Control of Emissions From New Marine Compression-Ignition Engines at or Above 30 Liters Per Cylinder

Federal RegisterFeb 28, 2003

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 9 and 94

[AMS-FRL-7448-9]

RIN 2060-AJ98

Control of Emissions From New Marine Compression-Ignition Engines at or Above 30 Liters Per Cylinder

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Final rule.

SUMMARY:

In this action, we are adopting emission standards for new marine diesel engines installed on vessels flagged or registered in the United States with displacement at or above 30 liters per cylinder. These standards are equivalent to the internationally negotiated standards for oxides of nitrogen and will be enforceable under U.S. law for new engines built on or after January 1, 2004. The certification and compliance program we are adopting is similar to the internationally negotiated program, but contains additional provisions reflecting certain Clean Air Act-specific compliance provisions and the related need to adopt test procedures designed to achieve the emission reductions called for under Clean Air Act section 213. These standards will apply until we adopt a second tier of standards in a future rulemaking. In developing that future rulemaking, which will be completed no later than April 27, 2007, we will consider the state of technology that may permit deeper emission reductions and the status of international action for more stringent standards. We will also consider the application of such a second tier of standards to engines on foreign vessels that enter U.S. ports.

We are also adopting additional standards for new engines with displacement at or above 2.5 liters per cylinder but less than 30 liters per cylinder. These standards, which are currently voluntary, are also equivalent to the internationally negotiated standards for oxides of nitrogen. The standards will apply through 2006. Beginning in 2007, the Tier 2 standards we finalized for these engines in 1999 will go into effect (64 FR 73300, December 29, 1999; 40 CFR part 94).

DATES:

This final rule is effective April 29, 2003.

The incorporation by reference of certain publications listed in this regulation is approved by the Director of the Federal Register as of April 29, 2003.

ADDRESSES:

Materials relevant to this rulemaking are contained in Public Docket Number A-2001-11 at the following address: EPA Docket Center (EPA/DC), Public Reading Room, Room B-102, EPA West Building, 1301 Constitution Avenue, NW., Washington, DC. The EPA Docket Center Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, except on government holidays. You can reach the Air Docket and Reading Room by telephone at (202) 566-1742 and by facsimile at (202) 566-1741. You may be charged a reasonable fee for photocopying docket materials, as provided in 40 CFR part 2.

For further information on electronic availability of this action, see

SUPPLEMENTARY INFORMATION

below.

FOR FURTHER INFORMATION CONTACT:

U.S. EPA, Office of Transportation and Air Quality, Assessment and Standards Division hotline, (734) 214-4636,

asdinfo@epa.gov.

SUPPLEMENTARY INFORMATION:

Affected Entities

This action will affect companies and persons that manufacture, sell, or import into the United States new marine compression-ignition engines for use on vessels flagged or registered in the United States; companies and persons that make vessels that will be flagged or registered in the United States and that use such engines; and the owners or operators of such U.S. vessels. Further requirements apply to companies and persons that rebuild or maintain these engines. Affected categories and entities include the following:

Category

NAICS Code

Examples of potentially affected entities

Industry

333618

Manufacturers of new marine diesel engines.

Industry

336611

Manufacturers of marine vessels.

Industry

811310

Engine repair and maintenance.

Industry

483

Water transportation, freight and passenger.

Industry

324110

Petroleum refineries.

Industry

422710, 422720

Petroleum Bulk Stations and Terminals; Petroleum and Petroleum Products Wholesalers.

North American Industry Classification System (NAICS).

This list is not intended to be exhaustive, but rather provides a guide regarding entities likely to be affected by this action. To determine whether particular activities may be affected by this action, you should carefully examine the regulations. You may direct questions regarding the applicability of this action as noted in

FOR FURTHER INFORMATION CONTACT.

Additional Information About This Rulemaking

Emission standards for new marine diesel engines at or above 30 liters per cylinder were considered by EPA in two previous rulemakings, in 1996 and in 1999. The notice of proposed rulemaking for the first rule (for the control of air pollution from new gasoline spark-ignition and diesel compression-ignition marine engines) can be found at 59 FR 55930 (November 1994); a supplemental notice of proposed rulemaking can be found at 61 FR 4600 (February 7, 1996); and the final rule can be found at 61 FR 52088 (October 4, 1996). The notice of proposed rulemaking for the second rule (for the control of air pollution from new marine compression-ignition engines at or above 37 kW) can be found at 63 FR 68508 (December 11, 1998); the final rule can be found at 64 FR 73300 (December 29, 1999). These documents are available on our Web sites,

http://www.epa.gov/otaq/marine.htm

and

http://www.epa.gov/otaq.marinesi.htm.

In addition, we recently adopted emission standards for recreational marine diesel engines (67 FR 68242, November 8, 2003). This final rule relies in part on information obtained for those rulemakings, which can be found in Public Dockets A-92-28, A-97-50, and A-2000-01. Those dockets are incorporated by reference into the docket for this proposal, A-2001-11.

Obtaining Electronic Copies of the Regulatory Documents

The preamble, regulatory language, Final Regulatory Support Document, and other rulemaking documents are available electronically from the EPA Internet Web site. This service is free of charge, except for any cost incurred for

internet connectivity. The electronic version of this final rule is made available on the date 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.

http://www.epa.gov/docs/fedrgstr/EPA-AIR

(either select desired date or use Search features).

http://www.epa.gov/otaq

(look in What's New or under the specific rulemaking topic).

Please note that due to differences between the software used to develop the documents and the software into which the document may be downloaded, format changes may occur.

Table of Contents

I. Introduction

A. Background

B. How Is This Document Organized?

C. What Requirements Are We Finalizing?

1. Category 3 Marine Diesel Engines

2. Category 1 and Category 2 Marine Diesel Engines

3. Foreign-Trade Exemption

4. Fuel Controls

D. Why is EPA Taking This Action?

1. What Are the Health and Welfare Effects of Category 3 Marine Diesel Engine Emissions?

2. What Is the Inventory Contribution From the Marine Diesel Engines That Are Subject to This Rule?

E. What Are the Internationally Negotiated Standards and What Is the Status of the U.S. Ratification of Annex VI?

F. Recent European Union Action

G. Statutory Authority

II. Which Engines Are Covered?

A. What is a Marine Vessel?

B. What are Category 1, 2, and 3 Marine Diesel Engines?

C. What is a New Marine Diesel Engine?

1. “New” Engines on Vessels Flagged or Registered in the United States

2. “New” Engines on Vessels Flagged or Registered Elsewhere

D. What is a New Marine Vessel?

1. Newly Manufactured Vessel

2. Modification of an Existing Vessel with Category 1 or Category 2 Main Propulsion Engines

3. Modification of an Existing Vessel with Category 3 Main Propulsion Engines

E. Is EPA Retaining the Foreign-Trade Exemption?

III. Standards and Technological Feasibility

A. What are the new emission standards?

B. When do the engine emission standards apply?

C. What technologies will engine manufacturers use to meet the Tier 1 emission standards?

D. Voluntary Low-Emission Standards

IV. Future Actions

A. Future Rulemaking for Engine Standards

1. What Is the Timetable for the Future Rule?

2. What Standards Will EPA Consider in the Future Rule?

3. What Technologies Will EPA Consider in the Future Rule?

4. Will the International Community Also Consider More Stringent Standards?

B. Fuel controls

1. Is EPA Adopting Fuel Requirements?

2. What Are the MARPOL Annex VI Fuel Provisions?

3. How Will SO

Emission-Control Areas Be Designated in the United States?

4. Are There Other Fuel-based Controls That May Be Considered?

V. Demonstrating Compliance

A. Overview of Certification

1. How do I certify my engines?

2. How are these certification requirements different from those of the NO

Technical Code?

3. How does a certificate of conformity relate to a Statement of Voluntary Compliance or an EIAPP?

4. What are the roles of the engine manufacturer and ship owner after the engine is installed?

B. Other Certification and Compliance Issues

1. How are engine families defined?

2. Which engines are selected for testing?

3. How does EPA treat adjustable parameters?

4. How must engines be labeled?

5. How does EPA ensure durable emission controls?

6. What are the manufacturer's responsibilities for the emission warranty and defect reporting?

7. What are deterioration factors?

8. What requirements apply to in-use maintenance?

9.What requirements apply to rebuilding engines?

10.What are the prohibited acts and related requirements?

11.What general exemptions apply?

12.What regulations apply for imported engines?

13.What are a manufacturer's recall responsibilities?

14.What responsibilities apply to ship owners and operators?

C. Test Procedures for Category 3 Marine Engines

1. What duty cycle do I use to test my engines?

2. How do I account for variable test conditions?

3. How does laboratory testing relate to actual in-use operation?

D. Comparison to NO

Technical Code Compliance Requirements

1. How are EPA's compliance requirements different from the NO

Technical Code requirements?

2. Can a manufacturer comply with EPA requirements and Annex VI requirements at the same time?

E. Technical Amendment to 40 CFR Part 94

F. Compliance Issues To Be Considered for Future Rulemaking

1. What are EPA's concerns about parameter adjustment?

2. What are EPA's concerns about off-cycle emissions?

3. What are EPA's concerns about the fuel used for emission testing?

4. What are EPA's concerns about production variability?

VI. Projected Impacts

VII. The Blue Cruise Program

VIII. Public Participation

IX. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

B. Paperwork Reduction Act

C. Regulatory Flexibility Act

D. Unfunded Mandates Reform Act

E. Executive Order 13132: Federalism

F. Executive Order 13175: Consultation and Coordination with Indian Tribal Governments

G. Executive Order 13045: Protection of Children from Environmental Health and Safety Risks

H. Executive Order 13211: Actions that Significantly Affect Energy Supply, Distribution, or Use

I. National Technology Transfer and Advancement Act

J. Congressional Review Act

I. Introduction

A. Background

Marine diesel engines can be significant contributors to local ozone, carbon monoxide (CO), and particulate matter (PM) levels, particularly in commercial ports and along coastal areas.

1,2

This rule addresses these air pollution concerns by adopting national emission standards for the first time for marine diesel engines with per-cylinder displacement at or above 30 liters or more that are installed on vessels flagged or registered in the United States.

These engines, also known as Category 3 marine diesel engines, are very large marine engines used primarily for propulsion power on ocean-going vessels such as container ships, tankers, bulk carriers, and cruise ships. Category 3 marine diesel engines have not previously been regulated under our nonroad engine programs. This rule also adopts standards for marine diesel engines with per-cylinder displacement at or above 2.5 liters per cylinder but less than 30 liters per

cylinder installed on vessels flagged or registered in the United States.

References to diesel-cycle engines, also referred to as “diesel engines” in this document are intended to cover a particular kind of engine technology,

i.e.

, compression-ignition combustion. Compression-ignition engines are typically operated on diesel fuel, though other fuels, such as compressed natural gas, may also be used. This contrasts with otto-cycle engines (also called spark-ignition or SI engines), which typically operate on gasoline. The requirements set out in this action apply only to compression-ignition engines.

Ground-level ozone, the main ingredient in smog, is formed by complex chemical reactions of volatile organic compounds (VOC) and NO

in the presence of heat and sunlight. Hydrocarbons (HC) are a large subset of VOC, and to reduce mobile source VOC levels we set maximum emission standards for hydrocarbons. VOCs can also be part of the secondary formation of PM.

This final rule applies to “new” marine diesel engines and to “new” marine vessels that include marine diesel engines. In general, a “new” marine diesel engine or a “new” marine vessel is one that is produced for sale in the United States or that is imported into the United States (

See

section II, below). The emission standards established in this final rule, therefore, will typically apply to marine diesel engines that are installed on vessels flagged or registered in the United States.

The emission-control program we are adopting in this rule is a continuation of the process of establishing emission standards for nonroad engines and vehicles under Clean Air Action section 213(a).

Section I of the preamble for our proposal contains an extensive description of the regulatory background for this rulemaking, which we are not repeating here (67 FR 37548, May 29, 2002).

This is our third action for emission standards for marine diesel engines above 37 kW. In our first action, in 1999, we adopted emission standards for commercial marine engines above 37 kilowatts (kW) (64 FR 73300, December 29, 1999; 40 CFR part 94). The standards adopted in that rule consist of mandatory standards, referred to as our Tier 2 standards, that apply to engines above 37 kW with per-cylinder displacement up to 30 liters (also known as Category 1 and Category 2 marine diesel engines).

These Tier 2 standards apply to oxides of nitrogen (NO

), hydrocarbon (HC), PM and CO emissions and go into effect in 2004-2007, depending on engine size. Our Tier 2 marine diesel engine standards are expected to achieve a 32-percent reduction in NO

emissions for Category 1 and Category 2 marine diesel engines by 2030 relative to uncontrolled levels. The Tier 2 standards for Category 1 and Category 2 marine diesel engines also contain PM standards that are expected to achieve a 26-percent reduction in PM emissions by 2030. We did not adopt mandatory emission standards for Category 3 marine diesel engines in 1999. Manufacturers of those engines were expected to comply voluntarily with internationally negotiated NO

standards.

EPA treats voluntary standards equivalent to the internationally negotiated oxides of nitrogen standards as Tier 1 standards. The internationally negotiated standards are contained in MARPOL Annex VI (see footnote 5 and associated text). When they go into force, the internationally negotiated standards will apply to new engines above 130 kW installed on vessels constructed on or after January 1, 2000 and engines that undergo a major conversion on or after January 1, 2000.

In our second action for marine diesel engines above 37 kW, we adopted standards for recreational marine diesel engines (67 FR 68242, November 8, 2002). These numerical standards are identical to those we finalized for commercial marine diesel engines in 1999. However, the engines are tested using a different duty cycle and the effective date for recreational marine diesel engines is 2006-2009, depending on engine size.

This third action for marine diesel engines above 37 kW was proposed on May 29, 2002 (67 FR 37548). At a public hearing on June 13 and during the public comment period, which ended on July 16, 2002, we heard from over 50 commenters. The emission-control program we are adopting in this action follows from the approach described in our proposal, though we have made numerous adjustments in response to the comments and other information received since the proposal.

B. How Is This Document Organized?

After this introductory section, Section II describes the set of engines that will be required to comply with the standards. Section III contains the standards we are finalizing. Section IV describes the future rulemaking we are committing to pursue. Section V describes various compliance provisions. Section VI summarizes the projected impacts of the standards. Section VII gives an update on the Blue Cruise program we described in our proposal. Finally, Sections VIII and IX contain information about how we satisfied our administrative requirements and about the statutory provisions for this final rule.

Additional information on many of these topics can be found in the Final Regulatory Support Document and the Summary and Analysis of Comments. These documents and all the comments we received are in Docket A-2001-11.

The remainder of this section summarizes the new requirements and the air quality need for the rulemaking. We also provide an update on the status of U.S. ratification of MARPOL Annex VI.

C. What Requirements Are We Finalizing?

We are adopting emission standards for new marine diesel engines installed on vessels flagged or registered in the United States. We are adopting standards for the first time for new Category 3 marine diesel engines, beginning in 2004. We are also adopting additional standards for some Category 1 and all Category 2 marine diesel engines, also beginning in 2004. This section presents a brief description of this emission-control program. More details can be found in Sections III and IV of this preamble and in the Final Regulatory Support Document.

1. Category 3 Marine Diesel Engines

Clean Air Act section 213(a)(3) requires EPA to adopt regulations that contain standards concerning certain pollutants reflecting the greatest degree of emission reductions achievable through the application of technology that will be available, taking into consideration the availability and costs of the technology, and noise, energy, safety factors and existing motor vehicle standards. EPA is also to revise these standards from time to time. The emission-control program we are adopting in this rule meets these criteria through a two-part approach. First, we are adopting near-term Tier 1 standards that will go into effect immediately based on readily available emission-control technology. Second, we are adopting regulations that set a schedule for a future rulemaking to assess and adopt an appropriate second tier of standards. We recognize that manufacturers can achieve additional reductions with more lead time than is provided by the Tier 1 standards. They can do this by expanding the use and optimization of in-cylinder controls, combined with the significant emission reductions that may be achievable with advanced technologies such as selective catalytic reduction or water injection. We believe, however, that it is appropriate to defer a final decision on the longer-term Tier 2 standards to a future rulemaking. While there is a certain amount of information available about the advanced technologies at this time, there are several outstanding technical issues concerning the widespread commercial use of these technologies. Deferring the Tier 2 standards to a second rulemaking will allow us to obtain important additional information on the use of the these advanced technologies that we expect to become available over the next few years. This new information may include (1) new developments as manufacturers continue to make various improvements to the technology and address any remaining concerns, (2) data or experience from recently initiated in-use installations using the advanced technologies, and (3) information from longer-term in-use experience with the advanced technologies that will be especially helpful for evaluating the long-term durability of emission controls. We believe the projected time frame for the future rulemaking is appropriate to allow us to make the best use of information that will be available to have a sound technical basis for assessing the technological capabilities of emission-control systems that include

advanced technologies. We will then be best situated to make a technology-based decision that maximizes emission reductions from these engines, taking into consideration cost and other appropriate factors.

While deferring adoption of the Tier 2 standards to a future rulemaking is appropriate for the reasons described above, an additional reason supporting this approach is to pursue further negotiations in the international arena to achieve more stringent global emission standards for marine diesel engines. As discussed below, adopting appropriate international standards has the potential to maximize the control of emissions from U.S. and foreign vessels.

The near-term Tier 1 standards we are adopting are equivalent to the internationally negotiated NO

standards established by the International Maritime Organization (IMO) in Annex VI to the International Convention on the Prevention of Pollution from Ships, 1973, as Modified by the Protocol of 1978 Relating Thereto (more commonly referred to as MARPOL or MARPOL 73/78; the standards are referred to as the Annex VI NO

standards).

As explained in Section III below and in the Final Regulatory Support Document, these standards are achievable almost immediately, with less than one year of lead time, because manufacturers are already achieving and certifying to these standards under our Voluntary Statement of Compliance program for Annex VI. These near-term standards are being achieved through the application of currently available technology, including optimized turbocharging, higher compression ratios, and optimized fuel injection. The certification and compliance program we are adopting is similar to the internationally negotiated program, but contains additional provisions reflecting certain Clean Air Act-specific compliance provisions and the related need to adopt test procedures designed to achieve the emission reductions called for under Clean Air Act section 213. These certification requirements are described in Section V of this preamble. These Tier 1 standards are expected to result in negligible costs because engine manufacturers are already producing engines that meet the MARPOL Annex VI NO

limits. Engine manufacturers should not have to engage in additional research and development to achieve these standards. Recognizing that some additional lead time is needed for manufacturers in some cases, we are including an interim provision that will allow manufacturers to use their Annex VI test data to show compliance with the Tier 1 standards.

Annex VI was adopted by a Conference of the Parties to MARPOL on September 26, 1997, but has not yet entered into force. Copies of the conference versions of the Annex and the NO

Technical Code can be found in Docket A-97-50, Document II-B-01. Copies of updated versions can be obtained from the International Maritime Organization (

http://www.imo.org

We considered, but rejected, setting near-term Tier 1 standards that would require a level of emission control greater than that necessary to meet the MARPOL Annex VI NO

limits, for a combination of reasons. We concluded that setting more stringent near-term Tier 1 standards would likely delay achieving greater environmental benefits in the longer term. The additional lead time that would be necessary to set a Tier 1 standard based on further use and optimization of in-cylinder control would lead to two separate—and possibly conflicting—design steps, one for Tier 1 and a second for Tier 2. Dividing manufacturers' resources this way has the potential to delay the Tier 2 standards. For example, manufacturers would potentially need to make initial changes to in-cylinder designs, then pursue an additional development program to optimize the in-cylinder technologies for controlling emissions in conjunction with advanced technologies. We believe the best route to achieving the maximum reductions from Category 3 marine engines is a near-term Tier 1 standard based on the use of existing technologies, followed by a Tier 2 rulemaking in the next few years that focuses on designing the optimum combination of in-cylinder and advanced technology to reduce emissions from these engines.

The second phase of our emission-control program for Category 3 marine diesel engines will consist of more stringent standards that reflect the application of advanced emission-control technologies and further optimization of in-cylinder controls. We understand that further use and optimization of in-cylinder control can achieve emission reductions beyond the levels needed to meet the Tier 1 standards. As discussed in the Final Regulatory Support Document, we believe that manufacturers can, with additional lead time, make greater use and optimization of in-cylinder controls to reduce emissions at least 10 to 15 percent below Tier 1 levels. It is not clear at this time that in-cylinder controls alone could reduce emissions 30 percent below Tier 1 levels. However, in combination with advanced technologies, emission reductions should be greater than 30 percent below Tier 1 levels. In the Tier 2 rulemaking, we therefore expect to focus on standards that would be based on achieving greater emission reductions through optimizing in-cylinder controls and incorporating advanced technologies such as SCR or water. As discussed above, adopting Tier 2 standards at this time based only on in-cylinder controls could lead to two separate and possibly conflicting design steps, potentially delaying introduction of advanced emission-control technologies and their anticipated emission reductions.

At this time, however, there are still several outstanding technical issues involving the use of these advanced emission-control technologies. For example, there are technical issues concerning the impacts of fuel sulfur levels on emissions, the ability of these technologies to achieve emission reductions at low engine loads, and their impacts on PM emissions. With regard to fuel-sulfur content, most of the demonstration engines that currently use these technologies are operated on fuel with a sulfur content ranging from 5,000 to 10,000 ppm. However, the average sulfur content of fuel used by Category 3 marine diesel engines is 27,000 ppm, and it can be as high as 45,000 ppm. At this time, it is not clear how engines will perform with this higher sulfur fuel and what types of adjustments will need to be made to accommodate the higher sulfur. Also, it may be the case that this technology will perform well with fuel at 15,000 ppm, which is the maximum sulfur content allowable for ships operating in SO

Emission Control Areas pursuant to Annex VI. With regard to emissions at low load, some studies suggest that advanced technologies may not perform as well when the engine is not operating at its optimal fuel-consumption rate. This is important because engines typically operate at low load in port. Once we understand this dynamic better we will be able to evaluate the extent to which it can be addressed technically. With regard to PM emissions, some concerns have been raised that using these advanced technologies to control NO

emissions may raise PM emissions. Again, once we understand this dynamic better we will be able to evaluate the extent to which it can be addressed technically. Part of this analysis will entail developing a method to measure PM emissions from these very large engines. Each of these issues is discussed in greater detail in Section IV and in the Final Regulatory Support Document.

Engine manufacturers are currently working on many of these issues. Water emulsification has been applied for

some time on the land-based counterparts of these engines, which are primarily used in stationary engines for power generation. Direct water injection and SCR have also been applied in recent years to several engines operating on vessels. These projects are discussed in Section IV and in Chapter 5 of the Final Regulatory Support Document; an Appendix to Chapter 5 provides a list of these vessels. Most of the engines using these technologies have been installed in the past five years. Many of them are on passenger ferries and most are on ships that operate in European waters, with many being delivered only since 1999. To date, the advanced technologies have only been applied in cases where the operating characteristics of the vessels are compatible with the technology. For instance, SCR has primarily been installed on vessels using medium-speed engines, which have higher exhaust temperatures than low-speed engines, and where very low-sulfur fuel is available. Through these projects, engine manufacturers are experimenting with different emission-control techniques and learning about the long-term operation and durability of these systems. These projects will also provide information about the emission levels that can be achieved through the application of these technologies.

Based on these outstanding technical issues, we believe it is not appropriate at this time to attempt to project the engineering answers and solutions to these technical issues. By waiting a few years, we will be able to benefit from the manufacturers' experience as they continue to develop and apply these technologies on marine diesel engines. We can also develop methods to assess the impact of fuel sulfur on emissions, to assess the emission-control potential of these technologies on emissions at low loads, and to measure and address PM emissions. Consequently, we plan to evaluate more stringent Tier 2 standards in a future rulemaking. In the 2004-2005 time frame, engine manufacturers will have five or more years of data on a significant number of vessels. During this period, we will work with manufacturers to learn more about the advanced technologies discussed above and the steps they are taking to resolve operational and technological issues. With this information, we should be in a significantly better position to determine the emission levels that are achievable and appropriate, given appropriate lead time for the use of these advanced technologies.

We have concluded that the standards in this final rule (which are equivalent to the internationally negotiated NO

standards established under MARPOL Annex VI) are the appropriate controls for the near term. Requiring additional near-term reductions from further use and optimization of in-cylinder controls would potentially delay and disrupt the second tier of standards, which will focus on emission-control systems that rely on optimized in-cylinder controls and advanced technologies to achieve significantly greater reductions. We have also concluded that it is appropriate to defer adoption of Tier 2 standards to a future rulemaking to allow us to take into account several important outstanding technical issues concerning the use of these advanced technologies and address the potential to combine in-cylinder controls with the advanced technologies.

We expect additional information to become available in the next few years that will allow us to more reliably and appropriately determine the level of emission control that is achievable and appropriate for such technologies, given appropriate lead time.

Based on this, we conclude that the near-term Tier 1 emission standards in this final rule satisfy the criteria of Clean Air Act section 213(a)(3) at this time. Section 213(a)(3) directs EPA to promulgate emission standards and from time to time review and revise those standards. This final rule adopts near-term standards and puts EPA on a schedule to review, and if appropriate, revise those standards in accordance with the criteria in section 213(a)(3). We believe this two-step approach is the most appropriate means to address emissions from Category 3 marine engines in the near-term in the face of incomplete information and the significant changes underway in applying emission-reduction technology to very large marine engines.

We are including a regulatory provision in 40 CFR 94.8 that establishes a schedule for a future rulemaking to promulgate additional emission standards for Category 3 marine engines that we determine are appropriate under section 213(a)(3). This rulemaking will reassess the emission standards in light of the developments in and experience with applying emission-reduction technology to Category 3 marine engines. The standards in this final rule will remain in effect until we modify them in a future rulemaking. We are committing to take final action on appropriate standards for marine diesel engines by April 27, 2007, and to issue a proposal no later than approximately one year before. This future rulemaking will allow us to exercise the discretionary authority under Clean Air Act section 213(a)(3), which directs EPA to “from time to time revise” regulations under that provision. EPA considers this time as necessary and appropriate to properly take into consideration additional information expected to become available about emerging technologies, as well as any developments in the international negotiations for more stringent emission limits.

In addition to allowing us to benefit from information that engine manufacturers continue to gather on these advanced technologies, delaying adoption of the Tier 2 until a future rule allows us to facilitate negotiations for appropriate consensus international standards. Adoption of international standards has the potential to maximize the level of emission reductions achieved from emission controls on U.S. and foreign vessels. For example, international standards set at an appropriate level would remove the objections to controlling emissions from engines on foreign vessels. Since engines on foreign-flag vessels account for the majority of emissions from Category 3 marine diesel engines impacting U.S. air quality, successful negotiation of international standards that achieve the greatest emission reduction feasible would result in the greatest improvement to air quality here in the U.S. and around the world. Addressing the long-term standards in the future rulemaking could facilitate such international action, but will also allow us to proceed expeditiously on our own if appropriate international standards are not adopted in a timely way.

The United States has already taken a leadership role for more stringent standards at the International Maritime Organization and has requested that organization to begin consideration of a second tier of international standards. Those discussions are likely to begin in 2004, after Annex VI goes into forces, or as part of a review process if enough countries have not ratified it by the end of 2003.

2. Category 1 and Category 2 Marine Diesel Engines

We proposed to adopt a first tier of standards equivalent to the internationally negotiated NO

limits for marine diesel engines with per-cylinder displacement of 2.5 to 30 liters. We are adopting these standards in this action. By adopting these standards as Tier 1 standards, we are making them mandatory and enforceable for new engines on U.S. vessels. The Tier 1 standards will begin to apply in 2004 and will continue to apply through 2006. Beginning in 2007, the Tier 2

standards we finalized in 1999 will go into effect.

We proposed to apply all the Tier 2 certification and compliance requirements to the proposed Tier 1 standards as well. After considering the public comments, we are finalizing this approach with two exceptions. First, we allow manufacturers to use test data generated using the procedures in the NO

Technical Code on an interim basis. Second, we will not require manufacturers to perform production-line testing on their Tier 1 engines.

3. Foreign-Trade Exemption

We are eliminating the foreign-trade exemption for all marine diesel engines, which was available for engines installed on U.S. vessels that spend less than 25 percent of total operating time within 320 kilometers of U.S. territory.

4. Fuel Controls

We are not setting standards for the fuel used by marine diesel engines in this final rule. With regard to the residual fuel used by Category 3 marine diesel engines, we remain concerned that regulating fuel sold in the United States would not necessarily ensure that lower-sulfur fuel is used in U.S. waters, since ships could purchase their fuel in other countries. To obtain the benefits of lower-sulfur fuel, we plan to investigate designation of one or more areas in the United States as SO

Emission Control Areas pursuant to the international process for this purpose. This is described further in Section IV.B.

With regard to the fuel used by Category 1 and Category 2 marine diesel engines, we are considering distillate marine diesel fuel controls as part of the nonroad diesel rule that is currently under development.

D. Why Is EPA Taking This Action?

Category 3 marine diesel engines generate NO

, HC, PM and CO emissions that contribute to ozone and CO levels above the National Ambient Air Quality Standards (NAAQS) for ozone and CO (

i.e.

, they contribute to ozone and CO nonattainment) as well as adverse health effects associated with ambient concentrations of PM. As described in more detail below and in the Final Regulatory Support Document, Category 3 marine diesel engines accounted for about 1.6 percent of nationwide mobile source NO

emissions in 2000. They also accounted for about 2.8 percent of nationwide mobile source PM emissions in 2000. These percentages are expected to increase as a result of increased trade and decreases in emissions from other nonroad sources. The contribution of Category 3 marine diesel engines to nationwide mobile source HC and CO levels is small, at 0.1 and 0.02 percent, respectively, in 2000.

The inventory contribution of Category 3 marine diesel engines can be higher on a port-specific basis. We estimate that these engines contribute about 7 percent of mobile source NO

in Baton Rouge/New Orleans and Wilmington, NC, and about 5 percent in Miami/ Fort Lauderdale and Corpus Christi. These ships can also have a significant impact on inventories in areas without large commercial ports. For example, they contribute about 37 percent of total area NO

in the Santa Barbara area.

1. What Are the Health and Welfare Effects of Category 3 Marine Diesel Engine Emissions?

There are important public health and welfare concerns related to Category 3 marine diesel engine emissions.

This section contains a summary of the general health effects associated with exposure to ozone, PM, and CO. Further information can be found in Chapter 1 of the Final Regulatory Support Document.

Sections II and VI of the preamble for our proposal contain an extensive description of the air quality problems we are addressing in this rulemaking, which we are not repeating here.

a. Ozone.

Volatile organic compounds (VOC) and NO

are precursors in the photochemical reaction which forms tropospheric ozone. Ground-level ozone, the main ingredient in smog, is formed by complex chemical reactions of VOCs and NO

in the presence of heat and sunlight. Hydrocarbons are a large subset of VOC, and to reduce mobile-source VOC levels we set maximum emission limits for hydrocarbon and particulate emissions.

Based on a large number of studies, we have identified several key health effects caused when people are exposed to levels of ozone found today in many areas of the country. A large body of evidence shows that ozone can cause harmful respiratory effects including chest pain, coughing, and shortness of breath, which affect people with compromised respiratory systems most severely. When inhaled, ozone can cause acute respiratory problems; aggravate asthma; cause significant temporary decreases in lung function of 15 to over 20 percent in some healthy adults; cause inflammation of lung tissue; produce changes in lung tissue and structure; may increase hospital admissions and emergency room visits; and impair the body's immune system defenses, making people more susceptible to respiratory illnesses. Children and outdoor workers are likely to be exposed to elevated ambient levels of ozone during exercise and, therefore, are at a greater risk of experiencing adverse health effects. Beyond its human health effects, ozone has been shown to injure plants, which has the effect of reducing crop yields and reducing productivity in forest ecosystems.

There is strong and convincing evidence that exposure to ozone is associated with exacerbation of asthma-related symptoms. Increases in ozone concentrations in the air have been associated with increases in hospitalization for respiratory causes for individuals with asthma, worsening of symptoms, decrements in lung function, and increased medication use, and chronic exposure may cause permanent lung damage. The risk of suffering these effects is particularly high for children and for people with compromised respiratory systems.

In addition to the health effects described above, there exists a large body of scientific literature that shows that harmful effects can occur from sustained levels of ozone exposure at low levels.

Studies of prolonged exposures, those lasting about 7 hours, show health effects from prolonged and repeated exposures at moderate levels of exertion to ozone concentrations as low as 0.08 ppm. The health effects at these levels of exposure include transient pulmonary function responses, transient respiratory symptoms, effects on exercise performance, increased airway responsiveness, increased susceptibility to respiratory infection, increased hospital and emergency room visits, and transient pulmonary respiratory inflammation.

Additional information about these studies can be found in Chapter 2 of “Regulatory Impact Analysis: Heavy-Duty Engine and Vehicle Standards and Highway Diesel Fuel Sulfur Control Requirements,” December 2000, EPA420-R-00-026. Docket No. A-2001-11, Document II-A-55. This document is also available at

http://www.epa.gov/otaq/diesel.htm#documents.

The current primary and secondary ozone National Ambient Air Quality Standard (NAAQS) is 0.12 ppm daily maximum 1-hour concentration, not to be exceeded more than once per year on average. EPA is replacing the previous 1-hour ozone standard with a new 8-hour standard. The new standard is set at a concentration of 0.08 parts per million (ppm), and the measurement period is 8 hours. Areas are allowed to disregard their three worst measurements every year and average performance over three years to determine if they meet the standard.

That is, the standard is set by the 4th highest maximum 8-hour concentration.

Ground level ozone today remains a pervasive pollution problem in the United States. About 51 million people live in areas with design values above the level of the 1-hour ozone standard based on three years of data (1999-2001). In addition, about 111 million people live in areas with design values above the 8-hour ozone standard based on those three years of data. Approximately 61 million of these people live in areas with design values above the 8-hour standard but are below the design standard for the 1-hour ozone standard (

i.e.

, they are attaining the 1-hour standard). The remainder of these people live in areas with design values above the 8-hour ozone standards but are above the design value for the 1-hour ozone standard (

i.e.

, they are not attaining the 1-hour standard).

This represents 291 counties with design values above the level of the 8-hour standard.

Memorandum to Docket A-2001-11 from Fred Dimmick, Group Leader, Air Trends Group, “Summary of Currently Available Air Quality Data and Ambient Concentrations for Ozone and Particulate Matter,” December 3, 2002, Air Docket A-2001-11, Document No. IV-B-3.

Over the last decade, declines in ozone levels were found mostly in urban areas, where emissions are heavily influenced by controls on mobile sources and their fuels. Twenty-three metropolitan areas have realized a decline in ozone levels since 1989, but at the same time ozone levels in 11 metropolitan areas with 7 million people have increased.

Regionally, California and the Northeast have recorded significant reductions in peak ozone levels, while four other regions (the Mid-Atlantic, the Southeast, the Central and Pacific Northwest) have seen ozone levels increase. The highest ambient concentrations are currently found in suburban areas, consistent with downwind transport of emissions from urban centers. Concentrations in rural areas have risen to the levels previously found only in cities.

b. Particulate Matter.

Category 3 marine engines contribute to ambient levels of particulate matter through direct emissions of particulate matter, especially sulfates.

National Air Quality and Emissions Trends Report, 1998, March, 2000, at 28. This document is available at

http://www.epa.gov/oar/aqtrnd98.

Relevant pages of this report can be found in Memorandum to Air Docket A-2000-01 from Jean Marie Revelt, September 5, 2001, (incorporated into Docket A-2001-11 at Document II-A-58).

Particulate matter represents a broad class of chemically and physically diverse substances. It can be principally characterized as discrete particles that exist in the condensed (liquid or solid) phase spanning several orders of magnitude in size. All particles equal to and less than 10 microns are called PM

. Fine particles can be generally defined as those particles with an aerodynamic diameter of 2.5 microns or less (also known as PM

2.5

), and coarse fraction particles are those particles with an aerodynamic diameter greater than 2.5 microns, but equal to or less than a nominal 10 microns.

Particulate matter, like ozone, has been linked to a range of serious respiratory health problems. Scientific studies suggest a likely causal role of ambient particulate matter (which is attributable to several sources including mobile sources) in contributing to a series of health effects.

The key health effects categories associated with ambient particulate matter include premature mortality, aggravation of respiratory and cardiovascular disease (as indicated by increased hospital admissions and emergency room visits, school absences, work loss days, and restricted activity days), aggravated asthma, acute respiratory symptoms, including aggravated coughing and difficult or painful breathing, chronic bronchitis, and decreased lung function that can be experienced as shortness of breath. Observable human noncancer health effects associated with exposure to diesel PM include some of the same health effects reported for ambient PM such as respiratory symptoms (cough, labored breathing, chest tightness, wheezing), and chronic respiratory disease (cough, phlegm, chronic bronchitis and suggestive evidence for decreases in pulmonary function). Symptoms of immunological effects such as wheezing and increased allergenicity are also seen. Exposure to fine particles is closely associated with such health effects as premature mortality or hospital admissions for cardiopulmonary disease.

EPA (1996) Review of the National Ambient Air Quality Standards for Particulate Matter: Policy Assessment of Scientific and Technical Information OAQPS Staff Paper. EPA452-R-96-013. Docket No. A-2001-11, Document II-A-52. The particulate matter air quality criteria documents are also available at

http://www.epa.gov/ncea/partmatt.htm.

PM also causes adverse impacts to the environment. Fine PM is the major cause of reduced visibility in parts of the United States. Other environmental impacts occur when particles deposit onto soils, plants, water or materials. For example, particles containing nitrogen and sulphur that deposit on to land or water bodies may change the nutrient balance and acidity of those environments. Finally, PM causes soiling and erosion damage to materials, including culturally important objects such as carved monuments and statues. It promotes and accelerates the corrosion of metals, degrades paints, and deteriorates building materials such as concrete and limestone.

There are two indicators related to PM NAAQS. The first indicator is PM

, and the second is PM

2.5

. Concentrations above the PM

2.5

standard are much more widespread than are violations of the PM

standard, and emission reductions needed to attain the PM

2.5

standards will also lead to attainment of the PM

standards. The NAAQS for PM

was established in 1987. According to these standards, the short term (24-hour) standard of 150 μg/m

is not to be exceeded more than once per year on average over three years. The long-term standard specifies an expected annual arithmetic mean not to exceed 50 μg/m

over three years. Recent PM

monitoring data indicates that there are 8 serious and 58 moderate PM

nonattainment areas with about 30 million people in 63 mainly western counties. The NAAQS for PM

2.5

indicator was established in 1997. According to these standards, the short term (24-hour) standard is set at 65 μg/m

based on the 98th percentile averaged over three years. The long-term standard specifies an expected annual arithmetic mean not to exceed 15 μg/m

over three years.

Current PM

2.5

monitored values for 1999-2001, which cover about a quarter of the nation's counties, indicate that at least 65 million people in 129 counties live in areas where design values of ambient fine particulate matter levels are at or above the PM

2.5

NAAQS. Three years of complete data are required to make regulatory determinations of attainment or nonattainment but, based on more limited available data, there are an additional 9 million people in 20 counties where levels exceeding the NAAQS are being measured, but there are insufficient data at this time to make an official estimate of the design value. In total, this represents 39 percent of the population in the areas with monitors.

To estimate the current number of people who live in areas where long-term ambient fine particulate matter levels are at or above 16 μg/m

but for which there are no monitors, we can use modeling performed for the Heavy-Duty Engine and Vehicle Standards and Highway Diesel Fuel Sulfur Control rule (also called the “HD07” rule) described

elsewhere.

At that time, we conducted 1996 base year modeling to reproduce the atmospheric processes resulting in formation and dispersion of PM

2.5

across the U.S. This 1996 modeling included emissions subject to this final rule. According to our national model predictions, there were a total of 76 million people (1996 population) living in areas with modeled annual average PM

2.5

concentrations at or above 16 μg/m

(29 percent of the population).

See the Final Regulatory Impact Analysis: Heavy-Duty Engine and Vehicle Standards and Highway Diesel Fuel Sulfur Control Requirements (EPA420-R-00-026, December 2000). Docket No. A-2001-11, Document II-A-55. This document is also available at

http://www.epa.gov/otaq/diesel.htm#documents.

Memorandum to Docket A-99-06 from Eric O. Ginsburg, Senior Program Advisor, “Summary of Absolute Modeled and Model-Adjusted Estimates of Fine Particulate Matter for Selected Years,” December 6, 2000; Docket No. A-2001-11, Document II-A-61.

While the final implementation process for bringing the Nation's air into attainment with the PM

2.5

NAAQS is still being completed, the basic framework is well defined. EPA's current plans call for designating PM

2.5

nonattainment areas in late-2004. Following designation, section 172(b) of the Clean Air Act allows states up to three years to submit a revision to their state implementation plan (SIP) that provides for the attainment of the PM

2.5

standards. We expect states to submit these SIPs in late-2007. Section 172(a)(2) of the Clean Air Act requires that these SIP revisions demonstrate that the nonattainment areas will attain the PM

2.5

standards as expeditiously as practicable but no later than five years from the date that the area was designated nonattainment. However, based on the severity of the air quality problem and the availability and feasibility of control measures, the Administrator may extend the attainment date “for a period of no greater than 10 years from the date of designation as nonattainment.” Therefore, we expect that areas will be ultimately be required to attain the PM

2.5

air quality standard in the 2009 to 2014 time frame.

c. Diesel Exhaust.

Diesel emissions are of concern beyond their contribution to ambient PM. There have been health studies specific to diesel exhaust emissions indicating that potential hazards to human health are specific to this emission source. For chronic exposure, these hazards included respiratory system toxicity and carcinogenicity. Acute exposure also causes transient effects (a wide range of physiological symptoms stemming from irritation and inflammation mostly in the respiratory system) in humans though they are highly variable depending on individual human susceptibility. The chemical composition of diesel exhaust includes several hazardous air pollutants, or air toxics.

EPA recently released its final “Health Assessment Document for Diesel Engine Exhaust” (the Diesel HAD).

There, we concluded that diesel exhaust is likely to be carcinogenic to humans by inhalation and environmental exposures in accordance with the revised draft 1996/1999 EPA cancer guidelines. A number of other agencies (

e.g.

, National Institute for Occupational Safety and Health, the International Agency for Research on Cancer, the World Health Organization, California EPA, and the U.S. Department of Health and Human Services) have made similar determinations.

U.S. EPA (2000) Health Assessment Document for Diesel Exhaust: SAB Review Draft. EPA/600/8-90-057E Office of Research and Development, Washington DC. This document is available electronically at

http://cfpub.epa.gov/ncea/cfm/dieslexh.cfm.

EPA concluded in the Diesel HAD that it is not possible to currently calculate a cancer unit risk for diesel particles due to a variety of factors that limit the current studies such as lack of adequate dose-response relations between exposure versus cancer incidence. Even though EPA does not have a carcinogenic potency with which to accurately estimate the carcinogenic impact of diesel exhaust, the likely hazard to humans together with the potential for significant environmental risks leads us to conclude that diesel exhaust emissions should be reduced from nonroad engines in order to protect public health.

d. Carbon Monoxide.

Carbon monoxide is a colorless, odorless gas produced through the incomplete combustion of carbon-based fuels. Carbon monoxide enters the bloodstream through the lungs and reduces the delivery of oxygen to the body's organs and tissues. The health threat from CO is most serious for those who suffer from cardiovascular disease, particularly those with angina or peripheral vascular disease. Healthy individuals also are affected, but only at higher CO levels. Exposure to elevated CO levels is associated with impairment of visual perception, work capacity, manual dexterity, learning ability and performance of complex tasks.

High concentrations of CO generally occur in areas with elevated mobile-source emissions. Peak concentrations typically occur during the colder months of the year when mobile-source CO emissions are greater and nighttime inversion conditions are more frequent. This is due to the enhanced stability in the atmospheric boundary layer, which inhibits vertical mixing of emissions from the surface.

The current primary NAAQS for CO are 35 parts per million for the one-hour average and 9 parts per million for the eight-hour average. These values are not to be exceeded more than once per year. Air quality carbon monoxide value is estimated using EPA guidance for calculating design values. In 1999, 30.5 million people (1990 census) lived in 17 areas designated nonattainment under the CO NAAQS.

National Air Quality and Emissions Trends Report, 1999, EPA, 2001, at Table A-19. This document is available at

http://www.epa.gov/oar/aqtrnd99.

The data from the Trends report are the most recent EPA air quality data that have been quality-assured. A copy of this table can also be found in Docket No. A-2001-11, Document II-A-59.

Nationally, significant progress has been made over the last decade to reduce CO emissions and ambient CO concentrations. Total CO emissions from all sources have decreased 16 percent from 1989 to 1998, and ambient CO concentrations decreased by 39 percent. During that time, while the mobile source CO contribution of the inventory remained steady at about 77 percent, the highway portion decreased from 62 percent of total CO emissions to 56 percent while the nonroad portion increased from 17 percent to 22 percent.

Over the next decade, we would expect there to be a minor decreasing trend from the highway segment due primarily to the more stringent standards for certain light-duty trucks (LDT2s).

CO standards for passenger cars and other light-duty trucks and heavy-duty vehicles did not change as a result of other recent rulemakings.

National Air Quality and Emissions Trends Report, 1998, March, 2000; this document is available at

http://www.epa.gov/oar/aqtrnd98.

National Air Pollutant Emission Trends, 1900-1998 (EPA-454/R-00-002), March, 2000. These documents are available at Docket No. A-2001-11, Document II-A-60.

Category

Tons

Percent of mobile source

Tons

Percent of mobile source

Tons

Percent of mobile source

Tons

Percent of mobile source

Total for engines subject to new standards (U.S. flagged commercial marine—Category 3)

0.2

0.0

2.5

0.4

Commercial Marine CI—Category 3 (U.S. and foreign)

214

1.6

0.1

0.02

19.7

2.8

Commercial Marine CI—Categories 1 and 2

703

5.2

0.3

103

0.1

2.9

Highway Motorcycles

0.1

1.1

331

0.4

0.1

Nonroad Industrial SI>19 kW

308

2.3

226

3.1

1,734

2.3

1.6

0.2

Recreational SI

0.0

418

5.7

1,120

1.5

12.0

1.7

Recreation Marine CI

0.3

0.0

0.1

Marine SI Evap

0.0

100

1.4

0.0

Marine SI Exhaust

0.2

708

9.6

2,144

2.8

5.4

Nonroad SI <19 kW

106

0.8

1,460

19.8

18,359

24.2

7.1

Nonroad CI

2,625

19.6

316

4.3

1,217

1.6

253

35.9

Locomotive

1,192

8.9

0.6

119

0.2

4.3

Total Nonroad

5,231

3,391

25,152

426

Total Highway

7,981

3,811

49,813

240

Aircraft

178

183

1,017

Total Mobile Sources

13,389

100

7,385

100

75,982

100

705

100

Total Man-Made Sources

24,532

18,246

97,735

3,102

Mobile Source percent of Total Man-Made Sources

Table I.D-2.—Modeled Annual Emission Levels for Mobile-Source Categories in 2030

[Thousand short tons]

Category

Tons

Percent of mobile source

Tons

Percent of mobile source

Tons

Percent of mobile source

Tons

Percent of mobile source

Total for engines subject to new standards (U.S. flagged commercial marine—Category 3)

0.5

0.0

2.5

0.3

Commercial Marine CI—Category 3 (U.S. and foreign)

531

8.9

0.5

0.05

54.0

7.3

Commercial Marine CI—Categories 1 and 2

680

11.4

0.5

137

0.1

20.0

2.7

Highway Motorcycles

0.3

172

3.4

693

0.7

1.0

0.1

Nonroad Industrial SI > 19 kW

0.7

0.3

265

0.3

2.0

0.3

Recreational SI

0.3

294

5.8

1,843

1.9

10.5

1.4

Recreation Marine CI

0.9

0.0

1.4

0.2

Marine SI Evap

0.0

122

2.4

0.0

Marine SI Exhaust

1.1

269

5.3

2,083

2.1

3.9

Nonroad SI < 19 kW

126

2.1

1,200

23.7

32,310

33.3

12.6

Nonroad CI

1,994

33.4

158

3.1

1,727

1.8

306

41.6

Locomotive

531

8.9

0.6

119

0.1

2.4

Total Nonroad

4,059

2,316

39,245

535

Total Highway

1,648

2,496

56,303

158

Aircraft

262

1,502

Total Mobile Sources

5,969

100

5,074

100

97,050

100

736

100

Total Man-Made Sources

16,177

16,094

121,428

3,297

Mobile Source percent of Total Man-Made Sources

These inventories are the same as for 2000 because, based on comments received, we assumed no future increase in U.S. domestic trade.

Further analysis suggests that Category 3 marine diesel engines contribute more significantly in individual port areas. For example, we estimate that these engines contribute about 7 percent of mobile-source NO

in the Metropolitan Statistical Areas (MSA) of Baton Rouge/New Orleans and Wilmington NC, about 5 percent of mobile-source NO

in the Miami/ Fort Lauderdale and Corpus Christi MSAs, and about 4 percent in the Seattle/Tacoma/Bremerton/Bellingham MSA.

In addition, these ships can have a significant impact on inventories even in areas without large commercial ports. For example, Santa Barbara estimates that engines on ocean-going marine vessels currently contribute about 37 percent of total NO

in their area. These emissions are from ships that transit the area, and “are comparable to (even slightly larger than) the amount of NO

produced onshore by cars and truck.”

By 2015 these emissions are expected to increase 67 percent, contributing 61 percent of Santa Barbara's total NO

emissions. This mix of emission sources led Santa Barbara to point out that they will be unable to meet air quality standards for ozone without significant emission reductions from these vessels, even if they completely eliminate all other sources of pollution.

Memorandum to Docket A-2001-11 from Jean Marie Revelt,

Santa Barbara County Air Quality News,

Issue 62, July-August 2001 and other materials provided to EPA by Santa Barbara County,” March 14, 2002. Air Docket A-2001-11, Document No. II-A-47.

E. What Are the Internationally Negotiated Standards and What Is the Status of the U.S. Ratification of Annex VI?

In response to growing international concern about air pollution and in recognition of the highly international nature of maritime transportation, the IMO initiated development of international standards for NO

, SO

, and a variety of other air emissions arising from marine vessel operations.

21,22

As a result of these discussions, Annex VI was drafted between 1992 and 1997. The Annex VI engine emission standards cover only NO

emissions; there are no restrictions on PM, HC, or CO emissions. They are based on engine speed and apply to engines above 130 kW. These standards are set out in Table III.A-1. Originally, these standards were expected to reduce NO

emissions by 30 percent when fully phased in. More recent analysis by EPA, based on newly estimated emission factors for these engines, indicates an expected reduction on the order of only 20 percent when compared to uncontrolled emissions by 2030 when the standards are fully phased-in. The EPA inventory analysis is described in more detail in the Final Regulatory Support Document.

The Annex covers several aspects air emissions from marine vessels: ozone-depleting substances, NO

, SO

, VOCs from tanker operations, incineration, fuel oil quality. There are also requirements for reception facilities and platforms and drilling rigs.

To obtain copies of this document,

see

Footnote 5, above.

The Annex VI NO

standards apply to each diesel engine with a power output of more than 130 kW installed on a ship constructed on or after January 1, 2000, or that undergoes a major conversion on or after January 1, 2000. The Annex does not distinguish between marine diesel engines installed on recreational or commercial vessels; all marine diesel engines above 130 kW are subject to the standards regardless of the type of vessel they are used on, and the standards apply to engines installed on vessels only in domestic service as well as to engines on vessels engaged in international voyages. The test procedures to demonstrate compliance are set out in the Annex VI NO

Technical Code.

They are based on ISO 8178 and are performed using distillate fuel. Engines can be pre-certified or certified after they are installed on a vessel. After demonstrating compliance, pre-certified engines would receive an Engine International Air Pollution Prevention (EIAPP) certificate. This document, to be issued by the Administration of the flag country, is needed by the ship owner as part of the process of demonstrating compliance with all the provisions of Annex VI and obtaining an International Air Pollution Prevention (IAPP) certificate for the vessel once the Annex goes into force. The Annex also contains engine compliance provisions based on a survey approach. These survey requirements would apply after the Annex goes into force. An engine is surveyed right after it is installed, every five years after installation, and at least once between five-year surveys. Engines are not required to be tested as part of a survey, however. The surveys can be done by a parameter check, which can be as simple as reviewing the Record Book of Engine Parameters that must be maintained for each engine and verifying that current engine settings are within allowable standards.

To obtain copies of this document,

see

Footnote 5, above.

After several years of negotiation, the Parties to MARPOL adopted a final version of Annex VI at a Diplomatic Conference on September 26, 1997. However, it will not enter into force until twelve months after the date on which not less than fifteen member states, the combined merchant fleets of which constitute not less than 50 percent of the gross tonnage of the world's merchant shipping, have ratified the agreement. To date, more than four years after it was adopted, the Annex has been ratified by only 6 countries representing about 26 percent of the world's merchant shipping.

The countries that have ratified Annex VI are Sweden, Norway, Bahamas, Singapore, Marshall Islands, and Liberia. Information about Annex VI ratification can be found at

http://www.imo.org

(look under Conventions, Status of Conventions—Complete List).

The Annex requires that engines installed on a ship constructed on or after January 1, 2000 must comply with the specifications set forth in Regulation 13 of the Annex and the NO

Technical Code. In addition, ship owners must bring existing engines into compliance if the engines undergo a major conversion on or after that date.

Although the Annex has not yet entered into force and is not yet legally binding, it is widely recognized that the vast majority of marine diesel engines manufactured and installed after January 1, 2000 meet the requirements of the Annex. To facilitate implementation while the Annex is not yet in force and to allow engine manufacturers to certify their engines before the Annex goes into force, we have set up a process for manufacturers to obtain a Statement of Voluntary Compliance.

Once Annex VI goes into effect for the United States we will develop a process by which an EPA-issued Statement of Voluntary Compliance can be exchanged for an EIAPP. It should be noted that an engine certificate (EIAPP) or Statement of Voluntary Compliance for an engine installed on a U.S. vessel must be issued by the U.S. EPA. Marine classification or survey societies are not authorized to issue such certificates on behalf of the U.S. government for U.S. vessels.

As defined in Regulation 13 of Annex VI, a major conversion means either (i) the engine is

replaced by a new engine, (ii) it is substantially modified, or (iii) its maximum continuous rating is increased by more than 10 percent. Any existing engine that undergoes a major conversion on or after January 1, 2000 would be required to comply with the Annex VI NO

limits. Note that EPA's marine diesel engine emission control program does not have a similar provision for marine diesel engines.

For more information about our voluntary certification program, see “Guidance for Certifying to MARPOL Annex VI,” VPCD-99-02. This letter is available on our Web site:

http://www.epa.gov/otaq/regs/nonroad/marine/ci/imolettr.pdf

and in Docket A-2001-11, Document No. II-B-01.

The U.S. government has prepared the appropriate documents for the President to submit Annex VI to the Senate for its advice and consent to ratification. Besides setting standards for NO

emissions, Annex VI regulates ozone-depleting emissions, sulfur oxides emissions and shipboard incineration, and contains other environmentally protective measures. In transmitting Annex VI to the Senate, the Administration will work with Congress on new legislation to implement the Annex. The United States government also supports a new effort to revise the Annex VI standards to include a second tier of NO

standards taking into account the emission-reduction potential of new control technologies. Should the Senate provide its advice and consent to ratification of the Annex, the United States will continue its leadership in promoting environmentally responsible international emission standards at the IMO and recognize the role the IMO plays in protecting the world's marine environment from pollution. As described in Section IV.A.4, we have already requested the Marine Environment Protection Committee to begin consideration of more stringent NO

emission standards for marine diesel engines. In addition, once the Annex goes into force, amendment of NO

standards to include a second tier of standards will be made easier through the tacit amendment process that would then apply.

F. Recent European Union Action

In November 2002, the European Union adopted a new strategy to address sulfur emissions from marine engines by reducing the sulfur content of marine fuels used in the European Union. The strategy consists of two documents: A Communication from the Commission to the European Parliament and the Council—A European Union strategy to reduce atmospheric emissions from seagoing ships; and a Proposal for a Directive of the European Parliament and of the Council—amending Directive 1999/32/EC as regards the sulphur content of marine fuel.

The strategy contains provisions to push the IMO for more stringent NO

limits for marine diesel engines. It also encourages the development of a Clean Marine award scheme and market-based instruments to promote emission reductions.

More information on the European Union strategy can be found at

http:www.europa.eu.int/comm/environment/air/transport.htm#3.

The proposal has two main provisions. The first is a 15,000 ppm sulfur content limit that would apply to the fuel used by all oceangoing vessels in the North Sea, English Channel, and Baltic Sea, and to all regular passenger vessels operating in the EU by 2007. This provision is consistent with the SO

Emission Control Areas designated under MARPOL Annex VI. The second provision would require ships to use fuel with a maximum sulfur content of 2,000 ppm (0.2%) while they are at berth in ports inside the European Union. This provision is intended to reduce sulfur and particulate matter emissions in populated areas. The analysis accompanying the fuel sulfur proposal estimates that the proposed standards will reduce SO

emissions by 507,000 metric tons and PM emissions by 8,000 metric tons, saving about 2,000 lives a year. These benefits are monetized at 2.7 billion Euros. The costs, which they note are likely to be born by shipowners through increased fuel prices, is estimated to be 1.07 billion euros per year.

The strategy was finalized on November 20, 2002. The strategy and communication documents will be sent to the European Parliament and Council. The proposal will be discussed in these legislative bodies, and negotiations are anticipated to take about two years.

G. Statutory Authority

We conducted a study of emissions from nonroad engines, vehicles, and equipment in 1991, as directed by section 213(a) of the Clean Air Act (42 U.S.C. 7547(a)). Based on the results of that study, we determined that emissions of NO

, volatile organic compounds (including HC), and CO from nonroad engines and equipment contribute significantly to ozone and CO concentrations in more than one nonattainment area (see 59 FR 31306, June 17, 1994). Given this determination, section 213(a)(3) of the Act requires us to establish (and from time to time revise) emission standards for those classes or categories of new nonroad engines, vehicles, and equipment that in our judgment cause or contribute to such air pollution. We have determined that marine diesel engines rated over 37 kW cause or contribute to such air pollution (

Category

Displacement per cylinder

hp range (kW)

rpm range

Disp. <5 liters (and power ≥37 kW)

37-2,300

1,800-3,000

5 ≤disp. <30 liters

1,500-8,000

750-1,500

Disp. ≥30 liters

2,500-80,000

60-900

C. What Is a New Marine Diesel Engine?

In the proposal for this rule, we proposed that the emission standards would apply to new engines on vessels flagged or registered in the United States. We also requested comment on whether to modify the definition of a “new marine engine” to find that the engine emission standards apply to marine diesel engines that are built after the standards become effective and that are installed on foreign vessels that enter U.S. ports. We have decided to finalize the scope of application as proposed. However, we intend to revisit this issue in our future rule.

1. “New” Engines on Vessels Flagged or Registered in the United States

As set out in 40 CFR 94.2, a new marine engine is (i) a marine engine, the equitable or legal title to which has never been transferred to an ultimate purchaser; (ii) a marine engine installed on a vessel, the equitable or legal title to such vessel has never been transferred to an ultimate purchaser; or (iii) a marine engine that has not been placed into service on a vessel. In cases where the equitable or legal title to an engine or vessel is not transferred to an ultimate purchaser prior to its being placed into service, an engine ceases to be new after it is placed into service.

This means that a marine engine is new and is subject to emission standards before its initial sale is completed or it is placed into service. Practically, it means that any engine must meet emission standards that are in effect the first time it is sold or placed into service or the first time the vessel on which it is installed is sold or placed into service. This is true for any engine that is sold for the first time as a marine engine (placed into service on a marine vessel), regardless of whether it has previously been used for other nonroad or highway purposes. This clarification is necessary because some marine engines are made by “marinizing” existing land-based nonroad or highway engines. Without this clarification, a

used highway or land-based engine converted for marine installation would not be subject to the standards, since its title was already transferred to the initial highway or land-based nonroad user.

With respect to imported marine diesel engines, 40 CFR 94.2 defines “new” as an engine that is not covered by a certificate of conformity at the time of importation and that was manufactured after the starting date of the emission standards applicable to such an engine (or which would be applicable to such an engine had it been manufactured for importation into the United States). According to this definition, the standards apply to engines that are imported by any person, whether newly manufactured or used, and whether they are imported as uninstalled engines or if they are already installed on a marine vessel that is imported into the United States. In one example, a person may want to import a vessel with an engine built after the effective date of the standards, but the engine does not have a certificate of conformity from EPA because the engines and vessel were manufactured elsewhere. We would still consider it to be a new engine or vessel, and it would need to comply with the applicable emission standards. This provision is important to prevent manufacturers from trying to avoid the emission standards by building vessels abroad, transferring their title, and then importing them as used vessels.

2. “New” Engines on Vessels Flagged or Registered Elsewhere

This final rule does not apply to Category 1, 2, and 3 marine diesel engines that are built after the standards become effective and that are installed on foreign vessels that enter U.S. ports and are not imported into the United States. Section 213 of the Clean Air Act (42 U.S.C. 7547), authorizes regulation of “new nonroad engine” and “new nonroad vehicle.” However, Title II of the Clean Air Act does not define either “new nonroad engine” or “new nonroad vehicle.” Section 216 defines a “new motor vehicle engine” to include an engine that has been “imported.” EPA modeled the current regulatory definitions of “new nonroad engine” and “new marine engine” at 40 CFR 89.2 and 40 CFR 94.2, respectively, after the statutory definitions of “new motor vehicle engine” and “new motor vehicle.” This was a reasonable exercise of the discretion provided to EPA by the Clean Air Act to interpret “new nonroad engine” or “new nonroad vehicle.”

See Engine Manufacturers Assoc.

EPA,

88 F.3d 1075, 1087 (D.C. Cir. 1996).

The 1999 marine engine rule did not apply to marine engines on foreign vessels. 40 CFR 94.1(b)(3). At that time, we concluded that engines installed on vessels flagged or registered in another country that come into the United States temporarily will not be subject to the emission standards. Those vessels are not considered imported under the U.S. customs laws and did not meet the definition of “new” adopted in that rule (64 FR 73300, Dec. 29, 1999).

The May 29, 2002 proposed rule solicited comment on whether to exercise our discretion and modify the definition of a “new marine engine” to find that engine emission standards apply to foreign vessels that enter U.S. ports. As discussed earlier, the standards in this rulemaking will go into effect in 2004. We will also conduct a subsequent rulemaking that will address revisions to these standards for future model years. In this subsequent rulemaking, we will consider adopting more stringent standards that require a longer lead time than the standards adopted in this final rule. The issue of applying these more stringent standards to foreign vessels will also be considered in that subsequent rulemaking.

We must therefore determine whether to revise the definition of “new” to include foreign vessels for purposes of the near-term standards adopted in this final rule. EPA need not decide whether we have the discretion to interpret “new” nonroad engine or vessel in that manner; however, we believe it would be appropriate not to exercise such discretion at this time even assuming we had the discretion to interpret “new'to include foreign vessels.

As noted above, one of the reasons we intend to address a second phase of more stringent standards in a subsequent rulemaking is to facilitate the development of more stringent consensus international requirements. Adoption of international standards has the clear potential to maximize the level of emission reductions achieved from emission control on U.S. and foreign vessels. For example, consensus international standards of appropriate stringency would facilitate and effectively reduce or remove the legal and policy objections to controlling emissions from foreign vessels, and therefore would facilitate achieving the greatest emission reductions from Category 3 vessels. This is one reason we determined to address the second phase of standards in a subsequent rulemaking timed to facilitate such international action, but also timed to allow us to proceed expeditiously on our own if appropriate international standards are not adopted.

Applying the first phase of standards adopted in this final rule to foreign vessels would require us to determine that we have the discretion to interpret new nonroad engine or vessel in that manner, and that it is a reasonable exercise of discretion to do so. However even assuming we have the discretion to interpret “new marine engine” to include engines on foreign vessels, we believe it would be appropriate not to exercise such discretion at this time.

The same reasons that counsel deferring adoption of more stringent standards to a subsequent rulemaking also counsel deferring a decision on applying Clean Air Act standards to foreign vessels to such a rulemaking. We believe that deferring this decision may help facilitate the adoption of more stringent consensus international standards. A new set of internationally negotiated marine diesel engine standards would apply to engines on all vessels, regardless of where they are flagged. Adoption of appropriate international consensus standards has the clear potential to maximize the level of emission reductions from domestic and international vessels.

Our decision to defer application of the standards to engines on foreign flag vessels is not expected to lead to any significant loss in emission reductions. We fully expect that foreign vessels will comply with the MARPOL standards whether or not they are also subject to the equivalent Clean Air Act standards being adopted in this final rule. Consequently, no significant emission reductions would be achieved by treating foreign vessels as “new” for purposes of the near-term standards in this final rule and there is no significant loss in emission reductions by not including them.

In conclusion, we are not including foreign engines and vessels in this rulemaking and are not revising the definition of “new marine engine” at this time. We do not need to decide now whether we have the discretion to include foreign vessels under the nonroad provisions of the Clean Air Act. In the subsequent rulemaking, we will be in a better position to resolve under what circumstances we may and should define new nonroad engine and vessel to include foreign engines and vessels. As part of that determination, we will also assess the progress made by the international community toward the adoption of new more stringent international consensus standards that reflect advanced emission-control technologies.

D. What Is a New Marine Vessel?

1. Newly Manufactured Vessel

The definition of new vessel is set out in 40 CFR 94.2. This definition is similar to the definition of new engine: a new marine vessel is a vessel whose equitable or legal title has never been transferred to an ultimate purchaser. In the case where the equitable or legal title to a vessel is not transferred to an ultimate purchaser prior to its being placed into service, a vessel ceases to be new when it is placed into service.

2. Modification of an Existing Vessel With Category 1 or Category 2 Main Propulsion Engines

In addition, our definition in 40 CFR 94.2 specifies that a vessel is considered new when it has been modified such that the value of the modifications exceeds 50 percent of the value of the modified vessel. As noted in our 1999 rulemaking, this provision is intended to prevent someone from re-using the hull or other parts from a used vessel to avoid emission standards. This provision is based on a similar provision in our locomotive engine emission control program (

see

40 CFR 92.2 definition of “freshly manufactured locomotive”). Since we finalized our 1999 commercial marine diesel engine rule we received several questions about how to apply this provision. The following is intended to clarify this provision.

When applying this provision, the modifications must be completed prior to the effective date of the standards that would otherwise apply. For example, for the Tier 2 engine standards that go into effect in 2007 for Category 1 and Category 2 marine diesel engines, modifications that are completed by December 31, 2006 will not trigger the engine requirements and the engines on that vessel would not have to meet the standards. However, if the vessel modifications are completed on or after January 1, 2007, and they exceed 50 percent of the value of the modified vessel, then the engines on the vessel must meet the standards regardless of whether they have been changed as part of the vessel modification.

The definition in 40 CFR 94.2 refers to the “value” of the modifications, rather than the costs. These figures must therefore be based on the appraised value of the vessel before modifications compared with the value of the modified vessel. The following equation demonstrates the calculation, showing that a vessel is new if:

[assessed value after modifications]−[assessed value before modifications]

≥ 0.5 [assessed value after modifications]

If the value of the modifications exceeds 50 percent of the final value of the modified vessel, we would treat the vessel as new under 40 CFR part 94. To evaluate whether the modified vessel would be considered new, one would need to project the fair market value of the modified vessel based on an objective assessment, such as an appraisal for insurance or financing purposes, or some other third-party analysis. While the preliminary decision can be based on the projected value of the modified vessel, the decision must also be valid when basing the calculations on the actual assessed value of the vessel after modifications are complete.

3. Modification of an Existing Vessel With Category 3 Main Propulsion Engines

EPA is adopting a separate definition of “new vessel” for those vessels equipped with a Category 3 engine. A separate definition for these vessels is reasonable because large ocean-going vessels are already subject to a different definition of “new vessel” pursuant to the U.S. adoption of the requirements in MARPOL Annex I, Regulations for the Prevention of Pollution by Oil.

The MARPOL Annex I criteria for determining when the modifications made to an existing vessel make that vessel “new” and thereby subject to MARPOL Annex I are contained in its definition for “major conversion” of a ship. The goal of the Annex I provision is similar to the goal of our provision: To require ships that have been so modified as to make them substantially new, to comply with the standards otherwise applicable to new vessels.

Annex I to the International Convention on the Prevention of Pollution from Ships, 1973, as Modified by the Protocol of 1978 Relating Thereto.

Note that while the provisions of MARPOL Annex I apply to all vessels, Annex I distinguishes between vessels at or above 400 gross tonnage, which are subject to the specific MARPOL requirements, and those below 400 gross tonnage, which are subject to potentially different provisions, adopted by each Member State to “ensure that it is equipped as far as practicable and reasonable with [relevant] installations.” Vessels above 400 gross tonnage, which are likely to be ocean-going vessels equipped with Category 3 main propulsion engines, are therefore subject to the Annex I criteria for determining when an existing vessel is modified in such a way that it is considered “new” and subject to MARPOL Annex VI's requirements.

For the purpose of this Clean Air Act regulation, we are adopting a definition of “new vessel” for vessels with Category 3 main propulsion engines that is consistent with the way Annex I was adopted into U.S. law (see 40 U.S.C. 2101). According to this approach, an existing vessel with a Category 3 main propulsion engine will be considered a “new vessel” and will be subject to the requirements of using a new engine certified to the emissions standards adopted in this final rule if that vessel undergoes a modification that:

• Substantially alters the dimensions or carrying capacity of the vessel;

• Changes the type of the vessel; or

• Substantially prolongs the life of a vessel.

Under our provision, once a vessel with a Category 3 propulsion engine is determined to be “new” according to the above criteria, then all the engines on that vessel would have to comply with EPA's marine diesel engine emission limits. To the extent that any judgment is required in interpreting this provision, EPA intends to implement this definition consistently with the application of the MARPOL.

E. Is EPA Retaining the Foreign-Trade Exemption?

In addition to their main propulsion engines, which are generally Category 3 marine diesel engines, ocean-going commercial vessels typically have several Category 1 and Category 2 engines that are used in auxiliary power applications. They provide electricity for important navigational and maneuvering equipment, and crew services.

Several commenters to our earlier marine diesel engine rulemaking expressed concern that requiring ship owners to obtain and use compliant Category 1 and Category 2 engines for vessels that spend most of their time outside the United States could be burdensome for those vessels if these engines need to be repaired or replaced when they are away from U.S. ports. Consequently, we provided a foreign-trade exemption for these engines. A vessel owner could obtain this exemption for Category 1 and Category 2 marine diesel engines if it was demonstrated to the Administrator's satisfaction that the vessel: (a) Will spend less than 25 percent of its total engine operation time within 320 kilometers of U.S. territory; or (b) will not operate between two U.S. ports (40 CFR 94.906(d)).

We are eliminating the foreign-trade exemption because the conditions on

which it was based no longer apply. Specifically, we have learned that many spare engine parts are kept onboard vessels to enable ship operators to perform maintenance and repairs while the ship is underway. In addition, obtaining parts that are not kept onboard is not expected to be a problem. Modern package delivery systems allow ship owners to obtain parts quickly, even overnight, and necessary parts can be shipped to the next convenient port on a ship's route. In the unlikely case that an engine fails catastrophically and must be replaced by a compliant engine, we are confident that the ship operator will be able to make arrangements to obtain a certified engine, since the major manufacturers of marine diesel engines operate abroad as well as in the United States. Because the burden associated with repairing or replacing engines away from the United States is not significant, we believe it is appropriate to eliminate the exemption. We do not expect this change to have any impact on shipowners and operators.

III. Standards and Technological Feasibility

The emission standards we are adopting reflect a two-step approach. The first step involves near-term standards designed to be achievable immediately without additional research and development. This section presents these Tier 1 standards and the technologies that will be used to achieve them. The second step consists of a set of long-term standards, discussed in Section IV.

A. What Are the New Emission Standards?

We are adopting standards for marine diesel engines that are equivalent to the internationally negotiated NO

standards, beginning in 2004. These standards, which are presented in Table III.A-1, apply to marine diesel engines with per-cylinder displacement over 2.5 liters. By adopting these standards, we are making them enforceable under U.S. law for engines on vessels flagged or registered in the United States, regardless of whether Annex VI has entered into force or whether the United States has deposited its instrument of ratification to MARPOL Annex VI.

Table III.A-1.—NO

Emission Standards

[g/kW-hr]

Engine Speed (n)

n ≥ 2000 rpm

2000 > n ≥ 130 rpm

n < 130 rpm

9.8

45.0 × n

−0.2

17.0

As described in Section V, we will accept emission data for certification to the near-term standards based on testing with either distillate or residual fuel. Because most or all manufacturers have been using distillate fuel to comply with Annex VI requirements, we expect manufacturers to meet the near-term standards generally by submitting their available emission data from testing with distillate fuels.

For marine diesel engines with per-cylinder displacement between 2.5 and 30 liters, these standards apply from 2004 to 2006, after which the EPA Tier 2 marine engine emission standards established in December 1999 apply (64 FR 73300, December 29, 1999). Testing to show compliance for these engines is generally based on emission measurements with distillate fuels meeting the specifications in 40 CFR 94.108.

We are not adopting the internationally negotiated standards for engines under 2.5 liters per cylinder. This is because our Tier 2 standards for most of those engines are effective in 2004. Marine diesel engines below 0.9 liters per cylinder need not meet EPA emission standards until 2005, but most of those engines are under 130 kW and are therefore not subject to Annex VI standards.

In the December 1999 final rule, we included a requirement to measure or prevent crankcase emissions. We have clarified in the final regulations that this applies only for engines subject to Tier 2 standards. As a result, none of the emission standards in this final rule include requirements related to crankcase emissions.

B. When Do the Engine Emission Standards Apply?

Adopting emission standards for new Category 3 marine engines starting in 2004 allows less than the usual lead time for meeting EPA requirements. We note, however, that manufacturers are generally already meeting the internationally negotiated standards, which apply to engines installed on vessels built on or after January 1, 2000. The near-term standards will require no additional development, design, or testing beyond what manufacturers are already doing to meet the internationally negotiated Annex VI NO

standards.

Engine manufacturers will need to comply with emission standards for all engines produced after January 1, 2004. For Category 1 and Category 2 engines, the date of manufacture is the date of the final assembly of the engine. However, we recognize that Category 3 engines are often disassembled for shipment to the site at which it is installed in the ship. Therefore, for Category 3 engines, the date of manufacture is based on the first full assembly of the engine.

Shipbuilders and owners are not required to certify their vessels under the program we are adopting in this action. However, shipbuilders are prohibited from selling vessels with noncompliant engines if they initiate construction of a vessel after the date that regulations begin to apply.

C. What Technologies Will Engine Manufacturers Use To Meet the Tier 1 Emission Standards?

The near-term Tier 1 standards are interim standards. They are intended to ensure that Category 3 engines achieve the greatest reductions achievable in this time frame, until the more stringent long-term standards we adopt go into effect. The short lead time associated with these interim standards means they call for the use of engine technologies that already have been or can be applied immediately, with little or no lead time.

The Tier 1 standards are achievable immediately because engine manufacturers are already producing engines that meet these standards. The short lead time involved in meeting Tier 1 standards by January 2004 allows manufacturers only enough time to work through this program's compliance requirements and do all the testing and paperwork required to complete the certification process.

Setting Tier 1 standards that are more stringent than the internationally negotiated NO

standards (for example, one requiring further development and optimization of in-cylinder controls), would require more lead time to allow engine manufacturers to develop and to optimize existing in-cylinder technologies and apply them to these engines. Moreover, as discussed in Section I.C, adopting an emission standard now that is based only on in-cylinder control technologies would likely delay the adoption of future more stringent emission standards that may be based on optimized in-cylinder controls in combination with advanced technologies such as SCR or water injection.

Similarly, we are not adopting Tier 1 emission standards for HC or CO emissions because the short lead time does not allow manufacturers sufficient time to do the testing and design work that would be necessary to ensure compliance with such standards. As described in the proposal, the focus of controlling emissions from Category 3 engines is on NO

. The standards we contemplated for HC and CO in the proposal would have achieved modest reductions from baseline levels or, more likely, merely prevented increases in these pollutants as manufacturers apply emission-control technologies to address NO

emissions. Manufacturers do not have a complete data set to characterize HC and CO emissions from their Category 3 engines, so some engines may well have emission rates above the level we would consider to be a cap that would merely prevent increasing emissions. The short lead time associated with the Tier 1 standards is too short to allow manufacturers in these cases to address this potential. As a result, we believe it is most appropriate to include appropriate emission standards for HC and CO emissions in the future rulemaking, as described below.

Engine manufacturers are meeting the Annex VI standards today with a variety of emission-control technologies. These basic emission-control technologies include a variety of in-cylinder technologies, generally including optimized turbocharging, higher compression ratio, and optimized fuel injection, which may include timing retard or changes to the number and size of injector holes to increase injection pressure.

D. Voluntary Low-Emission Standards

Several state and environmental groups and manufacturers of emission controls have supported our efforts to develop incentive programs to encourage the use of engine technologies that go beyond federal emission standards. Some companies have already significantly developed these technologies. In the final rule for land-based nonroad diesel engines, we included a program of voluntary standards for low-emitting engines, referring to these as “Blue Sky Series” engines (63 FR 56967, October 23, 1998). We included similar programs in several of our other nonroad rules, including that for commercial marine diesel engines. The general purposes of such programs are to provide incentives to manufacturers to produce clean products as well as create market choices and opportunities for environmental information for consumers regarding such products. The voluntary aspects of these programs, which in part provides an incentive for manufacturers willing to certify their products to more stringent standards than necessary, is an important part of the overall application of “Blue Sky Series” programs. While these are voluntary standards, they become binding once a manufacturer chooses to participate. EPA certification will therefore provide protection against false claims of environmentally beneficial products. For the program to be most effective, however, incentives should be in place to motivate the production and sale of these engines. These incentive programs can be put in place by users and state and local governments.

To be designated as a Blue Sky engine, an engine must have emissions at least 80 percent below Annex VI NO

levels. The specific voluntary low-emission NO

standard is expressed as 9.0 × n

−0.2

(in g/kW-hr), with a cap of 3.4 g/kW-hr for engines with rated speed over 130 rpm (no specific standard applies to engines over 2000 rpm, because Category 3 engines all have engine speeds well below 2000 rpm). Data suggest that engines utilizing selective catalytic reduction should be able to meet these emission levels. Establishing an objective qualifying level for voluntary low-emission engines allows state and local governments or individual port authorities to develop meaningful incentive-based programs to encourage preferential use of these very low-emitting engines.

Engines certified to the voluntary low-emission standards must also meet HC and CO standards reflecting baseline emission levels for these pollutants. As described in the proposal, we believe the appropriate levels to cap emissions of these pollutants are 0.4 g/kW-hr for HC and 3.0 g/kW-hr for CO.

IV. Future Actions

The standards we are adopting in this action are equivalent to the internationally negotiated standards contained in MARPOL Annex VI and are expected to achieve a 20-percent reduction in the national Category 3 NO

inventory by 2030. As noted in Section I, the inventory contribution of these engines to local NO

and PM inventories, particularly around commercial ports and coastal areas, can be significant. We recognize that manufacturers can achieve additional reductions with more lead time than is provided by the Tier 1 standards. They can do this by expanding the use and optimization of in-cylinder controls and by incorporating advanced technologies, such as selective catalytic reduction or water injection, that may achieve much greater reductions. We believe, however, that it is appropriate not to make a final decision on setting the longer-term Tier 2 standards in this final rule. This section describes how we plan to conduct a future rulemaking that will address a new tier of standards.

Separately, we also intend to pursue additional action to set controls for the fuels used by these engines. The sulfur content of these fuels is considerably higher than the fuel used in land-based nonroad engines. This high sulfur content leads to high PM and SO

emissions. MARPOL Annex VI contains a provision that would require ships to use lower sulfur fuel when operating in specially designated SO

Emission Control Areas, or be equipped with an exhaust gas cleaning system or other system that reduces the total SO

emissions from the ship to 6.0 g/kW-hr or less. If the Annex goes into force, we will assist the other federal agencies in investigating and developing an application to the IMO by the United States for designating relevant coastal and port areas as SO

Emission Control Areas. If the Annex does not go into force, we may address this issue under our existing authority in a future rule. In addition, we are considering fuel controls as part of the nonroad diesel rule that is currently under development that could affect the distillate fuels used by marine vessels.

A. Future Rulemaking for Engine Standards

1. What Is the Timetable for the Future Rule?

We are adopting a regulatory provision in 40 CFR 94.8 that establishes a schedule for a future rulemaking to promulgate additional engine controls that EPA determines are appropriate under section 213(a)(3) of the Act. This future rulemaking will reassess the standards in place at the time using information about the feasibility of optimizing in-cylinder controls and applying advanced NO

and PM control technologies to these engines. We intend to consider an additional tier of standards for all marine diesel engines and will also consider application of these standards to engines on foreign vessels that enter U.S. ports. We will also include in our evaluation an assessment of the status of international action to set more stringent standards. The standards in this final rule will remain in effect unless modified by a future rulemaking. We are committing to take final action

on appropriate standards for marine diesel engines by April 27, 2007, and to issue a proposal no later than approximately one year before. This future rulemaking will allow us to exercise the discretionary authority under Clean Air Act section 213(a)(3), which directs EPA to “from time to time revise” regulations under that provision.

This schedule for our future rule will allow us to coordinate with future actions of the U.S. government with respect to negotiations for a future tier of standards under MARPOL. As described in Section IV.A.4 below, in 2000 the United States requested the Marine Environment Protection Committee to consider more stringent emission controls for marine diesel engines. We are hopeful that the committee will begin these discussions in the next year or so. At the same time, while harmonizing with future, more stringent MARPOL emission limits is desirable, the standards contained in our future rule will be promulgated pursuant to the Clean Air Act, as described in the next section.

EPA considers this time as necessary and appropriate to properly take into consideration additional information expected to become available about emerging technologies, as well as any developments in the international negotiations for more stringent emission limits.

2. What Standards Will EPA Consider in the Future Rule?

a. Standards for Category 3 Marine Diesel Engines.

For the future rule, we intend to set more stringent standards for Category 3 marine diesel engines based on the greatest degree of emission control achievable from technologies that will be available with appropriate lead time. In our proposal, we considered a 30-percent reduction below Annex VI levels to be the primary option for adopting long-term standards for Category 3 marine diesel engines. At the time we believed this could be achieved through the use of in-cylinder controls. However, further review of information on this technological approach shows that these technologies are already being used to meet the internationally negotiated standards. At this point we are not confident that in-cylinder controls alone would reduce emissions much more than 10 or 15 percent below the Tier 1 levels.

We are concerned that, if we were to implement standards based on traditional in-cylinder controls to reduce emissions beyond Annex VI levels, either in this or a future rule, manufacturers would need to divert resources from their advanced technology development programs. In addition, manufacturers would need to optimize their use of in-cylinder controls again when incorporating the advanced emission-control technologies. As a result, the readiness of this technology could be delayed in return for a standard based on traditional in-cylinder controls alone, which may not be capable of reducing NO

emissions by an additional 30 percent.

We are therefore now considering Tier 2 standards that would focus on optimizing in-cylinder controls with the advanced technologies presented in the proposal, which together are projected to reduce NO

emissions by significantly more than 30 percent. This approach was supported by commenters representing environmental and state interests, who strongly objected to emission standards that rely on engine-based technologies because of the expectation that these other advanced technologies are available and appear to be cost-effective.

We are, however, not finalizing such Tier 2 standards in this final rule because we believe there are substantial outstanding issues associated with water technologies and selective catalytic reduction. These issues, which include fuel compatibility, low-load effectiveness, and PM impacts, are discussed below in Section IV.A.3.

During the next few years we will have the opportunity to develop a better understanding of the issues that prevent us from adopting standards based on advanced technologies now. For example, several vessels have been equipped recently with selective catalytic reduction, as described in Chapter 5 of the Final Regulatory Support Document. Observing these installations will allow us to gain insight into the effectiveness and durability of these systems, while highlighting any potential technical constraints or problems. We would also have opportunity to learn with engine manufacturers and other industry contacts who are actively pursuing development and implementation of the advanced technologies.

In the future rulemaking, we will also consider the need to adopt emission standards for HC and CO emissions. Although HC and CO emissions are generally low from diesel engines, HC emissions nevertheless combine with NO

emissions to form ozone; HC and CO can also have direct health impacts. Setting standards for HC and CO may achieve modest emission reductions, but more importantly, may be necessary to prevent HC and CO emission increases that might otherwise result from controlling NO

emissions alone.

Regarding PM from Category 3 marine engines, the majority of emissions comes directly from the high concentration of sulfur in the residual fuel used by these engines. Short of changing in-use fuel quality, emission-control technologies only address the remaining portion of PM, because engine technologies are ineffective at reducing sulfur-related PM emissions. Furthermore, no acceptable procedure exists for measuring PM from Category 3 marine engines, because currently established PM test methods show unacceptable variability when sulfur levels exceed 0.8 weight percent. Both distillate and residual marine fuels used in these engines commonly exceed that level. No PM test method or calculation methodology has yet been developed to correct that variability. However, the additional time available to prepare the future rulemaking will allow us to take into account any developments related to regulation of in-use fuel quality and PM measurement equipment and procedures as we consider the appropriateness of adopting a PM standard for Category 3 marine diesel engines.

We also intend to revisit various other issues raised in the proposal. For example, we continue to be concerned about controlling emissions at low-power test modes and at operating points between test modes. As described in the proposal, we would like to take steps to ensure that engines meet emission standards when operating on residual fuel, including an appropriate means to correct for the nitrogen content of the test fuel. We also believe that basing emission standards on engine displacement instead of rated speed warrants further consideration. We will also revisit several compliance issues such as onboard NO

monitoring, adjustable parameters, deterioration factors with advanced technologies, post-certification testing (PLT), broader test conditions, defect reporting, and test fuel. These compliance issues are discussed in Section V.

b. Standards for Category 1 and Category 2 Marine Diesel Engines.

For Category 1 and Category 2 marine diesel engines, we have already established Tier 2 emission standards based on in-cylinder controls. However, there are several differences between these engines and Category 3 engines, which made this possible. First, for Category 1 and Category 2 marine diesel engines, manufacturers are able to transfer emission-control technology already developed for the land-based counterparts to these engines. Second,

Category 1 and Category 2 engines are produced in much greater volumes than Category 3 engines which allows manufacturers to more easily amortize their research and development costs. Third, because Category 3 engines generally operate on residual fuel, this provides an additional constraint on what can be achieved through in-cylinder control.

While this final rule primarily addresses Category 3 engines, we intend to use the future rulemaking as an opportunity to reconsider Tier 3 emission standards for Category 1 and Category 2 standards. We proposed Tier 3 standards for these engines on December 11, 1998 (63 FR 68508, December 11, 1998), but chose not to finalize the Tier 3 standards at that time. Given the current and expected advances in emission-control technologies for land-based diesel engines and the need to coordinate standards for all categories of marine engines, we believe this will be the appropriate context to reopen the proposed Tier 3 standards. In the future rulemaking we would also be able to consider applying compliance provisions such as onboard NO

monitoring to Category 1 and Category 2 engines. This may be especially appropriate for certain applications, such as ferries and tugboats that operate closest to metropolitan areas.

3. What Technologies Will EPA Consider in the Future Rule?

As discussed above, the future rulemaking will focus on technologies we believe can be used to reduce NO

emissions by significantly more than 30 percent below Tier 1 levels for Category 3 marine diesel engines. These emission-control systems are expected to include a combination of optimized in-cylinder controls and advanced technologies such as selective catalytic reduction and water. These advanced technologies are discussed below. Although we do not believe it is appropriate to set standards for Category 3 marine engines based on these approaches at this time, we believe that remaining technological and operational issues can be addressed in the future. Technologies that could be used to achieve emission reductions beyond the Tier 2 standards for Category 1 and Category 2 marine diesel engines were discussed in an earlier proposal (63 FR 68508, December 11, 1998).

Further analysis of potential Tier 3 standards for Category 1 and Category 2 marine diesel engines may be found in the Draft Regulatory Impact Analysis associated with this proposal which is available in Air Docket A-97-50.

a. Water-based technologies.

We believe that significant NO

control of approximately a 50-percent reduction can be achieved in the future, once certain technical and practical challenges are overcome, by introducing water into the combustion process in combination with appropriate in-cylinder controls. Water can be used in the combustion process to lower maximum combustion temperature, and therefore lower NO

formation, with an insignificant increase in fuel consumption. Water has a high heat capacity, which allows it to absorb enough of the energy in the cylinder to reduce peak combustion temperatures. Data presented below and in the Final Regulatory Support Document suggest that NO

reductions significantly more than 30 percent below the Tier 1 standards can be achieved, depending on the ratio of water to fuel and on the method of introducing water into the combustion chamber. These data are primarily based on developmental engines; however, given enough lead time, we believe that introducing water into the combustion process may become an effective emission-control strategy.

Water may be introduced into the combustion process through emulsification with the fuel, direct injection into the combustion chamber, or saturating the intake air. Water emulsification refers to mixing the fuel and water prior to injection. This strategy is limited by the instability of suspending water in fuel. To increase the effective stability, a system can be used that emulsifies the water into the fuel just before injection. Another option is to stratify the fuel and water through a single injector. The Final Regulatory Support Document presents data on these approaches showing a 30-40 percent reduction in NO

with water fuel ratios ranging from 0.3 to 0.4.

More effective control of the water injection process can be achieved through the use of an independent nozzle for water. Using a separate injector nozzle for the water allows larger amounts of water to be added to the combustion process because the water is injected simultaneously with the fuel, and larger injection pumps and nozzles can be used for the water injection. In addition, the fuel injection timing and the amount of water injected can be better optimized. Data presented in the Final Regulatory Support Document show NO

reductions of 40 to 70 percent with water-to-fuel ratios ranging from 0.5 to 0.9 if a separate nozzle is used for injecting water. Direct water injection has been installed on medium-speed Category 3 engines on more than a dozen vessels, and there are plans for using it on additional vessels. These vessels are primarily ferries and roll-on roll-off (ro-ro) vessels operating in European waters where there are economic incentives for reducing NO

emissions. In addition, they make relatively short trips, so water storage is not a significant issue.

Other strategies for introducing water into the combustion process are being developed that will allow much higher water-to-fuel ratios. These strategies include combustion air humidification and steam injection. With combustion air humidification, a water nozzle is placed in the engine intake and an air heater is used to offset condensation. With steam injection, waste heat is used to vaporize water, which is then injected into the combustion chamber during the compression stroke. Data on initial testing, presented in the Final Regulatory Support Document, show NO

reductions of more than 80 percent with water-to-fuel ratios as high as 3.5.

We believe that the results from initial testing of water introduction strategies is encouraging. We will continue to evaluate this technology in the future. However, we believe there are still outstanding technical issues concerning the use of water-introduction technologies for widespread application on marine engines. These issues are discussed below.

A primary concern with the use of water in the combustion process is the effect on PM emissions. The water in the cylinder reduces NO

, which is formed at high temperatures, by reducing the temperature in the cylinder during combustion. However, PM oxidation is most efficient at high temperatures. At this time, we do not have sufficient information on the effect of water emulsification and injection strategies on PM emissions to quantify this effect.

Fresh water is necessary for any of these water-based NO

-reduction strategies. Introducing salt water into the engine could result in serious deterioration due to corrosion and fouling. For this reason, a ship using water strategies would need either to produce fresh water through the use of a desalination or distillation system or to store fresh water on board. Cruise ships may already have a source of fresh water that could be used to enable this technology. This water source is the “gray” water, such as drainage from showers, which could be filtered for use in the engine. However, the use of gray water would have to be tested on these engines, and systems would have to be devised to ensure proper filtering. For example, it would be necessary to

ensure that no toxic wastes are introduced into the gray waste-water stream. One manufacturer stated that today's ships operating with direct water injection carry the amount needed to operate the system between ports (two to four days).

Depending on the amount of water necessary, other vessels that use Category 3 marine engines may not be able to generate sufficient amounts of water for this technology, especially at low loads where less heat is available from the engine. These ships would have to carry the water or be outfitted with new or larger distillation systems. Both of these options could displace cargo space. Finally, it should be noted that vessels currently equipped with water-based NO

-reduction technologies are four-stroke engines and include fast ferries, cruise ships, and cargo ships. The specific vessels travel relatively short distances between stops and need a much smaller volume of fresh water for a trip than would be required for crossing an ocean. More information is needed regarding operation on ocean-going vessels. If the ships were to use this technology only while traveling from 175 nautical miles of the U.S. coast to port, less water-storage capacity would be needed than if the ship used this NO

reduction strategy at all times. However, ships operating primarily within 175 nautical miles of the U.S. coast would need to be able to carry a volume of water of about one-half the volume of fuel they carry if they wish to keep the same refueling schedule. Ships making long runs, such as from California to Alaska, would have to be able to store enough water for that trip even if the ship travels that route infrequently. Because the standards would not be retroactive to existing vessels, ships could be designed to carry this water, however, this space would not be available to carry cargo or fuel. Lastly, if this technology were applied to two-stroke engines there may be lubricity concerns with the cylinder liner. One manufacturer is developing a strategy to use direct water injection with exhaust gas recirculation to minimize water requirements on such engines.

b. Selective catalytic reduction.

Selective catalytic reduction is one of the most effective means of reducing NO

from large diesel engines. In SCR systems, a reducing agent such as ammonia, is injected into the exhaust. The exhaust then goes through a catalyst where NO

emissions are reduced. As discussed in the Final Regulatory Support Document, SCR can be used to achieve NO

reductions of 90 percent or more below the Tier 1 limits, at exhaust temperatures above 300 °C. Lower-cost SCR systems can also be designed for less effective control of NO

emissions by reducing the amount of reducing agent used in the SCR unit. These systems are being successfully used for stationary applications, which operate under constant, high-load conditions. These systems are also installed in Category 3 engines used on ferries and cruise ships where they operate largely at high loads and over short distances so exhaust temperature and urea storage are not primary issues.

As discussed in the Final Regulatory Support Document, manufacturers are demonstrating similar NO

reduction using SCR technology for marine applications. These SCR demonstrations include both test systems and in-use vessels. One manufacturer has demonstrated a standard SCR system on eight vessels and a compact SCR system, which uses an oxidation catalyst upstream of the SCR reactor to reduce reactor size, on four vessels. Combined, these twelve vessels are equipped with a total of 40 medium-speed Category 3 marine engines. Another manufacturer has installed systems on 56 Category 2 or Category 3 marine engines. The majority of these engines were in ferries and ro-ros operating in European waters where there are economic incentives to use SCR. In addition, these engines are four-stroke medium-speed engines, which have higher exhaust temperatures than two-stroke low-speed engines which better enables the use of SCR. To prevent sulfur poisoning of the catalysts, the fuel used by these vessels ranges from 0.1 to 1.0 percent sulfur. This fuel includes both residual fuel and marine distillate fuel. In addition, they make relatively short trips between European ports, so urea availability and storage are not significant issues. Also, the relatively short trips allow time for maintenance and provide better access to any needed parts compared with ocean-going trips.

In one case, SCR was equipped on vessels with two-stroke low-speed engines. The goal of this program was to reduce the emissions emitted during the transportation of steel to a facility in Pittsburg, California. Because the vessels were equipped with two-stroke low-speed engines, the exhaust temperatures were low. In addition, the vessels operate at low load near the coast; therefore, certain modifications to the system were necessary. Primarily, the exhaust system was reconfigured to provide the maximum heat to the reactor, which had negative impacts on transient response and efficiency. Also, the catalyst was formulated to be effective at temperatures as low as 270°C. Because such a reactive catalyst is vulnerable to sulfur poisoning, the vessels operate only on 0.05 percent sulfur fuel when the SCR unit is active. These vessels make about 6 calls to California per year and the SCR unit is active for about 12 hours per call, when the vessel is within about 50 miles from the port.

We believe that the results from initial applications of SCR systems are encouraging. We will continue to evaluate this technology in the future. However, we believe there are still outstanding technical issues concerning the use of SCR for widespread application on marine engines. These issues are discussed below.

Lower-sulfur fuel is necessary to ensure the durability of the SCR system because sulfur can be trapped in the active catalyst sites and reduce the effectiveness of the catalyst. This sulfur poisoning can require additional maintenance of the system. We need more information on the impacts of fuel sulfur on SCR. As discussed above, SCR units in service today are operating on fuel ranging from 500 to 10,000 ppmS. Even if these systems can be made to operate on 15,000 ppmS fuel, an infrastructure would be necessary to ensure that ships could refuel with 15,000 ppmS fuel at ports they visit. Lower-sulfur residual fuel is available in areas that provide incentives for using such fuel, including the Baltic Sea; however, such fuel is not yet available at ports throughout the United States. During the next few years we expect to develop a better understanding of the availability of lower-sulfur fuels through the process related to designating SO

Emission Control Areas under Annex VI. We also intend to learn more about the sensitivity of SCR systems to fuel-sulfur concentrations.

Another issue is the effectiveness of SCR during low-load engine operation. SCR systems available today are effective only over a narrow range of exhaust temperatures (generally above 300 °C). The effectiveness of the SCR system is decreased at reduced temperatures that occur during engine operation at partial loads. Most of the engine operation in and near commercial ports and waterways close to shore is likely to be at these partial loads. In fact, reduced-speed zones can be as large as 100 miles for some ports. Because of the cubic relationship between ship speed and engine power required, engines may operate at less than 25 percent power in a reduced-speed zone. During this low-load operation, no NO

reduction would be expected, so SCR would be less effective while operating near ports. Some

additional heat to the SCR unit can be gained by placing the reactor upstream of the turbocharger; however, this temperature increase would not be large at low loads and the volume of the reactor would diminish turbocharger response when the engine changes load. The engine could be calibrated to have higher exhaust temperatures; however, this could affect durability if this calibration also increased temperatures at high loads (depending on the fuel used). For an engine operating on residual fuel, vanadium in the fuel can cause damage by reacting with the valves at higher temperatures. In addition, a catalyst that is formulated to be more reactive at lower temperatures is also more sensitive to sulfur poisoning. Any information that becomes available over the next few years would help us understand the potential for SCR systems to control emissions at low engine loads and ensure proper operation in port areas, where emission reductions are most important. This will help ensure that we adopt requirements with an appropriate expectation regarding the effectiveness of the anticipated emission-control technologies.

Sulfur in fuel is also a concern with an oxidation catalyst because, under the right conditions, sulfur can also be oxidized to form direct sulfate PM. At higher temperatures, up to 20 percent of the sulfur could be converted to direct sulfate PM in an oxidation catalyst compared to about a 2 percent conversion rate for a typical diesel engine without aftertreatment. Depending on the precious metals used in the SCR unit, it could be possible to convert some sulfur to direct sulfate PM in the reactor as well. Manufacturers would have to design their exhaust system (and engine calibration) such that temperatures would be high enough to have good conversion of NO, but low enough to minimize conversion of sulfur to direct sulfate PM. Direct sulfate PM emissions could be reduced by using lower sulfur fuel such as distillate.

SCR systems traditionally have required a significant amount of space on a vessel; in some cases the SCR unit is as large as the engine itself. However, at least one manufacturer is developing a compact system that uses an oxidation catalyst upstream of the reactor to convert some NO to NO

, thus reducing the reactor size necessary. The reactor size is reduced because the NO

can be reduced without slowing the reduction of NO. The catalytic reaction is faster by reducing NO

through two mechanisms. This compact SCR unit is designed to fit into the space already used by the silencer in the exhaust system. If designed correctly, this could also be used to allow the SCR unit to operate effectively at somewhat lower exhaust temperatures. The oxidation catalyst and engine calibration would need to be optimized to convert NO to NO

without significant conversion of sulfur to direct sulfate PM. NO

reductions of 85 to 95 percent have been demonstrated with an extraordinary sound attenuation of 25 to 35 dB(A).

Paro, D., “Effective, Evolving, and Envisaged Emission Control Technologies for Marine Propulsion Engines,” presentation from Wartsila to EPA on September 6, 2001 (Docket A-2001-11; document II-A-72).

A vessel using an SCR system would also require an additional tank to store ammonia (or urea to form ammonia). This storage tank would be sized based on the vessel use, but could be large for a vessel that travels long distances in U.S. waters between refueling, such as between California and Alaska. Urea consumption increases operating costs. If lower sulfur diesel fuel were required to ensure the durability of the SCR system or to minimize direct sulfate PM emissions, this lower sulfur fuel would also increase operating costs. The operational characteristics of ocean-going vessels may interfere with correct maintenance of the SCR system. Ferries that have incorporated this technology do not run continuously and therefore any maintenance necessary can be performed during regular down times. The availability of time for repair can be an issue for ocean-going vessels that operate continuously for long periods.

Because SCR units are so easily adjustable, if allowed, ship operators may choose to turn off the SCR unit when not operating near the U.S. coast. If they were to use this approach, they would need to construct a bypass in the exhaust to prevent deterioration of the SCR unit when it is not in use. To ensure that the SCR system is operating properly within 175 nautical miles of the U.S. coast, we would need to consider continuous monitoring of NO

emissions for engines using SCR. This is discussed in more detail below.

If the combustion is not carefully controlled, some of the ammonia can pass through the combustion process and be emitted as a pollutant. This is less of an issue for Category 3 marine engines, which generally operate under steady-state conditions, than for other mobile-source applications. In addition, in ships where banks of engines are used to drive power generators, such as cruise ships, the engines generally operate under steady-state conditions near full load. If ammonia slip still occurred, an oxidation catalyst could be used downstream of the reactor to burn off the excess ammonia.

Slow-speed marine engines generally have even lower exhaust temperatures than medium-speed engines due to their two-stroke design. However, we are aware of four slow-speed Category 3 marine engines that have been successfully equipped with SCR units. Because of the low exhaust temperatures, the SCR unit is placed upstream of the turbocharger to expose the catalyst to the maximum exhaust heat. Also, the catalyst design required to operate at low temperatures is very sensitive to sulfur. Especially at the lower loads, the catalyst is easily poisoned by ammonium sulfate that forms due to the sulfur in the fuel. To minimize this poisoning on these four in-service engines, highway diesel fuel (0.05% sulfur) is required. In addition, these ships operate with the exhaust routed through the SCR unit only when they enter port in the United States, which is about 12 hours of operation every 2 months. Therefore, the sulfur loading on the catalyst is much lower than it would be for a vessel that continuously used the SCR system. To prevent damage to the catalyst due to water condensation, this system needs to be warmed up and cooled down gradually using an external system. Another issue associated with the larger slow-speed engines and lower exhaust temperatures is that a much larger SCR system would be necessary than for a vessel using a smaller medium-speed engine. Size is an issue because of the limited space on most ships.

c. Fuel cells.

A third advanced technology that may allow for significant reduction of NO

emissions involves the use of fuel cells to power the vessel in place of an internal-combustion engine. A fuel cell is like a battery, except where batteries store electricity, a fuel cell generates electricity. The electro-chemical reaction taking place between two gases, hydrogen and oxygen, generate the electricity from the fuel cell. The key to the energy generated in a fuel cell is that the hydrogen-oxygen reaction can be intercepted to capture small amounts of electricity. The byproduct of this reaction is the formation of water. Current challenges include the storage or formation of hydrogen for use in the fuel cell and cost of the catalyst used within the fuel cell.

Recently, several efforts to apply fuel cells to marine applications have been conducted. These include grants from the Office of Naval Research and the U.S. Navy. The Office of Naval Research initiated a three-phase advanced development program to evaluate fuel

cell technology for ship service power requirements for surface combatants in 1997. In early 2000, the U.S. Navy sponsored an effort to continue the development of the molten carbonate fuel cell for marine use. The Society of Naval Architects and Marine Engineers released the technical report “An Evaluation of Fuel Cells for Commercial Ship Applications.” The report examines fuel cells for application in commercial ships of all types for electricity generation for ship services and for propulsion.

Fuel cell research is currently supported by several sources including the U.S. Maritime Administration (MARAD) and the state of California's Fuel Cell Partnership. MARAD's Division of Advanced Technology has also included the topic of fuel cells as a low air emission technology that should be demonstrated. California's Fuel Cell Partnership seeks to achieve four main goals which include (1) demonstrate vehicle technology by operating and testing the vehicles under real-world conditions in California; (2) demonstrate the viability of alternative fuel infrastructure technology, including hydrogen and methanol stations; (3) explore the path to commercialization, from identifying potential problems to developing solutions; and (4) increase public awareness and enhance opinion about fuel cell electric vehicles, preparing the market for commercialization. At this time, we consider fuel cell technology still be in the early stages of development. Because a mature fuel cell system could have significant environmental benefits, we will consider fuel cells in the future rulemaking.

4. Will the International Community Also Consider More Stringent Standards?

At the time the Annex VI NO

limits were adopted in September 1997, several Member States expressed concern that the NO

limits were not stringent enough and would not result in the emission reductions they were intended to achieve. Due to the efforts of these Member States, the Conference of the Parties adopted a resolution that provides for review of the emission limits with the aim of adopting more stringent limits, taking into account the adverse effects of such emissions on the environment and any technological developments in marine engines. This review is to occur at a minimum of five-year intervals after entry into force of the Annex, with amended NO

limits to reflect more stringent controls if appropriate.

In March 2000, the United States requested the Marine Environment Protection Committee (MEPC) to begin consideration of more stringent emission limits for marine diesel engines.

EPA's analysis of emission-control technology for our 1999 rulemaking indicated that more stringent standards are feasible for all Category 1 and Category 2 marine diesel engines. Engine manufacturers were also beginning to apply these emission-control strategies to Category 3 marine diesel engines, as well as more advanced strategies such as water emulsification and selective catalytic reduction. Reflecting the potential emission reductions that could be obtained from applying these strategies to all marine diesel engines, the United States recommended Annex VI Tier 2 NO

limits be set at 25 to 30 percent below the existing Annex VI NO

limits for all engines subject to the regulation (engines above 130 kW), to go into effect in 2007. This would allow a seven-year period of stability for the Annex VI NO

limits, permit engine manufacturers to adjust their engine designs to include new emission-control technologies, and allow manufacturers of marine diesel engines at or above 30 liters per cylinder to develop emission-control strategies for those large engines. This recommendation was discussed at the 44th session of the MEPC (London, March 3-16, 2000), but the committee took no action.

MEPC 44/11/7, Prevention of Pollution from Ships, Revision of the NO

Technical Code, Tier 2 Emission Limits for Marine Diesel Engines at or Above 130 kW, submitted by the United States. This document is available at Docket A-2001-11, Document No. II-A-16.

The United States will continue to promote more stringent standards at IMO and encourage MEPC to adopt a second tier of emission limits that will reflect available technology and reduce the impact of marine diesel engines on the world's air quality. Technology has continued to advance since we made our request for review in 2000. EPA now believes that Member States of the IMO should consider further reductions of significantly more than 30 percent from the NO

limits currently stipulated under Regulation 13 of the Annex, to be applicable to engines installed on vessels constructed on or after a date to be determined. Consideration should be given to use of emission-control systems that include a combination of optimized in-cylinder controls and advanced technologies such as selective catalytic reduction and water-based control technologies.

B. Fuel Controls

The majority of Category 3 engines are designed to run on residual fuel. This fuel is made from the very end products of the oil refining process, formulated from residues remaining after the primary distilling stages of the refining process. It has higher contents of ash, metals, and nitrogen that may increase emissions of exhaust pollutants. Residual fuel also has sulfur content up to 45,000 ppm; the global average sulfur concentration is currently about 27,000 ppm, though fuel sold in the United States has sulfur levels somewhat above the average.

Operating on fuels with such high sulfur contents results in high SO

and direct sulfate PM emissions.

Sulphur Monitoring 2002. Report to Marine Environmental Protection Committee, 47th Session. MEPC 47/INF.2, August 28, 2001. A copy of this document can be found in Docket A-2001-11, Document No. II-E-9.

Using a residual fuel with a lower sulfur content would reduce the fraction of PM emissions from ash and metals. Using distillate fuel instead of residual fuel could result in even lower emissions. The simpler molecular structure of distillate fuel may result in more complete combustion with reduced levels of carbonaceous PM. Operation on distillate fuel would also reduce NO

emissions because distillate fuel generally contains less nitrogen and has better ignition qualities. In general, engines that are designed to operate on residual fuel are capable of operating on distillate fuel. For example, if the engine is to be shut down for maintenance, distillate fuel is often used to flush out the fuel system. However, there are several complications associated with using distillate fuel to reduce emissions. Switching to distillate fuel requires 20 to 60 minutes, depending on how slowly the operator wants to cool the fuel temperatures. According to engine manufacturers, switching from a heated residual fuel to an unheated distillate fuel too quickly could cause damage to fuel pumps. There could also be fuel pump durability problems if the engine is operated on distillate fuel for more than a few days. For continued operation on distillate, ships would need to have separate (or modified) pumps and lines. In addition, modification to the fuel tanks may be necessary to ensure sufficient capacity for lower-sulfur fuel.

1. Is EPA Adopting Fuel Requirements?

In our proposal, we requested comment on whether we should set standards for the fuel that ships use and, if so, what form the standards should take. After reviewing the comments and

other information, we have decided not to set fuel-based regulations at this time. We remain concerned that regulating fuel sold in the United States would not necessarily ensure that distillate fuel was used in U.S. waters. It is not clear under the Clean Air Act whether we can set standards for more than the fuel sold in the United States. If so, then a fuel sulfur standard would be unlikely to have a significant impact on emissions because ships may choose to refuel before entering or after leaving the United States.

However, as we noted in our proposal, Regulation 14 of MARPOL Annex VI allows areas in need of SO

emission reductions to petition to be designated as SO

Emission Control Areas. After the Annex goes into force, ships operating in these designated areas must use fuel with a sulfur content not to exceed 15,000 ppm or an exhaust gas cleaning system to reduce total vessel SO

emissions to 6.0 g/kW-hr or less. The United States may propose designation of one or more areas in the future pending a review of the relevant emissions, the potential benefits, and the associated costs. However, if the Annex does not go into effect, we will address this issue in the future to the extent appropriate under the Clean Air Act.

2. What Are the MARPOL Annex VI Fuel Provisions?

MARPOL Annex VI contains requirements for fuels used onboard m

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