideration to cost, lead time, noise, energy and safety factors. As a result of information now available, and due to the rapid technological advances the handheld engine industry is making in an effort to design engines which are more environmentally friendly, we have determined that the standards being adopted today are achievable during the timeframe being adopted today. Table 4 summarizes the handheld technologies we conclude are capable of meeting the newly adopted standards by engine class. Note that for the purpose of generating a cost estimate for this rule, a subset of these available technologies were evaluated for their cost impact. Table 4.—Potential Technologies for Meeting the Phase 2 Standards for Handheld Engines Engine class Technologies III —Compression Wave Technology + low-medium efficiency Catalyst. —Stratified Scavenging with Lean Combustion + medium-high efficiency Catalyst. —4-Stroke. IV —Compression Wave Technology. —Compression Wave Technology + low efficiency Catalyst. —Stratified Scavenging with Lean Combustion + medium efficiency Catalyst. —4-Stroke. V —Compression Wave Technology. —4-Stroke (on certain applications). —Stratified Scavenging with Lean Combustion. While not all of the technologies discussed above have yet been demonstrated in mass-produced production engines operated under typical in-use conditions, we are confident that these technologies will provide industry with several emission control alternatives for meeting the new Phase 2 standards. Manufacturer prototype testing, California ARB certification information, and testing that we have performed as listed in Chapter 3 of the Final Regulatory Impact Analysis (RIA) demonstrate that currently available 2-stroke and 4-stroke technologies can achieve the newly adopted emission standards, especially if one considers catalysts are available to use along with the 2-stroke engine technologies. In addition to the technologies highlighted in today's action, we have examined though not included in our feasibility and costs analyses other promising technologies that may be available to help manufacturers meet the standards being adopted today. One of these technologies, a new engine design, referred to as DIPS, utilizes direct fuel injection and has shown promise in achieving HC emissions levels below the standards being adopted today possibly without the use of a catalyst. Another technology is a redesigned spark plug developed by Pyrotek that has been shown to achieve incremental emission HC reductions (at low cost) that could be beneficial for engines which may need slightly more reductions to meet the emission standards being adopted today. Both of these technologies are described in further detail in Chapter 3 of the Final RIA. Finally, we understand that manufacturers are developing electronic fuel injection systems which if successful, should also allow low emissions. However, we have insufficient information at this time to consider this technology in this rulemaking although it may well be available during the 2002-2007 time period during which these standards will take effect. For 2-stroke engines, John Deere has certified a 25cc trimmer engine outfitted with the compression wave technology (also referred to as the John Deere LE engine) under the California ARB's Tier 2 program for small SI engines. The engine, which would be a Class IV engine under our classifications, was certified to a HC+NO X emissions level of 61 g/kW-hr at a useful life of 125 hours. In addition, John Deere adapted two Class V chainsaw engines and achieved HC+NO X emissions below the Class V standard of 72 g/kW-hr. Both of the chainsaw prototype applications did have significantly lower power with the compression wave technology retrofitted to the engine. However, the revised engine designs had been developed in a very short period of time and the fuel metering system had not been optimized for either of the engines, which would explain the loss in power. We believe, however, John Deere's efforts to retrofit the compression wave technology on these two Class V engines demonstrates the potential to apply the technology to Class V applications. Other manufacturers have also certified a number of advanced 2-stroke engine designs in California to meet the California ARB's Tier 2 HC+NO X standard for model year 2000. Among these engines, Komatsu Zenoah has certified two stratified scavenging with lean combustion engine designs at 66 g/kW-hr HC+NO X at a useful life of 300 hours with a 25.4cc engine and 53 g/kW-hr HC+NO X at a useful life of 300 hours with a 33.6cc engine. Stihl has certified an engine at 66 g/kW-hr HC+NO X at a useful life of 300 hours for a 56.5cc engine ( i.e ., Class V under our classifications). While neither John Deere's compression wave technology engine nor the Komatsu Zenoah stratified scavenging with lean combustion engines noted above currently meets the newly adopted emission standards alone, John Deere has informed us that perhaps 50% of their Class IV applications are expected to comply with the standards while relying on the compression wave technology only. This may be due to their expectations for further improvement to that technology and their ability to take advantage of averaging to reduce costs. Thus, the addition of a catalyst on at least some applications, along with further engine improvements should allow them to demonstrate compliance with the Phase 2 standards. Allowing for a 20% compliance margin to account for variances within production runs and less precise manufacturing from prototype models to production runs, the target certification level in Classes III and IV is estimated to be around 40 g/kW-hr HC+NO X for the technology prototypes ( i.e ., certification engines) at the end of their regulatory useful lives. The required catalyst conversion efficiencies for these engines to meet the target level noted above have been estimated using information from a number of sources. Engine-out emissions (without catalyst) at the end of the useful life are taken from the California ARB's Tier 2 certification data. HC+NO X emission deterioration information for the compression wave technology is also obtained from the California ARB certification data, which states the deterioration for the compression wave technology is 1.1. HC+NO X emission deterioration information for the stratified scavenging with lean combustion is estimated from EPA test data (Docket A-96-55 Item VI-A-01) and is assumed to be 1.0. Finally, a 30% deterioration in catalyst efficiency is assumed as the catalyst goes from new to the end of the certification useful life. Using this information, it is estimated that, without improvements in engine emission performance, the new engine catalyst conversion efficiency for the 25cc compression wave technology engine would need to be approximately 50% (30 g/kW-hr HC+NO X ). For the 25.4cc stratified scavenged with lean combustion engine a 57% (38 g/kW-hr HC+NO X ) efficiency catalyst would be needed and for the 33.6cc stratified scavenged with lean combustion engine a 36% (19 g/kW-hr HC+NO X ) efficiency catalyst would be needed, given the current level of engine-out emissions. Concerns regarding catalyst heat management need to be addressed, especially in cases where high levels of HC+NO X need to be converted in a catalyst. However, given the fact that catalysts used on currently certified handheld engines have been shown to have conversion efficiencies in the range cited above, the amount of lead time available to manufacturers prior to the implementation of the Phase 2 standards will be sufficient for manufacturers to implement additional engine and equipment improvements such that catalysts may be utilized on handheld engines without catalyst heat management concerns. Further, we believe that John Deere's, Ryobi's, and Echo's support of the 50 g/kW-hr standard supports the conclusion that if catalysts are used then catalyst heat issues can adequately be addressed. Although the current California standards are somewhat less stringent than the federal standards being adopted today, the fact that catalysts are being used in some of these California certified applications demonstrates that manufacturers have the ability to design equipment adequately addressing catalyst temperature issues. We believe that the leadtime available before implementation of this rule and the period during phase-in to the final standards will allow additional improvements in engine-out emission performance. These improvements will include refinements of the fuel metering technology, improvements in combustion chamber and piston head design, and improvements in spark ignition via such devices as the Pyrotek spark plug mentioned earlier. Lastly, as the test data from the California ARB certification list shows, emissions of larger engines (as illustrated in comparison of the 25.4cc and 34cc stratified scavenged with lean combustion engines) decrease with increased engine size and therefore catalyst conversion requirements (and catalyst temperatures) will not be as high with larger Class IV engine displacements. It should be noted that for Class V (engines with displacement above 50cc), we do not believe that manufacturers will need to employ catalysts to meet the standards being adopted today, and therefore catalyst heat management concerns should not be a concern. Although 2-stroke engines currently dominate the handheld engine market, we have determined that 4-stroke engines have the potential to achieve a significant share of the handheld market in the future. Ryobi, one of the biggest manufacturers of handheld equipment, has commented that it intends to expand the number of 4-stroke models available under the Phase 2 program. Three manufacturers have recently certified 4-stroke engines with the California ARB for the 2000 model year Tier 2 program that are used in handheld applications. Fuji Heavy Industries has certified a 4-stroke engine at 17 g/kW-hr HC+NO X for a useful life of 125 hours with a 24.5cc engine. Komatsu Zenoah has certified a 4-stroke engine at 31 g/kW-hr HC+NO X for a useful life of 300 hours with a 26.4cc engine. Ryobi has also certified two different 4-stroke engine families at 15 g/kW-hr HC+NO X for a useful life of 50 hours and at 21 g/kW-hr HC+NO X for a useful life of 300 hours. Both of these designs are on a 26.2cc engine. All of the 4-stroke engines noted above would be expected to meet the standards adopted today without use of a catalyst. In the July 1999 SNPRM, we requested comment on a number of items related to the standards and the technologies we considered in developing the reproposed standards. The bulk of the comments received on the July 1999 SNPRM focused on the technologies, standards and implementation schedule proposed in the SNPRM. The following paragraphs summarize the major comments received and our responses. The full set of comments and more detailed responses related to the technologies, standards and implementation schedule can be found in the Summary and Analysis of Comments Document. John Deere, Ryobi, and the California ARB supported the reproposed standards and suggested an additional change in the HC+NO X standard for Class V to 50 g/kW-hr. John Deere asserted that compression wave technology is available for meeting a 50 g/kW-hr HC+NO X standard in all classes. Ryobi commented that the 4-stroke engine is capable of meeting a 50 g/kW-hr HC+NO X standard in all classes. One additional engine manufacturer, Echo, supported the standards as proposed. A number of other engine manufacturers opposed the HC+NO X standards, including Husqvarna/Frigidaire Home Products (FHP), Stihl, and Tecumseh. Technical feasibility concerns regarding the technologies noted in the July 1999 SNPRM were the focus of comments from those in industry who opposed the reproposed HC+NO X emission standards. (The July 1999 SNPRM noted that technologies such as John Deere's LE engine with a catalyst, Komatsu Zenoah's stratified scavenging with lean combustion engine with a catalyst, and 4-stroke engines are all technologies which have shown or have the potential to achieve the proposed standards on all or a portion of the engines covered in this rulemaking. For Class V engines, the July 1999 SNPRM noted that catalysts would likely not be required to meet the standards.) Two handheld industry associations supported the CO standards as proposed. Several months after the close of the comment period for the July 1999 SNPRM, we received comments from the Sierra Club and from the State and Territorial Air Pollution Program Administrators/Association of Local Air Pollution Control Officials (STAPPA/ALAPCO) asking us to adopt more stringent standards for Class V, and to expedite the effective dates for all of the handheld standards, based on their belief that manufacturers could meet such standards on a more accelerated schedule. We also received comments from equipment users and representatives of the forestry industry expressing concern about the potential impact of these regulations on safety, in particular a concern that chainsaws could cause a fire hazard if their exhaust systems became very hot. With regard to John Deere's compression wave technology, we requested comments on the likelihood that cost-effective solutions can be made available over the next two to three years across the full range of handheld engines and applications. John Deere, Stihl, and Husqvarna/FHP commented on this item. While John Deere had nearly completed a successful prototype on a Class IV trimmer engine prior to the July 1999 SNPRM, it was constructing a preliminary prototype for a 70cc Class V chainsaw engine during the comment period and was able to submit a video and emission test results showing successful preliminary application of the technology to a Class V chainsaw in their comments on the July 1999 SNPRM. Stihl and Husqvarna/FHP also each submitted comments stating that they conducted individual short term studies on their interpretation of the compression wave technology on Class V and Class IV chainsaw engines, respectively. As detailed in their comments, the results of their limited studies lead Stihl and Husqvarna/FHP to believe that the technology is not feasible based on a number of issues with their chainsaw prototypes. After the close of the comment period, John Deere submitted additional feedback on the analysis performed by Stihl and Husqvarna on their respective prototypes. While John Deere did address the majority of each company's concerns listed in their reports, John Deere also acknowledged that more development time is needed in order to optimize the system for Class V applications and to determine if an additional lubrication system will be necessary on chainsaw and similar application engines. Nevertheless, based on the fact that John Deere has been successfully developing the technology for approximately one year, and has shown us that it can in this relatively short period of time, address the majority of issues that have been raised by Stihl and Husqvarna, we have concluded that the compression wave technology holds a great deal of promise and that industry will be able to address all issues raised in the lead time provided under today's rule. Under today's action, Class V engines have until 2004 to start certifying, and this is sufficient time for engine manufacturers to develop the compression wave technology, or stratified scavenging with lean combustion, or develop their own technology, for Class V engines. Therefore, we conclude that the issues raised by Stihl and Husqvarna regarding technological feasibility do not undermine the achievability of the Class V standards, since adequate technology will be available. With regard to the more stringent Class V standard supported by John Deere, Ryobi, and the California ARB, we do not believe the existing information provides us with a high enough degree of certainty to determine that a tighter standard is feasible for all applications within the leadtime provided by the rule. As noted earlier, John Deere has submitted information on two Class V engines equipped with the compression wave technology. The test results show that emission levels close to the standard are currently achievable on the larger engines as well. However, as noted earlier, the redesigned engines were not fully developed to address all issues, including emissions deterioration over the longest useful life category to which Class V engines are expected to certify. Based on John Deere's experience with applying the compression wave technology to its 25cc engine, at least in the near term, emissions will likely increase as the system is redesigned to address issues needed to make the engine production ready and deliver maximum performance. In addition, while we are optimistic that low deterioration can be demonstrated, the deterioration characteristics of the compression wave technology out to 300 hours remain unknown at this time. Due to these concerns, we cannot be as certain that Class V engines can achieve a standard of 50 g/kW-hr as is being adopted for Class III and IV engines and applications within the timeframe of implementation of the Class V standards. Therefore, for Class V we are adopting the 72 g/kW-hr HC+NO X standard as proposed. It should be noted that the Class V standards during the phase-in period differ from those proposed because of the revised four year implementation schedule described below. With regard to the provisions of the patent as offered by John Deere for the compression wave technology, the licensing fee printed in John Deere's literature had been claimed to be excessive by some in the industry. We therefore requested comment on the licensing fees suggested by John Deere, the impact such fees would have on competition given the cost for other technology options, and the level of the licensing fee necessary to allow this licensed technology to be a more cost effective option for other manufacturers. Manufacturers claimed that the provisions of the current licensing agreement offered by John Deere are unworkable since they include provisions that development work is the responsibility of the licensee, and any patentable ideas a manufacturer develops become the property of John Deere. One manufacturer stated that the small engine industry typically bases royalties (usually 1 to 4%) on the cost of the component and not the cost of the equipment as John Deere has established. In addition, typical per unit profits in the consumer market are claimed by some manufacturers to be well below the minimum fee of $7.50 proposed by John Deere and, according to these manufacturers, a license fee of $7.50 would drive out competitors from the market. While the provisions of the licensing agreement currently published by John Deere may not be acceptable to other manufacturers, especially those that compete directly against John Deere in the consumer market, we are confident that future competing technologies, such as the stratified scavenging with lean combustion engine and the 4-stroke engine, will lead to lower licensing fees and perhaps licensing agreement provisions for all technologies which the licensee will find more favorable. Therefore, we do not view the initial licensing fee proposal offered by John Deere to be an impediment to the availability of LE technology for purposes of achieving the standards adopted today. The fact that no manufacturer has agreed to pay the license fee as proposed by John Deere suggests that it is too high and will necessarily have to be lowered. However, we do not know what the ultimate level of the licensing fee will be and therefore, for cost purposes, we have assumed the levels proposed by John Deere. Lower license fees would obviously result in lower overall costs of this technology and reduced impacts on consumer prices. With respect to other low emission technologies, we requested information on the idea that 4-stroke engines could be used for the majority of Class IV applications. The July 1999 SNPRM also stated that it is likely the 4-stroke would be applicable to the smallest of Class V engines. We received comments questioning the applicability of 4-stroke engines in all handheld applications and expressing concerns about the heavy weight of the 4-stroke engine design, its slow acceleration, lower power, decreased durability due to the increased number of parts compared to 2-stroke engines, and the need for new manufacturing facilities for 4-stroke engines. Additional comments also questioned whether 4-stroke engines can be useful to the commercial user. Other comments supported use of 4-stroke engines and noted that they are currently used to power trimmers and brushcutters and weigh little more than comparable 2-stroke engines. In addition, commenters noted that 4-strokes provide more power in the lower engine speed range and no oil/fuel mixing is required. Considering all of these comments and the fact that manufacturers are already certifying low-emitting 4-stroke engines for use in handheld applications under the California ARB's Tier 2 program, we have concluded that the 4-stroke engine has a significant place among the technologies capable of meeting the finalized standards. However, 4-stroke engines may not be the manufacturer's preferred choice for all engine displacements or equipment applications. While the 4-stroke is currently being applied in Class IV applications, such as trimmers, it may be a less desirable solution for Class III due to the cost of developing whole new 4-stroke engines for the few engine families in this class. (Class III applications tend to be the lowest priced consumer products.) The low volumes of the majority of Class III engine family sales may make the 4-stroke engine a less cost effective solution than other technologies unless the engine block and components can be adapted from a larger Class IV engine production line. Some manufacturers may find the cost of the 4-stroke technology on Class III equipment to be too large compared to the retail price, especially given the consumer market focus for these engines. For Class V engines we are confident that the 4-stroke engine design can be adapted to equipment in the lower displacement Class V engines. However, 4-stroke engines have not been demonstrated in the larger Class V applications where manufacturers have especially expressed concerns over potential increased weight, ergonomic problems, and the need to assure sufficient lubrication. To our knowledge, the manufacturers who currently market large displacement Class V equipment in the United States have no experience in designing and producing 4-stroke engines for handheld equipment, adding to their difficulty in applying this technology. Therefore, we conclude that 4-stroke technology will be cost-effective and widely available for Class IV engines, will be available but possibly less cost-effective for Class III engines, and will be available for at least the lower displacement Class V engines under the standards adopted today. However, we cannot similarly predict the applicability of 4-stroke technology for the largest displacement Class V engines within the time constraints for implementation of Class V standards. For stratified scavenging with lean combustion engine designs, comments were received asserting the inability of current designs with a catalyst to meet the standards proposed in the July 1999 SNPRM. As suggested evidence that lean combustion designs could not meet the proposed standards, one manufacturer stated that Kawasaki recently introduced a stratified scavenged 2-stroke engine with a catalyst that obtains 46 g/hp-hr (61.3 g/kW-hr) HC+NO X . Another manufacturer stated that the suggestion that stratified scavenging technology is a feasible way to achieve the proposed standards for Classes III and IV is unfounded. It cited the results of our recent testing that showed a prototype Komatsu Zenoah engine exceeded the U. S. Department of Agriculture's Forest Service (USFS) temperature requirements even without a catalyst. Komatsu Zenoah did not submit any comments on the July 1999 SNPRM. However, Komatsu Zenoah has developed 25.4cc and 33.6cc versions of this technology and certified them with the California ARB under the Tier 2 program at HC+NO X levels of 66 g/kW-hr for a useful life of 300 hours and 53 g/kW-hr for a useful life of 300 hours, respectively. (They are also certified to meet the USFS temperature requirements.) Neither of these engines is equipped with a catalyst. While our recent testing of their prototype trimmer did reveal concerns of high surface temperature of the exhaust housing, observation of the current muffler/housing arrangement revealed that the design was not optimized and that there was room for improvement in its design. While the California ARB certification emissions data shows that current engines equipped with stratified scavenging with lean combustion are emitting at levels above the 50 g/kW-hr HC+NO X standard adopted today for Class III and IV, our emission test data on Komatsu Zenoah's 25cc stratified scavenging with lean combustion engine with one medium/high and one medium efficiency catalyst ranged from 28 to 39 g/kW-hr HC+NO X , respectively. Using the data associated with the catalyst that yielded 28 g/kW-hr, and assuming a 30% deterioration of the catalyst and 10% deterioration of the engine, the resultant emission level in-use is estimated to be 48 g/kW-hr. While this result shows compliance with the standards adopted in this rulemaking can already be achieved with this technology, it is likely that emissions will need to be lowered even more either through engine improvements or better catalyst designs to allow for a compliance margin with production engines. Compliance with the USFS temperature requirements may also need to be further addressed. However, several years still remain before full compliance with these standards is required and we are confident that further development will bring this technology within reasonable emissions for use in meeting these standards. In addition, our testing was conducted on the 25.4cc engine, and application of this technology to larger displacement engines will result in lower emissions. This is seen in the California ARB certification results where emissions on the 33.6cc engine are lower than the emission on the 25.4cc engine. Therefore, we conclude that stratified scavenging with lean combustion plus a catalyst will be an available technology for meeting the Class IV standards. In regard to application of the stratified scavenging with lean combustion technology to Class V engines, we expect that the decrease in emissions with this technology in larger engines, as was shown in the comparison of the 25.4cc to the 33.6cc engines, to continue due to the favorable surface to volume ratios in larger displacement engines. This will be beneficial because catalysts should not need to be utilized on Class V engines and the degree of enleanment can be decreased and therefore provide the amount of lubrication needed in high speed applications, such as chainsaws. Therefore, we believe the technology will also be available for Class V engines under the standards adopted today. We conclude that the stratified scavenging with lean combustion technology should be available for Class III engines as well, but manufacturers will need to address the unfavorable surface to volume ratios in the smallest engines which tend to result in higher g/kW-hr emission levels, which suggest the need for higher efficiency catalysts. We requested comment on the status of catalyst technology development for handheld engine applications and the likelihood that catalysts will be able to be applied to the full range of handheld engine applications to meet the proposed standards and appropriate safety requirements. Three engine manufacturers commented on catalysts, one of which has three catalyst equipped trimmers in the marketplace, and one catalyst industry trade organization commented. Two manufacturers commented that heat dissipation is an important issue and claimed that meeting the USFS and UL-82 requirements will be difficult on all engine applications. Of particular concern are equipment such as chainsaws where the ability to redesign the engine housing is limited due to weight and power issues. A number of parties related to the timber industry have also submitted comments regarding their concern over potential forest fires with the use of catalysts on Class V commercial equipment. In regard to the application of catalysts in Classes III and IV, a variety of catalyst substrates exist in the marketplace today, including the traditional honeycomb substrate, a plate substrate (as currently used in several trimmer applications), and a circular wire mesh substrate. Some catalyst designs are able to achieve higher conversion percentage than others based on the available surface area of the catalyst. Data from our testing of two engines with low engine-out emissions retrofitted with catalysts (a Komatsu Zenoah stratified scavenging with lean combustion engine retrofitted with a flat plat and honeycomb catalyst, and a John Deere compression wave technology engine retrofitted with a prototype metallic sponge catalyst) have shown catalyst conversion efficiencies of 45% or higher. The main concern raised by manufacturers with the use of catalysts is safety and compliance with the USFS temperature requirements. Higher conversion efficiencies of the catalyst and higher exhaust flow rate (which tends to increase with engine size) both can result in higher catalyst and exhaust gas temperatures. The needed conversion efficiency of the catalyst and available cooling are factors that need to be addressed in order to successfully apply catalysts to small engines. While catalyst and muffler designs can influence the conversion efficiency, the ability to cool the muffler is largely dependent on the application. Leaf blowers can blow air past the muffler, and thereby can achieve a high degree of cooling. Trimmers typically have ample available space around the muffler and therefore can be designed to handle a certain amount of additional cooling by extending the muffler housing out beyond current equipment designs. (It should be noted that there are a number of such handheld applications currently certified, both federally and with the California ARB, that employ catalysts and also comply with the USFS temperature requirements.) Chainsaws on the other hand have compact packaging requirements and therefore have less flexibility in being able to handle increased amounts of cooling. The power of an engine will influence the amount of heat that is generated in a catalyst. The general trend is that while larger engines produce more power, they also have larger surface to volume ratios which typically means lower engine out emissions (on a g/kW-hr basis), therefore decreasing the needed efficiency of a catalyst to obtain a given emission standard in g/kW-hr. Therefore, in regards to various engine classes and applications, we conclude that because the large majority of Class III engines are trimmers, they have the capability to easily incorporate a low- to medium-efficiency catalyst and that any additional heat can be managed by muffler and muffler housing redesign. Class IV incorporates a large range of engine sizes and applications from trimmers to chainsaws. The low emitting 2-stroke engine technologies that will be available for these engines reveal that, except in the case of 4-stroke engines, a catalyst may be needed to certify to the emission standards being adopted today. The major sales application in Class IV is trimmers and, as with Class III, this application will be able to incorporate a fair degree of cooling with muffler and muffler housing redesign. Blowers will also be able to incorporate a catalyst with sufficient ability to achieve a high degree of cooling. Chainsaws using Class IV engines will be limited in the degree of catalyst conversion based on the tight packaging. However, such applications should still be able to meet the standards through controlling engine out emissions and the use of a catalyst. Additionally, averaging, banking and trading gives the manufacturer additional flexibility. Averaging, banking and trading can assist a manufacturer who may have Class IV chainsaws, or other more difficult cooling applications, in need of emission reduction by allowing the manufacturer to, for example, produce a chainsaw without a catalyst (thereby forgoing the cost and lead time associated with catalyst and cooling redesign) and, if emitting above the standard, offset these excess emissions with credits from lower emitting trimmers and blowers equipped with catalysts. With regard to Class IV 4-stroke engines, based on the certification data submitted by manufacturers to the California ARB, we believe that such engines will not require the use of a catalyst to meet the standards being adopted today and therefore will not have any heat issues that need to be addressed. Finally, with regard to Class V engines, the standards being adopted today have been set at levels that are not expected to require the use of catalysts. Therefore, Class V applications should not have any catalyst heat issues that need to be addressed. In the July 1999 SNPRM, we requested comment on the appropriateness of the proposed two year delay for Class V engines. We received comments on the phase-in schedule for the Phase 2 standards for all classes from two manufacturers (with relatively small number of engine families) recommending a shorter implementation schedule of one year or three years beginning in 2002 for all classes. The California ARB also requested a more expeditious timeline, recommending nationwide phase in of the standards within five years after the implementation of California's Tier 2 standard which took effect January 1, 2000. Sierra Club and STAPPA/ALAPCO also asserted that the standards can be met by all engines earlier than we proposed. One additional manufacturer (with a relatively large number of engine families) indicated that the timeline is not long enough to develop new technologies for the 50 g/kW-hr and 72 g/kW-hr standards. As noted earlier, in response to comments submitted on the July 1999 SNPRM, with today's action we are adopting a shorter phase in schedule than we proposed in the SNPRM. We are finalizing a four year implementation schedule instead the five year schedule proposed in the July 1999 SNPRM. Each manufacturer's position with regard to implementing new technologies is unique. While some manufacturers have a small number of families, or have sales heavily dominated by one or two large engine families, other manufacturers have many families and do not have sales dominated by any specific engine family. Therefore, in determining the appropriate implementation schedule, we must balance the need for those manufacturers which have large numbers of families to have adequate time to address all of their families against the environmental benefit of achieving emission reductions as soon as possible. Based on the number of families currently certified by small SI engine manufacturers, we have determined that a four year implementation schedule of the Phase 2 standards is feasible, especially when taking into consideration the benefits of the averaging, banking, and trading program as well as the flexibilities provided for small volume engine manufacturers and small volume engine families. Some commenters requested us to adopt an even more aggressive schedule than a four year phase-in. However, we believe the leadtime before the standards are scheduled to take effect is appropriate. The HC+NO X standards being adopted today for Class III and Class IV are more stringent than the California ARB's HC+NO X standards for these engines ( i.e., 72 g/kW-hr for engines 0-65cc with the exception of exempted applications), on which industry had been focusing and developing technologies over the past few years, and will necessitate additional effort and time to assure compliance. Additionally, these will be the first low emission standards to apply to many of the Class V engine families which are used in certain farm and construction equipment applications and are exempted from meeting the California ARB standards. In addition, we believe that industry will benefit from additional lead time since in the near term they will be finishing development of products for the California market that meet the California ARB Tier 2 emission standards for small SI engines. Furthermore, we believe the schedule of standards being adopted today will allow manufacturers to sell their engines designed to meet the California ARB Tier 2 standards nationwide for a number of years, recouping the investments made for such designs, while redesigning their product offerings to meet the proposed HC+NO X standards on average. Finally, because most of the Class V engines are exempt from the California ARB Tier 2 requirements, and because the manufacturers of most Class V engines also have significant numbers of Class IV engines to redesign, we are retaining the delayed implementation schedule for Class V engines as proposed, as modified to accommodate a four year phase-in period. In addition to the standards contained in the July 1999 SNPRM, we requested comments on the costs, feasibility, and other effects of complying nationwide with a 72 g/kW-hr HC+NO X standard for all three classes of handheld engines. Specific areas on which we requested comment included the engine designs and technologies that would be used to comply with a 72 g/kW-hr HC+NO X standard, the cost of adopting such technologies (both relative to engines currently certified under the Phase 1 program and as an extension of production of California compliant engines), and the potential for such Class III and Class IV engines to be modified to meet a 50 g/kW-hr HC+NO X standard. We also requested comment on an alternative set of standards (72 g/kW-hr for Classes III and IV and 87 g/kW-hr for Class V) supported by a number of engine manufacturers in previous discussions with us. In response to these requests, Husqvarna/FHP and Stihl submitted comments supporting the standards of 72 g/kW-hr for Classes III and IV and 87 g/kW-hr for Class V noting that technologies they were selecting to meet those levels for purposes of meeting the California ARB standards would not be able to be modified to meet the reproposed standards of 50 g/kW-hr for Classes III and IV and 72 g/kW-hr for Class V. Husqvarna/FHP also submitted a study performed by National Economic Research Associates (NERA) examining the cost effectiveness of the standards supported by Husqvarna/FHP (relative to the Phase 1 standards) and the cost effectiveness of the standards contained in the July 1999 SNPRM (relative to the standards supported by Husqvarna/FHP). The results of the NERA study suggested that the cost effectiveness of the standards supported by Husqvarna/FHP relative to Phase 1 were significantly lower than the cost effectiveness of the reproposed standards (relative to the standards supported by Husqvarna/FHP). For more discussion of this study, including our response, see section III.B. below. We note that in the course of this rulemaking we have proposed and considered a variety of alternative approaches to the Phase 2 handheld program, and that our thinking has evolved in parallel with the industry's recent and rapid technological development. In many respects, our developing rule would become more stringent with each proposed approach, but in many others it would become less so. For example, our March 1997 ANPRM and our January 1998 NPRM reflected significantly less stringent proposed standards that would phase in according to production percentages, with all three handheld classes having to meet the final standards by 2005. Under that alternative approach, there would have been a mandatory in-use testing program, and no ABT program. Under the ANPRM, there were no flexibility provisions under consideration, and we would have committed to conducting a technology review for possibly more stringent Phase 3 standards by 2002. Under the NPRM, the proposed flexibility provisions would have applied much more narrowly for “small volume” engine families, equipment manufacturers, and equipment models. However, as some manufacturers' technical options for reducing emissions from handheld engines rapidly and dramatically increased over the rulemaking, thereby increasing the amount of emissions reduction achievable from handheld engines in general, we developed additional alternatives and refined and/or eliminated earlier considered alternatives. This was driven by Clean Air Act section 213(a)(3)'s requirement that our rule achieve the greatest degree of emissions reduction achievable through the application of technology that we determine will be available within the lead time provided by the program, and by our developing understanding of what kind of program would be needed in order to ensure those emissions reductions are obtained. For example, we now know that the initially considered standards in the ANPRM and NPRM are not sufficiently stringent to meet the requirements of the Act, as they were premised on a much more limited set of technological options than we now know will be available. Similarly, while some manufacturers have continued to advocate the standards of 72/72/87 g/kW-hr for Classes III-V that we were considering in late 1998, based on the continuing development of clean technology by other manufacturers we have determined that such standards would also fall short of meeting section 213(a)(3)'s requirements, in that they would result in losing approximately 13 percent of the emissions reduction achieved by the final standards using technology we have determined will be available and would not prompt all manufacturers to shift to these more innovative and cleaner engine technologies. This is because standards of 72/72/87 g/kW-hr could be met, indefinitely, without having to convert to the available technology options that support our final standards, and the substantial emission reduction benefits of converting to those technologies would be lost. In order to adopt the 72/72/87 g/kW-hr standards that these particular manufacturers support, we would have to conclude that the technologies underlying standards of 50/50/72 g/kW-hr will not be available in the lead time provided by the rule considering costs, safety, energy, and noise impacts, even in the face of evidence supplied by other manufacturers that these technologies and the more stringent standards are achievable. Since we do not believe we could validly reach such a conclusion and still meet the requirements of the Clean Air Act, we must eliminate the manufacturer-supported standard set of 72/72/87 g/kW-hr as a potential alternative that achieves the objectives of the rule. While it may be true that the technologies certain manufacturers have been developing to meet the California ARB's Tier 2 standards will not be capable of meeting the tighter standards being adopted today, we have concluded that the standards being adopted today are the most appropriate standards given the requirements of section 213(a)(3) of the Clean Air Act, which requires our standards for nonroad engines and vehicles to achieve the greatest degree of emission reduction achievable through the application of technology which the Administrator determines will be available, giving appropriate consideration to cost, lead time, noise, energy and safety factors. This statutory requirement is a technology-forcing provision that reflects Congress' intent that our standards encourage manufacturers to shift their production to more innovative, environmentally friendly technologies. It does not mean that our standards should be able to be met by all currently used technologies or preclude our standards from rendering less innovative and environmentally beneficial technologies obsolete. In addition, as described later in section III.B., the cost effectiveness of the adopted standards (relative to the currently applicable Phase 1 standards) is in the range of other nonroad programs we have adopted in recent years. It should also be noted that manufacturers who have invested in technologies not capable of meeting the Phase 2 standards being adopted today, but capable of meeting the slightly less stringent California ARB HC+NO x standard of 72 g/kW-hr, will still be able to certify such technologies under the Phase 2 program and earn credits in the ABT program during the transition years. Such credits will help them as they transition their entire selection of engines to meet the Phase 2 standards being adopted today. Manufacturers who have not yet developed compliant technologies can learn from the technologies already developed and/or expand the application of these technologies to their own production lines. With regard to emissions of particulate matter (PM), the July 1999 SNPRM did not propose any standards. Nor did the SNPRM take any position regarding whether such standards would be appropriate. However, we requested information on PM emissions from handheld engines and the need for PM standards for small SI nonroad engines under section 213(a)(4) of the Clean Air Act. Two industry associations commented that they did not support establishing PM limits. The California ARB stated it recommend the study of PM and toxics from handheld engines and that a study include the classification and ranking of the toxicity of emissions from various 2-stroke designs compared to diesel PM emissions. We are not prepared to establish PM standards under section 213(a)(4) of the Clean Air Act at this time. However, we have agreed with other parties that a PM and hazardous air pollutant (HAP) test program should be conducted (see 62 FR 14746). The Portable Power Equipment Manufacturers Association (PPEMA), in cooperation with us, has agreed to conduct a test program to evaluate and quantify emissions of PM and HAP including, but not limited to, formaldehyde, acetaldehyde, benzene, toluene, and 1,3 butadiene. We anticipate that testing will be conducted on Phase 2 technology handheld engines, with a sufficient magnitude of engines tested to represent the range of new basic technologies used to comply with the Phase 2 engine standards being adopted today. We expect that the information generated by this program will be useful in informing any future consideration of PM or HAP standards for small SI engines. In the July 1999 SNPRM, we proposed the addition of two nonhandheld classes and standards for each class that would be implemented upon the effective date of the final rule. We specifically requested comment on the assumption that 2-stroke engines would not proliferate into these new classes, on the level of the proposed standards, and the feasibility of achieving tighter emission standards with OHV, SV and 2-stroke engines. We received a number of comments related to the proposed Class I-A and Class I-B provisions. In general, engine manufacturers supported the proposed program for Class I-A and Class I-B engines, including the proposed standards. One engine manufacturer commented that we should consider tightening the standards because catalysts are more practical on nonhandheld applications. In terms of concern of 2-stroke lawnmowers proliferating into these new classes, several engine manufacturers stated that the power requirements of the lawnmower will not allow such small engines to be used in the application. (Under our Phase 1 program, engine manufacturers are allowed to certify a limited number of 2-stroke engines for use in lawnmowers to the handheld engine standards through the 2002 model year. Beginning with the 2003 model year, such engines will be required to meet the applicable nonhandheld engine standards.) One manufacturer commented that the standards are so low in the proposed classes that the only 2-stroke engine likely to be able to meet such standards in applications is a 2-stroke with fuel injection, which would be prohibitively expensive and therefore commercially unrealistic. Finally, one manufacturer that currently certifies an engine that would be considered a Class I-B engine under the proposed changes, submitted comments suggesting that we consider a short delay in implementing the Class I-B standards because of difficulty in recertifying current engines in a such short period of time. With today's action, we are adopting the Class I-A and Class I-B standards as proposed. Table 3, presented earlier, contains the Phase 2 standards being adopted for Class I-A and Class I-B engines. Based on the comments submitted by manufacturers, we do not believe there is any need to be concerned at this time over the possibility of 2-stroke engines proliferating in these nonhandheld engine classes. With regard to the issue of tighter standards through the application of catalysts raised by one manufacturer, we believe that issue should be addressed in future rulemakings that affect all nonhandheld engines, since the current standards for Phase 2 nonhandheld engines were set at levels that did not consider the use of catalysts. With regard to the implementation date of the new standards, we are adopting a slight delay for implementation of the Class I-A and Class I-B standards to the 2001 model year. Under the provisions of the July 1999 SNPRM, implementation of the Class I-A and Class I-B standards would have begun upon the effective date of the final rule, which is 60 days after publication in the Federal Register . This would have meant a manufacturer would have to immediately recertify current Phase 1 designs that fall under the 100cc displacement cutoff for Class I-A and Class I-B. We do not believe this is necessary given the limited number of engines expected to covered by these provisions. Therefore, under today's action, manufacturers may wait until the 2001 model year to certify engines below 100cc to the Class I-A and Class I-B provisions. We received comments from a large number of logging related companies requesting an exemption for professional and commercial chainsaws above 50cc from the Phase 2 regulations. The parties expressed concerns that increased weight could lead to operator fatigue and a greater risk of injury, about power loss, cost, limited impact of such equipment on the environment, and forest fire/safety concerns from catalysts. They also noted these applications are already subject to Phase 1 requirements. Under today's action, handheld engines used in professional and commercial chainsaws above 50cc (i.e., Class V engines) will be required to meet the Phase 2 standards. We are aware of the impact that increased weight can have on a logger that utilizes the equipment on a regular basis as well as the concern over the increased risk of potential forest fires with the use of catalysts. However, we conclude that manufacturers of engines used in professional chainsaws will be able to meet the standards being adopted today for Class V through the use of technologies such as the stratified scavenging with lean combustion technology or compression wave technology which do not have significant impacts on equipment weight or power. In addition, the estimated increase in equipment cost due to the Phase 2 standards compared to the current cost of such equipment is estimated to be at or below 10 percent. With regards to the use of catalysts on these applications, we believe the standard for Class V engines being adopted today and the technologies expected to be available for meeting the standards will not require the use of catalysts on these engines. Therefore the increased exhaust temperature concerns noted by commenters are not expected to be an issue for these engines. As described in section II.A.2 of the Preamble and Chapter 3 of the RIA, EPA's conclusion is that the standards adopted today, considering the lead time provided and other flexibility provisions such as averaging, banking, and trading, are technologically feasible for this industry and appropriate under section 213 of the Clean Air Act. At the same time, EPA recognizes that certain manufacturers who will be subject to these provisions believe that the standards may not be technologically feasible for them. This issue was most clearly raised with respect to the Class V standards, even though Stihl has certified a Class V engine in California at levels that would meet our final standards. While EPA's adoption of the standards reflects our view that our Class V standards are achievable, EPA also believes that it is appropriate in responding to the manufacturers' comments and concerns to establish a procedure that will allow all members of the regulated industry as well as other interested parties to continue to explore the issue of technological feasibility of the Class V standards as industry makes progress in moving towards implementation of this program. EPA is therefore committing to perform a study of the technological feasibility of the Class V standards we are adopting today, to be completed by the end of 2002. EPA intends the technology study to focus on availability of technology, certification data, in-use performance, and other factors of interest to the parties, such as availability and pricing of credits. EPA expects that this study will involve EPA discussion with individual manufacturers, as well as a public notice and comment process exploring the issues of technological feasibility for Class V. 3. NMHC+NO X Standard for Class I-B Natural Gas-Fueled Engines In the July 1999 SNPRM, we proposed standards for Class I-B engines fueled by natural gas. We also requested comment on the need to establish standards for Class I-A engines operated on natural gas. No comments were received on either of these issues. We are finalizing the NMHC+NO X standard for Class I-B natural gas-fueled engines as proposed. To be consistent with the implementation date for Class I-A and Class I-B noted in section II.A.3., the standard for Class I-B natural gas-fueled engines will take effect with the 2001 model year. 4. Useful Life Categories With today's action, we are adopting the three different useful life categories for handheld engines as proposed. Therefore, a manufacturer will choose between useful life categories of 50, 125, and 300 hours. A manufacturer would be responsible for demonstrating compliance with the Phase 2 handheld engine standards described in today's action at whichever useful life level it designated for its engine families. We believe that 50 hours is appropriate for most of the products targeted at the home consumer and 300 hours is appropriate for products targeted at the commercial market. Some engines targeted for home consumer use (including some new engines which are expected to enter the market in the next few years) are expected to have designs which tend to be more durable than the 50 hour consumer grade designs yet are not as durable as the 300 hour commercial grade designs. Such engines can be certified to the intermediate useful life category of 125 hours. For the newly designated category of Class I-A engines, we are adopting the handheld engine useful life categories of 50, 125, and 300 hours, as proposed. We believe the engine designs in Class I-A will be similar to handheld engines in terms of design durability. In addition, the useful life designations for Class I-A engines are the same as those established by the California ARB in its Tier 2 rule for engines of this size range. For the newly designated category of Class I-B engines, we are adopting useful life categories of 125, 250 or 500 hours, as proposed. These useful life categories are the same as we finalized for Class I nonhandheld engines in March 1999 because we believe the engines designs in Class I-B will be similar to Class I nonhandheld engines in terms of design durability. In addition, the useful life designations for Class I-B engines are the same as those established by the California ARB in its Tier 2 rule for engines of this size range. 5. Selection of Useful Life Category As proposed in the July 1999 SNPRM, today's action assigns the responsibility for selecting the useful life category to the engine manufacturer. For manufacturers of handheld engines, virtually all engines are placed in specific equipment also manufactured by the engine manufacturer or, in those cases where engines are supplied to another equipment manufacturer, into equipment well known by the engine manufacturer. Handheld engine manufacturers know the design features and performance characteristics of both their engines and the equipment in which they are installed, and understand the expected in-use operation of this equipment and thus the expected useful life of the engine. Additionally, based on design features these manufacturers build into their engines, they have a good idea of the expected useful life in such applications. Similarly, we expect that manufacturers of Class I-A and Class I-B engines will have a good idea of the types of equipment their engines are expected to be used in and, from their marketing information, a reasonably accurate projection of the relative volumes in such applications. Given that many of these engines will be used in new applications, manufacturers should have an even clearer understanding of these projections. Relying on this information, manufacturers should be able to make good selections of appropriate useful life categories for their engines. While today's action leaves the responsibility of selecting the useful life category to the manufacturer, we expect that we would periodically review manufacturers' decisions to ensure this regulation is being properly implemented and to determine whether modifications to the rules are appropriate. We believe it is important that appropriate useful life periods be selected especially because handheld engines, Class I-A engines, and Class I-B engines covered by today's action are included in the ABT program where the useful life period selected by the manufacturer has a direct impact on the number of credits which can be generated or need to be used. Therefore, proper selection of the useful life period is important to ensure that the ABT program is fair and environmentally sound. 6. Certification Test Procedure With today's action, we are retaining the current test procedure used by manufacturers to certify handheld engines with one change that was proposed in the January 1998 NPRM. For Phase 2, the weighting of the two different test modes used for calculating certification emission levels for handheld engines is being changed to 85 percent for the wide open throttle mode and 15 percent for the idle mode. The revised weightings are based on information submitted by manufacturers on actual handheld equipment being operated in real world conditions. (The weighting of the modes for Phase 1 handheld engines is 90 percent for the wide open throttle mode and 10 percent for the idle mode, and will remain so for the duration of the Phase 1 program.) B. What Are the Provisions of the Averaging, Banking, and Trading Program? With today's action, we are adopting provisions to include all Phase 2 handheld engines and the newly designated nonhandheld engine classes (Class I-A and Class I-B) in the certification averaging, banking, and trading (ABT) program adopted in the March 1999 final rule for Phase 2 nonhandheld engines. Averaging means the exchange of emission credits among engine families within a given engine manufacturer's product line. Averaging allows a manufacturer to certify one or more engine families to Family Emissions Limits (FELs) above the applicable emission standard. However, the increased emissions have to be offset by one or more engine families certified to FELs below the same emission standard, such that the average emissions in a given model year from all of the manufacturer's families (weighted by various parameters including engine power, useful life, and number of engines produced) are at or below the level of the emission standard. Banking means the retention of emission credits by the engine manufacturer generating the credits for use in future model year averaging or trading. Trading means the exchange of emission credits between engine manufacturers which then can be used for averaging purposes, banked for future use, or traded to another engine manufacturer. The following section describes the ABT program as it will apply to handheld engines, Class I-A engines, and Class I-B engines. The basic framework of the ABT program is the same as that finalized for nonhandheld engines in March 1999. To address comments submitted on the July 1999 SNPRM relating to the stringency of the standards and the phase-in periods, we have made a number of changes to the ABT program proposed in the July 1999 SNPRM and such changes are noted in the following section. In addition, the Summary and Analysis of Comments Document contains a complete description of comments received on the proposed ABT program and our response to those comments. Because the Phase 1 rule did not include an ABT program, this will be the first ABT program for handheld engines. We believe the ABT program is an important element in ensuring that the stringent Phase 2 emissions standards being adopted today will be achievable with regard to technological feasibility, lead time, and cost. The ABT program is intended to enhance the flexibility offered to engine manufacturers that will be needed in transitioning their product lines to meet the stringent HC+NO X standards being adopted with today's action. The ABT program also encourages the early introduction of clean engines certified under the Phase 2 requirements, thus securing earlier emission benefits. We believe that the ABT program being adopted for handheld engines, Class I-A engines, and Class I-B engines is consistent with the statutory requirements of section 213 of the Clean Air Act. Although the language of section 213 is silent on the issue of averaging, it allows us considerable discretion in determining what regulations are most appropriate for nonroad engines. The statute does not specify that a specific standard or technology must be implemented, and it requires us to consider costs, lead time, safety, and other factors in making our determination of the greatest degree of emissions reduction achievable through the application of technology which will be available. Section 213(a)(3) also indicates that our regulations may apply to nonroad engine classes in the aggregate, and need not apply to each nonroad engine individually. As noted above, the ABT program will apply to all classes of handheld engines as well as Class I-A and Class I-B engines. The ABT program will be available for HC+NO X emissions but will not be available for CO emissions. The ABT program will also apply to natural gas-fueled engines. All credits for natural gas-fueled engines will be determined against the standards to which the engine is certified (either the HC+NO X standard or the optional NMHC+NO X standards noted earlier). Under the program being adopted today, manufacturers are allowed to freely exchange NMHC+NO X credits with HC+NO X credits. Today's action places no restrictions on credit exchanges across any of the classes of small SI engines. Under the ABT program, manufacturers will be allowed to exchange credits from handheld engines to nonhandheld engines and visa versa. Given the stringent level of the standards recently finalized for nonhandheld engines and the stringent level of the standards contained in today's final rule, we do not expect that credits from one class will result in delays in technology improvement for other classes, and do not believe that any cross-class restrictions are necessary. Under an ABT program, a manufacturer establishes a family emission limit (FEL) for an engine family that takes the place of the emission standard for all compliance determinations. In addition, as part of the ABT program, we establish upper limits on the FEL values that may be declared by manufacturers. The FEL upper limits contained in the July 1999 SNPRM for handheld engines were 300 g/kW-hr for Class III engines, 246 g/kW-hr for Class IV engines, and 166 g/kW-hr for Class V engines and were based on the combination of the Phase 1 HC standard and NO X standard. One engine manufacturer submitted comments on the proposed FEL upper limits and suggested that they should be raised by 12 percent to account for differences between the Phase 1 and Phase 2 programs. The differences specifically cited by the manufacturer that could cause current Phase 1 engines to exceed the proposed FEL upper limits included the change in the weighting of the two test modes (when calculating certification emission levels) and the need to factor in deterioration over the useful life of the engine. While most current engines are certified well below the Phase 1 emission standards, we agree that certain engines, especially those certified closer to the Phase 1 standards, could exceed the proposed FEL upper limits under the Phase 2 program, primarily because the new weighting of the individual test modes in Phase 2 will lead to a higher certification level for such engines, and to a lesser extent because of potential deterioration over the useful life that must be accounted for under the Phase 2 program. Therefore, we are adopting FEL upper limits suggested by the manufacturer that are slightly higher than those proposed in the July 1999 SNPRM to account for the differences between the Phase 1 and Phase 2 programs noted above. The HC+NO X FEL upper limits being adopted with today's action are 336 g/kW-hr for Class III engines, 275 g/kW-hr for Class IV engines, and 186 g/kW-hr for Class V engines. For the newly designated categories of Class I-A and Class I-B engines, we did not receive any comments on the proposed FEL upper limits. Therefore, we are adopting HC+NO X FEL upper limits of 94 g/kW-hr and 50 g/kW-hr, respectively, as proposed. Under the ABT program, all credits will be calculated based on the difference between the manufacturer-established FEL and the Phase 2 HC+NO X standard for the applicable model year using the following equation. Credits = (Standard−FEL) × Production × Power × Useful life × Load Factor At the time of certification, manufacturers will be required to supply to us the appropriate information used in the above noted equation. “Production” represents the manufacturer's U.S. production of engines for the given engine family, excluding exported engines and engines that are introduced into commerce for use in California. “Power” represents the maximum modal power of the certification test engine over the certification test cycle. “Useful Life” is the regulatory useful life established by the manufacturer for the given engine family. “Load Factor” is a constant that is dependent on the test cycle over which the engine is certified. In order to demonstrate compliance with the applicable HC+NO X emission standard in a given model year, a manufacturer participating in the ABT program will be required to show that the number of HC+NO X credits available to the manufacturer are equal to or greater than the number of credits needed by engines certified with FELs above the applicable standards in that model year. This will be done by using credits generated in that model year by engines certified with FELs below the applicable standard, banked credits, or credits obtained in a trade from another small SI engine manufacturer. With regard to credit life, the final rule differs from the proposed provisions of the ABT program in order to address comments received on the SNPRM relating to the stringency of the standards and the phase in periods. Under the ABT provisions being adopted today for handheld engines, manufacturers will be able to select from two options for the purpose of generating credits. These two programs also have unique credit life opportunities. Under the program referred to as the “Normal Credit” program, manufactures certifying engine families with FELs at or below 72 g/kW-hr will have an unlimited credit life. Such credits will be available to the manufacturer for the duration of the Phase 2 program and will not be discounted in any manner under the Normal Credit program. Credits generated by engines certified with FELs above 72 g/kW-hr can be used by a manufacturer in the model year in which they are generated for its own averaging purposes, or traded to another manufacturer to be used for averaging purposes in that model year. However, such credits generated by engines may not be carried over to the next model year, including when traded to another manufacturer. Alternatively a manufacturer may choose to have a family participate in what is referred to as the “Optional Transition Year” credit program. Under this program, any family with FELs below the applicable phase-in standards is eligible to generate credits. However, these credits will be progressively discounted the higher the family's FEL is compared to the final standards for that class. For example, in Class IV, a family with an FEL 99 g/kW-hr or higher in 2002 will have its credits discounted by 75 percent before they can be used in future model years. If the family's FEL was equal to 87 g/kW-hr but less than 99 g/kW-hr, its credits will be determined by the difference between its FEL and the Class IV standard for model year 2002 (196 g/kW-hr) and then discounted by 50 percent before being used in future model years. This combination of ability to generate credits with families of higher emission levels but discounting the credits for these higher emitting engines provides an increased incentive for manufacturers to make interim emission improvements while still preserving the environmental benefits of this program. We are also providing an additional incentive for manufacturers who produce especially clean equipment by providing a 25% bonus for credits generated below specified levels. While normal program credits do not have an expiration date, special program credits have a limited life and application. They may be used without limitation through the 2007 model year. For model years 2008 through 2010, they may also be used, but only if the manufacturer's product line is, without the use of any credits, below a level determined by production weighting the manufacturer's product line assuming emission levels of 72 g/kW-hr for Class III, 72 g/kW-hr for Class IV and 87 g/kW-hr for Class V. These programs also respond to manufacturer concerns that the rule should provide that the technologies in which they considerably invested to meet California standards could also be sold nationally, at least through the phase-in years without penalty. Also, allowing carryover credits to be generated from such engines provides an additional incentive for manufacturers to market nationally the clean technologies they have developed for California. Under the ABT program, manufacturers of handheld engines will be allowed to use portions of the ABT program prior to implementation of the Phase 2 standards to provide an incentive to accelerate introduction of cleaner technologies into the marketplace. We believe that making bankable credits available prior to the effective date of the new standards will reward those manufacturers who take on the responsibility of complying with the Phase 2 requirements sooner than required and will also result in early environmental benefits. Under the early banking provisions for handheld engines, manufacturers will be allowed to begin using the averaging and banking portions of the ABT program beginning with the 2000 model year. However, only those engines certified to the Phase 2 requirements and produced after the effective date of this action will be eligible for early credits in the 2000 model year. As proposed, all early credits will be calculated against the first year phase in standards for the applicable engine class (i.e., 238 g/kW-hr for Class III engines, 196 g/kW-hr for Class IV engines, and 143 g/kW-hr for Class V engines) until the first year that the Phase 2 standards apply for the appropriate engine class. This approach for early credits from handheld engines is similar to the approach recently finalized for nonhandheld engines where early credits are generated only from engines with FELs below the final standards, not the initial phase in standards. After considering comments submitted on the SNPRM, we now believe a similar approach is appropriate for handheld engines in order to provide us with sufficient assurance that the ABT program will not contribute to a significant delay in implementation of the low-emitting technologies envisioned under the Phase 2 program. Because the Phase 2 standards for Class I-A and Class I-B engines that are being adopted today are scheduled to take effect so soon (beginning with the 2001 model year) and because manufacturers indicated they would not be ready to implement these standards sooner, no opportunity exists for generating credits. Therefore, we are not adopting early credit provisions for Class I-A and Class I-B engines. Engines for which a manufacturer generates early credits will have to comply with all of the requirements for Phase 2 engines ( e.g ., full useful life certification, the Production Line Testing program requirements, etc.). Manufacturers of handheld engines will not be allowed to trade their early engine credits to other manufacturers until the first effective model year of the Phase 2 standards for the applicable engine class. As discussed in section II.D. of today's action, we are adopting several compliance flexibility provisions for engine manufacturers and equipment manufacturers that allow the limited use of Phase 1 engines in the Phase 2 time frame. Phase 1 engines sold by engine manufacturers under the flexibility provisions will be excluded from the ABT program. In other words, engine manufacturers will not have to use credits to certify Phase 1 engines used for the flexibility provisions even though they will likely exceed the Phase 2 standards being adopted today. As noted elsewhere in today's final rule, we are adopting a number of provisions t [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A00-7887. Public record. Not legal advice.