Control of Emissions of Air Pollution From Nonroad Diesel Engines

SUMMARY: EPA, the California Air Resources Board, and members of the

nonroad diesel engine industry recently signed a Statement of

Principles (``Nonroad SOP'') calling for significantly more stringent

standards for emissions of oxides of nitrogen, hydrocarbons, and

particulate matter from compression-ignition, or diesel, engines used

in most land-based nonroad equipment and some marine applications. In

addition, members of the nonroad equipment manufacturing industry that

utilize these engines have also signed in support of the SOP. If these

standards are implemented, the resulting emission reductions would

translate into significant, long-term improvements in air quality in

many areas of the U.S. For engines in this large category of pollution

sources, NOx and PM emissions would be reduced by up to two-thirds from

current standards. Overall, the proposed program would provide much-

needed assistance to states and regions facing ozone and particulate

air quality problems that are causing a range of adverse health effects

for their citizens, especially in terms of respiratory impairment and

related illnesses.

EPA is issuing this Supplemental Advance Notice of Proposed

Rulemaking (Supplemental ANPRM) to make available the text of the

Nonroad SOP and to invite comment from all interested parties on EPA's

plans to propose new emission standards and other related provisions

for these engines consistent with the Nonroad SOP. This action

supplements an earlier Advance Notice published on August 31, 1995,

which provides additional context for EPA's plans regarding nonroad

engines.

DATES: EPA requests comment on this Supplemental ANPRM no later than

February 3, 1997. Should a commenter miss the requested deadline, EPA

will try to consider any comments that it receives prior to publication

of the Notice of Proposed Rulemaking (NPRM) that the Agency expects to

follow this Supplemental ANPRM. There will also be an opportunity for

oral and written comment when EPA publishes the NPRM.

ADDRESSES: Materials relevant to this action are contained in Public

Docket A-96-40, located at room M-1500, Waterside Mall (ground floor),

U.S. Environmental Protection Agency, 401 M Street, S.W., Washington,

DC 20460. The docket may be inspected from 8:00 a.m. until 5:30 p.m.,

Monday through Friday. A reasonable fee may be charged by EPA for

copying docket materials.

Comments on this notice should be sent to Public Docket A-96-40 at

the above address. EPA requests that a copy of comments also be sent to

Tad Wysor, U.S. EPA , 2565 Plymouth Road, Ann Arbor, MI 48105.

FOR FURTHER INFORMATION CONTACT: Tad Wysor, U.S. EPA, Engine Programs

and Compliance Division, 2565 Plymouth Road, Ann Arbor, MI 48105.

Telephone: (313) 668-4332.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose for This Supplemental Advance Notice

With this notice EPA announces the signing of a Statement of

Principles (SOP) between EPA, the California Air Resources Board, and

members of the nonroad diesel engine manufacturing industry. Members of

the nonroad equipment manufacturing industry that utilize these engines

also signed in support of the SOP. EPA announced its intent to pursue

an SOP for nonroad engines in an Advance Notice of Proposed Rulemaking

(ANPRM) on August 31, 1995 (60 FR 45580). This 1995 ANPRM discussed the

need for further reductions of NOX, PM, and HC from highway heavy-

duty engines (HDEs) and nonroad engines and presented for public

comment an SOP focusing on highway HDEs. Today's Supplemental Advance

Notice includes the text of the Nonroad SOP as an appendix to this

preamble.

It is the Agency's intent to issue a Notice of Proposed Rulemaking

(NPRM) in the near future in accordance with the Nonroad SOP. Such a

proposal will be subject to the full public process of any proposed

rulemaking. By publishing the text of the SOP in advance of the NPRM,

EPA hopes to receive early comments and suggestions which can inform

the development of the proposal. In addition, in the August 1995 ANPRM

EPA discussed a number of reasons why the Agency places a high priority

on considering new emission standards for both highway heavy-duty

engines and nonroad engines. EPA encourages comment on this rationale

as it applies to nonroad engines and on all aspects of the Nonroad SOP

published here.

As discussed in the August 31, 1995 ANPRM, EPA believes that the

Nonroad SOP represents a constructive framework for stringent new

standards for a class of engines which contribute heavily to the

nation's air quality problems. Emissions of oxides of nitrogen

(NOX) are a major part of the ozone problem facing many areas (due

to local emissions as well as the transport of ozone and its precursors

from upwind areas); these emissions add to the NOX-related

problems of acid rain, eutrophication of estuaries, and the formation

of secondary nitrate PM; and NOX emissions are directly harmful to

human health and the environment. NOX emissions from compression-

ignition (CI) nonroad engines (commonly called nonroad diesels)

represent a large fraction of total nationwide NOX emissions,

about 10 percent, or about 20 percent of nationwide mobile-source

NOX emissions.1 EPA expects that emission reductions from

current standards will be largely offset in the future by growth in

this sector. Figure 1 illustrates EPA's current projection of the

emissions of NOX from nonroad diesels covered by this Supplemental

ANPRM as compared to total mobile source emissions.2

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\1\ The discussion of the contribution of nonroad engines in the

1995 ANPRM was general and included some categories of nonroad

engines not covered in the recent Nonroad SOP. Today's action is

limited to the Nonroad SOP categories.

\2\ The ``Nonroad Diesel'' emissions presented in Figure 1 are

the sum of all diesel-powered source categories listed in the memo

``Nonroad Diesel and Mobile Source NOX Emission Projections''

(found in Docket Number A-96-40) except highway vehicles, commercial

marine vessels, and locomotives. The ``All Mobile Sources''

emissions in Figure 1 are the total of all source categories listed

in the memo except stationary sources.

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[GRAPHIC] [TIFF OMITTED] TP02JA97.000

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Available evidence shows that PM caused by diesel engines

contributes to a variety of respiratory problems and diseases. Nonroad

diesels covered by the Nonroad SOP contribute a large fraction of the

diesel PM emissions to which Americans are exposed--nearly half of the

total PM from diesel engines. Finally, nonroad diesel engines are also

significant contributors to hydrocarbon emissions, a key precursor to

ozone formation.3

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\3\ The reader will find more discussion of the health and

environmental impacts of NOX, PM, and HC, the contribution of

nonroad engines to these emissions, and EPA's conclusion that new

emission controls are appropriate in the August 31, 1995 ANPRM

referenced above.

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A first set of emission standards, called ``Tier 1'' standards, was

previously issued for new land-based nonroad diesel engines rated at or

above 37 kW (50 hp) (59 FR 31306, June 17, 1994). As a result,

manufacturers of these engines are now beginning to address the

emissions of their products. For nonroad diesel engines rated below 37

kW, no emission standards currently exist. All diesel nonroad engine

and equipment manufacturers are at a much earlier stage in the

development and incorporation of emission control technologies than are

their counterparts in the highway engine and truck/bus industries.

Also, in contrast to the relatively small number of large,

domestically-focused companies that dominate the heavy-duty highway

engine and truck/bus industries, the nonroad diesel industry is made up

of a large number of engine and equipment manufacturers, many of which

do business internationally.

II. Summary of the Nonroad SOP and EPA Plans

The Nonroad SOP concerns most diesel nonroad engines and the

equipment they power. Nonroad engine categories not addressed in this

SOP and being addressed in other federal programs are those used in

aircraft, underground mining equipment, locomotives, marine vessels

over 37 kW, and all spark-ignition (SI) nonroad engines, including

gasoline engines. As discussed in the Nonroad SOP, EPA will pursue a

separate SOP with manufacturers of land-based SI engines rated at over

19 kW (25 hp) regarding standards for this class of engines. Other SI

engines are being addressed in separate EPA initiatives.

The approach to new emission standards is somewhat different in the

Nonroad SOP than in the Heavy-duty Highway SOP, where a single set of

standards was proposed. Specifically, the Nonroad SOP involves a tiered

approach to reducing the standards. For engines rated at 37 kW and

above, which are subject to the Tier 1 regulations, the SOP discusses a

Tier 2 set of standards for the early years of the next decade and Tier

3 standards 3 to 5 years later for engines rated between 37 kW and 560

kW (750 hp). The Tier 2 nonroad NOX standards for engines rated at

37 kW and above are similar in stringency to the heavy-duty highway

engine NOX standards that will apply in 1998; the Tier 3 nonroad

NOX standards are similar in stringency to the highway heavy-duty

NOX standards proposed for 2004 (see 61 FR 33421, June 27, 1996).

As discussed in the SOP, EPA plans to propose a second tier of PM

standards for nonroad engines rated at 37 kW and above, but does not

plan to immediately propose a third tier of standards for PM. Recent

health studies have raised new concerns about exposure to diesel and

other PM, and EPA has proposed a revision of the existing PM NAAQS and

is currently taking comment. At this time, the Agency believes it is

premature to address diesel nonroad PM standards beyond the second tier

contained in the SOP, and would take any further reductions that might

be proposed in the future into account in the below-discussed review of

the feasibility of the proposed Tier 3 NMHC+NOX standards.

For nonroad diesel engines rated under 37 kW, EPA plans to propose

federal standards for the first time.4 The SOP contains a set of

Tier 1 standards for the 1999-2000 time frame and Tier 2 standards in

the 2004-5 time frame.

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\4\ The State of California currently regulates nonroad diesel

engines under 19 kW (25 hp).

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For the Tier 3 over 37 kW engine standards and the Tier 2 under 37

kW engine standards, the Nonroad SOP calls for EPA to conduct a review,

including opportunity for public comment, of any rule adopting these

standards to assess whether these standards are technologically

feasible and otherwise appropriate under the Clean Air Act. This review

is to be completed by the end of 2001. The SOP describes a number of

issues to be covered in this review, including the cost of engine and

equipment redesigns.

There are some program areas for which the SOP does not contain

detailed provisions, as discussed below. EPA particularly solicits

comment on these areas in its preparation of the proposal.

The SOP participants are interested in establishing a program that,

in real-world operating experience, achieves the emission control

levels implied in the SOP standards. To this end, the Agency is

evaluating whether the provisions adopted in the Tier 1 program that

impact emission controls' durability, such as the length of the

regulatory useful life, should be revised. Comment is solicited on the

need for and form of such changes.

In addition, the SOP discusses a program to encourage clean

alternative fuels and innovative diesel emission control technologies

through optional standards and test procedures. EPA solicits

suggestions on the appropriate standards and procedures for this

program, as well as on any other concepts which might help accomplish

this goal.

Because many manufacturers of nonroad diesel engines and equipment

market their products on an international scale, the industry places a

very high value on globally harmonized emission standards. Therefore,

the Nonroad SOP states that harmonized standards and test procedures

will be pursued to the maximum extent possible, provided that these

measures do not compromise either the SOP's other provisions or the air

quality needs of the U.S. The Agency requests comment on specific

program elements by which fuller harmonization might be achieved.

Finally, the SOP includes detailed provisions for a proposal giving

flexibility to equipment manufacturers in incorporating the cleaner

engines envisioned in the SOP into their products. The SOP also

expresses the signatories' intent to develop alternative flexibility

proposals that will not compromise the environmental benefits. EPA

encourages commenters to provide suggestions for such alternatives.

III. Potential Impacts of the SOP Standards

Because of the large reduction in the levels of emissions standards

contained in the SOP and the large number of engines that would be

subject to the standards, EPA and the other signatories of the Nonroad

SOP expect major reductions in emissions to occur if the standards are

implemented. As a part of the planned rulemaking, EPA will include

detailed analyses of the emissions reductions and air quality benefits

that would result from implementing the SOP standards in the planned

NPRM. Based on preliminary assessments, EPA expects that the emission

control program described in the SOP will reduce NOX emissions on

the order of 800,000 tons per year. Large reductions in PM would result

as well, both from reducing the carbonaceous PM that is directly

emitted by nonroad diesel engines and from reducing

[[Page 203]]

secondary nitrate PM as a result of the NOX reductions described

above. Overall, the emission reductions the Agency believes will result

from the standards contained in the SOP would rank this program among

the most significant single mobile-source emission control programs EPA

has ever implemented.

EPA also will include in the NPRM an analysis of the expected costs

of meeting the emission standards of the Nonroad SOP. A very

approximate indication of possible cost impacts can be gained from the

cost analyses developed by the Agency in the past for similar levels of

emissions control on highway HDEs. EPA estimated the per-engine cost of

reducing the highway HDE NOX standard from 6.0 to 5.0 g/bhp-hr

(effective in 1991) at less than $100 (50 FR 10653, March 15, 1985);

from 5.0 to 4.0 g/bhp-hr (1998) at less than $100 (58 FR 15801, March

24, 1993); and from 4.0 g/bhp-hr NOX to 2.5 g/bhp-hr NOX+NMHC

(proposed for 2004) at less than $500 (61 FR 33421, June 27, 1996).

Thus EPA's estimate of the overall cost for reducing emissions from 6.0

g/hp-hr NOX to 2.5 g/bhp-hr NOX+NMHC is in the range of

several hundred dollars per highway HDE. This emission reduction is

similar to the reduction from 6.9 g/bhp-hr NOX (the nonroad Tier 1

level) to 3.0 g/hp-hr NOX+HC (the Nonroad SOP Tier 3 level for

larger engines). The Agency recognizes that comparisons of this sort do

not account for such differences as the potential costs of nonroad

equipment redesign, relative penetration of electronic fuel controls

and turbocharging, relative market sizes and degree of product

diversity, special factors in small engine design, and costs of

controlling other pollutants. These factors will, of course, be

included in the NPRM analysis.

IV. Public Participation

The Agency is committed to a full and open regulatory process and

looks forward to input from a wide range of interested parties as the

rulemaking process develops. If EPA proceeds as expected with a

proposed rule, these opportunities will include a formal public comment

period and a public hearing. EPA encourages all interested parties to

become involved in this process as it develops.

With today's action, EPA opens a comment period for this

Supplemental ANPRM. Comments will be accepted through February 3, 1997.

The Agency strongly encourages comment on all aspects of the SOP and

the overall emission control program it lays out. The most useful

comments are those supported by appropriate and detailed rationales,

data, and analyses. All comments, with the exception of proprietary

information, should be directed to the EPA Air Docket Section, Docket

No. A-96-40 before the date specified above.

Commenters who wish to submit proprietary information for

consideration should clearly separate such information from other

comments by (1) labeling proprietary information ``Confidential

Business Information'' and (2) sending proprietary information directly

to the contact person listed (see FOR FURTHER INFORMATION CONTACT) and

not to the public docket. This will help ensure that proprietary

information is not inadvertently placed in the docket. If a commenter

wants EPA to use a submission of confidential information as part of

the basis for an NPRM, then a nonconfidential version of the document

that summarizes the key data or information should be sent to the

docket.

Information covered by a claim of confidentiality will be disclosed

by EPA only to the extent allowed and in accordance with the procedures

set forth in 40 CFR part 2. If no claim of confidentiality accompanies

the submission when it is received by EPA, it will be made available to

the public without further notice to the commenter.

V. Copies of Documents

This Supplemental Advance Notice and the Nonroad SOP, as well as

the August 31, 1995 ANPRM, are available in the public docket as

described under ADDRESSES above. These documents are also available

electronically on the Internet and on the Technology Transfer Network

(TTN).

A. Internet

This Supplemental Advance Notice and related documents may be found

on the Internet as follows:

World Wide Web

http://www.epa.gov/omswww

FTP

ftp://ftp.epa.gov Then CD to the /pub/gopher/OMS/ directory

Gopher

gopher://gopher.epa.gov:70/11/Offices/Air/OMS

Alternatively, go to the main EPA gopher, and follow the menus:

gopher.epa.gov

EPA Offices and Regions

Office of Air and Radiation

Office of Mobile Sources

B. Technology Transfer Network (TTN)

The Technology Transfer Network (TTN) is an electronic bulletin

board system (BBS) operated by EPA's Office of Air Quality Planning and

Standards. Users are able to access and download TTN files free of

charge (except for the cost of the phone call) on their first call

using a personal computer and modem as follows:

TTN BBS: 919-541-5742 (1200-14400 bps, no parity, 8 data bits, 1

stop bit)

Voice Helpline: 919-541-5384

Also accessible via Internet: TELNET ttnbbs.rtpnc.epa.gov Off-line:

Mondays from 8:00 AM to 12:00 Noon ET

VI. Statutory Authority

Section 213 of the amended Clean Air Act, 42 USC 7547(a), EPA

conducted a study of emissions from nonroad engines, vehicles and

equipment in 1991. Based on the results of that study, EPA determined

that emissions of NOX, volatile organic compounds (including HC),

and CO from nonroad engines and equipment contribute significantly to

ozone and CO concentrations in more than one NAAQS nonattainment area

(see 59 FR 31306, June 17, 1994). Having made these determinations,

Section 213(a)(3) of the Act requires EPA to promulgate (and from time

to time revise) emissions standards for those classes or categories of

new nonroad engines, vehicles, and equipment that in EPA's judgment

cause or contribute to such air pollution.

Where EPA determines that other emissions from new nonroad engines,

vehicles, or equipment significantly contribute to air pollution which

may reasonably be anticipated to endanger public health or welfare,

Section 214(a)(4) authorizes EPA to establish (and from time to time

revise) emission standards from those classes or categories of new

nonroad engines, vehicles, and equipment that EPA determines cause or

contributor to such air pollution.

VII. Unfunded Mandates Reform Act

Under Section 202 of the Unfunded Mandates Reform Act of 1995

(UMRA), Public Law 104-4, EPA must prepare a budgetary impact statement

to accompany any general notice of proposed rulemaking or final rule

that includes a Federal mandate which may result in estimated costs to

State, local, or tribal governments in the aggregate, or to the private

sector, of $100 million or more. Under Section 205, for any rule

subject to Section 202 EPA generally must select the least costly, most

cost-effective, or least burdensome

[[Page 204]]

alternative that achieves the objectives of the rule and is consistent

with statutory requirements. Under Section 203, before establishing any

regulatory requirements that may significantly or uniquely affect small

governments, EPA must take steps to inform and advise small governments

of the requirements and enable them to provide input.

EPA has determined that the requirements of UMRA do not extend to

advance notices of proposed rulemaking such as this Supplemental

Advance Notice.

VIII. Small Business Regulatory Enforcement Fairness Act (SBREFA)

The Small Business Regulatory Enforcement Fairness Act of 1996

(SBREFA), Public Law 104-121, amended the Regulatory Flexibility Act

and is intended to assure that concerns about small entities are

adequately considered during the development of new regulations which

affect them. SBREFA does not formally apply to advance notices like

this Supplemental ANPRM. However, EPA has begun to consider how small

entities would be affected by the potential new standards of the SOP.

In contrast to the relatively small number of fairly large

companies that dominate the heavy-duty highway engine and truck/bus

industries and the primarily domestic market these industries serve,

the nonroad diesel industry is made up of a large number of engine

manufacturers and a still larger number of equipment manufacturers,

many of which do business internationally. Some of these equipment

manufacturers are relatively small businesses that may be impacted

differently than larger equipment manufacturers as new technologies are

incorporated into nonroad diesel engines.

Equipment manufacturers were involved in the Nonroad SOP

discussions and, as discussed above, the final SOP includes several

provisions which will provide flexibility to nonroad equipment

manufacturers, especially smaller manufacturers, without harming the

overall emission benefits of the program. EPA plans to minimize any

disproportionate impact on smaller nonroad equipment manufacturers and

will work with representatives of such entities as the formal proposal

is developed, including the preparation of a Regulatory Flexibility

Analysis. EPA requests comment on the impacts of the program outlined

in the SOP on small entities; such comments will help the Agency meet

its obligations under SBREFA.

IX. Administrative Designation and Regulatory Analysis

Under Executive Order 12866 (58 FR 51735 (Oct. 4, 1993)), the

Agency must determine whether this regulatory action is ``significant''

and therefore subject to Office of Management and Budget (OMB) review

and the requirements of the Executive Order. The order defines

``significant regulatory action'' as any regulatory action (including

an advanced notice of proposed rulemaking) that is likely to result in

a rule that may:

(1) have an annual effect on the economy of $100 million or more or

adversely affect in a material way the economy, a sector of the

economy, productivity, competition, jobs, the environment, public

health or safety, or State, local, or tribal governments or

communities;

(2) create a serious inconsistency or otherwise interfere with an

action taken or planned by another agency;

(3) materially alter the budgetary impact of entitlements, grants,

user fees, or loan programs or the rights and obligations of recipients

thereof; or,

(4) raise novel legal or policy issues arising out of legal

mandates, the President's priorities, or the principles set forth in

the Executive Order.

This Supplemental Advance Notice was submitted to OMB for review as

required by Executive Order 12866. Any written comments from OMB and

any EPA response to OMB comments are in the public docket for this

Notice.

List of Subjects in 40 CFR Part 89

Environmental protection, Administrative practice and procedure,

Air pollution control, Diesel fuel, Motor vehicles, Motor vehicle

pollution, Reporting and recordkeeping requirements, Research.

Dated: December 20, 1996.

Carol M. Browner,

Administrator.

Appendix--Nonroad Compression-Ignition Engine Statement of

Principles

Nonroad Compression-Ignition Engine Statement of Principles

Members of the nonroad compression-ignition (CI) engine and

equipment industry, the U.S. Environmental Protection Agency (EPA)

and the California Air Resources Board (ARB) (collectively, the

Signatories) recognize the importance of preserving the environment

while maintaining a strong industry. This Statement of Principles

(SOP) increases certainty and stability for the nonroad CI engine

and equipment industry which is vital for their business planning.

It also ensures cleaner air in a manner which is both realistic for

industry and responds to environmental needs. With this SOP the

nonroad CI engine and equipment industry has stepped forward to

become a leader in environmental protection, and industry and

government will work as partners to bring about cleaner air.

EPA and ARB have recently established programs to control

emissions from nonroad engines. EPA and ARB recognize these engines

are sources of ozone-forming oxides of nitrogen (NOX) and

hydrocarbons (HC), as well as of particulate matter (PM) and other

pollutants, all of which raise concerns for public health and the

environment. The current Tier 1 regulations for large CI nonroad

engines are primarily focused on achieving significant NOX

reductions as early as possible and are being phased in by

horsepower level beginning in 1996. At the time of finalizing the

Tier 1 regulations, EPA and ARB recognized that more stringent

standards for these engines, and further evaluation of the test

procedure by which compliance with the standards is measured, would

likely be needed in the future to help meet air quality goals. These

agencies also recognized the need to control emissions from spark-

ignited (SI) and other CI nonroad engines as well.

Although recent progress in improving the nation's air quality

has been encouraging, EPA and ARB believe there is strong evidence

that currently adopted measures are insufficient to offset such

factors as the growth in vehicle and equipment sales and usage. The

states and others have strongly urged EPA to undertake new programs

to achieve further cost-effective emission reductions in a time

frame consistent with the Clean Air Act attainment goals. In

response, among other initiatives, EPA and ARB have initiated a

program to further reduce emissions from heavy-duty on-highway

vehicles and nonroad engines.

The industries that produce these engines have also stepped

forward, expressing a desire to develop and use cost-effective

emission control technologies to help meet the nation's air quality

goals. EPA and ARB have consulted with these industries to help

craft proposals that provide the needed air quality benefit. The

effectiveness of this approach is evidenced by the issuance of a

joint Statement of Principles (SOP) on July 11, 1995, outlining a

proposal for stringent new nationwide standards for on-highway heavy

duty engines. EPA followed up that SOP with an Advanced Notice of

Proposed Rulemaking (ANPRM) and a Notice of Proposed Rulemaking

(NPRM). The 1995 SOP expressed an intent by the Signatories to

pursue a similar SOP for heavy-duty nonroad engines.

After considerable discussion between EPA, ARB, and the nonroad

engine and equipment industries, this SOP has been completed. The

Signatories expect major reductions in emissions from the standards

set forth in this SOP. For nonroad CI engines rated at 50 hp (37 kW)

and higher, the Tier 2 and Tier 3 standards together will achieve

about a 75 percent reduction in NOX from uncontrolled levels.

The Tier 2 standards for PM represent about a 40 percent reduction

from current levels. For nonroad CI engines rated at less than 50

hp, the Tier 2 standards are expected to result in NOX and PM

[[Page 205]]

reductions similar to those from the Tier 2 standards for engines

rated at 50 hp and higher.

The Signatories agree that EPA should issue an ANPRM in 1996 and

an NPRM in 1997 consistent with the points outlined in this

document. A final rule would follow by February 1998. However, this

SOP does not change the importance of EPA demonstrating the need for

the standards described below and EPA's obligation to meet the

criteria of the Clean Air Act in finalizing any rule, including

complying with all applicable rulemaking procedures.

1. Scope

This SOP concerns CI nonroad engines as defined in 40 CFR 89.2,

and the nonroad equipment powered by these engines, with the

exception of engines used in aircraft, underground mining equipment,

locomotives, and marine vessels. However, propulsion and auxiliary

marine CI engines rated at less than 50 hp (37 kW) are

included.1 EPA is addressing marine CI engines rated at 50 hp

and higher separately from this SOP.

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\1\ Currently, EPA is required under a court order to take final

action on proposed regulations for CI marine engines by December 18,

1996. EPA will seek appropriate changes to this order regarding

final action on CI marine engines less than 50 hp (37 kW) to conform

to this SOP.

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Although EPA and ARB have made significant progress in SOP

discussions with the manufacturers of nonroad SI engines rated at

above 25 hp (19 kW) (as well as the manufacturers of equipment using

these engines), these discussions have not yet reached a stage that

would allow inclusion of these engines in this SOP. EPA and ARB will

pursue the development of an SOP for nonroad SI engines above 25 hp

by the end of 1996. Such an SOP would assist the nonroad engine and

equipment manufacturers in their product planning. The Signatories

recognize the possible competitive effects of regulating CI and SI

engines separately, and EPA and ARB will take those effects into

account in the development of an SI engine SOP.

2. National Standards for CI Nonroad Engines

This SOP seeks to establish a nationwide program that, in real-

world operating experience, achieves the emission control levels

indicated below. Recognizing that real-world control is closely

linked to the test procedure by which conformance with standards is

measured, the following discussion of standards should be read in

the context of the test procedure discussion that follows it. The

Signatories' goal is a combination of emission standards and test

procedures that achieves real-world emission reductions

corresponding to these standards, provided that such standards are

technologically feasible and cost effective, taking into

consideration both engine and equipment manufacturer costs.

a. NMHC, NOX, CO and PM Standards

EPA will propose combined standards for nonmethane hydrocarbons

(NMHC) and NOX, and separate standards for carbon monoxide (CO)

and PM. These standards would apply to any affected engine that is

newly manufactured on or after January 1 of the year indicated in

the following table, except as provided in Section 5, Implementation

Flexibility, below. While this SOP does not specify PM standards in

Tier 3, the Signatories acknowledge that there is, in general, an

inverse relationship in controlling certain pollutants (e.g.,

NOX and PM). The Signatories recognize that the manufacturer

signatories have agreed to the Tier 3 NMHC+NOX standards set

forth below on the condition that there would be no further

reduction in PM or CO from Tier 2 levels. If such reductions should

be proposed, EPA will take the reductions into account in its review

of the feasibility of the proposed Tier 3 NMHC+NOX standards

(see Section 4, Feasibility Review, below). The Signatories

recognize the role that direct injection engine technology plays in

the less than 50 hp nonroad engine market and expect the standards

set forth in this SOP to allow for the continued existence of that

technology. As part of the feasibility review (see Section 4 below),

EPA will assess the progress in meeting Tier 2 standards for those

engines using direct injection technology.

b. Smoke

The Signatories support the completion and worldwide adoption of

the new smoke test being developed by the International Standards

Organization (ISO 8178-9). EPA intends to propose to replace its

current smoke test with the ISO test procedure for the sake of

harmonization and improved control of smoke, provided that it

provides for a level of smoke control at least as adequate as the

current test. EPA will also propose to extend the smoke standards

that were adopted in the Tier 1 rule to the under 50 hp engine

category, and will evaluate the appropriateness of any changes to

the smoke standards for all engine size categories in formulating

the proposal.

c. Crankcase Emissions

For several years, emission regulations for on-highway engines

have required that crankcase emissions be eliminated, except in the

case of turbocharged diesel engines, which present special

difficulties in designing for closed crankcase. EPA will propose to

extend this requirement to covered nonroad engines (including the

provision for excepting turbocharged diesel engines).

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NMHC+NOX / CO / PM in g/hp-hr (g/kW-hr)

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hp(kW) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

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(5)Tier 1 Tier 2*

11 (8)............... .......... 7.0 (9.5) .......... .......... .......... .......... 5.6 (7.5)

25 (19).............. 7.0 (9.5) .......... .......... .......... .......... 5.6 (7.5)

50 (37).............. .......... .......... .......... .......... .......... 5.6 (7.5) .......... .......... .......... 3.5 (4.7)

100 (75)............. .......... .......... .......... .......... 4.9 (6.6) .......... .......... .......... 3.0 (4.0)

175 (130)............ .......... .......... .......... .......... 4.9 (6.6) .......... .......... 3.0 (4.0)

300 (225)............ .......... .......... 4.8 (6.4) .......... .......... .......... .......... 3.0 (4.0)

600 (450)............ .......... .......... .......... 4.8 (6.4) .......... .......... .......... 3.0 (4.0)

750 (560)............ .......... .......... .......... .......... .......... .......... .......... 4.8 (6.4)

.......... .......... .......... .......... .......... .......... .......... 2.6 (3.5)

.......... .......... .......... .......... .......... .......... .......... 0.15

(0.20)

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* These standards are subject to a feasibility review as discussed in Section 4.

** See above discussion on PM standards.

3. Test Procedures

In adopting a steady-state test cycle for its Tier 1 final rule,

EPA stated that further study will be required to better

characterize the nature and level of transient operation experienced

by nonroad engines in actual use. The Signatories recognize that

additional data would be beneficial in assessing the adequacy of the

steady-state test in achieving control of regulated emissions,

especially PM, in use. Other test parameters, such as the

composition of the test fuel, may also impact the program's success

in controlling in-use emissions.

The Signatories further recognize: (1) the crucial role that the

test procedure plays in ensuring real emissions control in use, (2)

the critical importance of in-use emission reductions in improving

air quality and in determining state implementation plan credits

under the Clean Air Act, (3) the effect that changes to test

procedures could have on industry's ability to design, test and

produce engines that comply with the applicable standards in the

time periods contemplated by the SOP, (4) the need for a well-

planned and well-coordinated test program to settle the issue of

test procedure adequacy, (5) the value of proceeding in concert with

international standard setting organizations in adopting a

harmonized test procedure, and (6) the potential for this to be a

lengthy process.

In order to achieve major NOx reductions as early as possible,

EPA will propose that the current steady-state test be retained in

the adoption of this SOP's standards. In addition, the Signatories

will initiate a comprehensive test program, coordinated by EPA and

cooperatively executed, to evaluate the adequacy of the current test

procedure for achieving in-use emissions control. The test program

will be initiated within six months of signing this SOP and will be

completed by December 1998. The Signatories will also engage

interested parties in the European Union (EU) in this comprehensive

test program with the goal of gaining their participation as

partners, if possible. Should the results of the testing program

indicate that the test procedure does not achieve adequate control

of emissions in use, EPA will initiate action to revise the test

procedure if another test procedure is expected to provide

significantly better control.

It is recognized that the standards in the SOP are based on the

current steady-state test procedure. Further, all Signatories

recognize that any test cycle changes or additions would likely

complicate and delay industry's ability to research, design, test,

and produce engines that comply with the standards contained in the

SOP. As a result, any proposal to revise the current test procedure

would propose that the revision not be implemented before Tier 3.

Any changes in the test procedure will be taken into consideration

as part of the Tier 3 feasibility review outlined below.

Engines rated at under 50 hp are not subject to the current Tier

1 standards and test procedure.

The Signatories recognize that the manufacturer signatories'

agreement to the standards for these engines set forth in Section 2

of this SOP is based on the assumption that the following test

cycles are adopted:

Land-based CI engines

Variable- and constant-speed 2 between the time the feasibility

review is finalized and the Later Standards become effective (while

maintaining the engine category phase-in set forth in Section 2

above); (3) the need to assess the suitability, effectiveness and

cost of transferring on-highway engine technology to nonroad engines

and equipment; and (4) the need to assess the costs associated with

redesigning equipment to accommodate the Later Standards.

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\2\ In the case of engines rated at less than 50 hp, no less

than two full years of leadtime.

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The Signatories acknowledge that the standards set forth in this

SOP will require a substantial investment for nonroad engine and

equipment manufacturers, and their customers, and that the affected

nonroad industry ordinarily requires a substantial period of

stability in which to recoup such an investment. The period of

stability between the previous and Later Standards ordinarily would

be too short a time in which to reasonably recoup the investment

needed to comply with the previous standards before imposing

additional costs to comply with the Later Standards. Thus, the

Signatories agree that the Later Standards in this SOP are based on

the premise that no significant equipment redesign beyond that

required to accommodate engines meeting the previous standards will

be required to accommodate engines meeting the Later Standards.

As part of the review discussed in this Section, EPA will

solicit information as to whether equipment redesign will be

required as a result of changes to engines that will be required to

meet the Later Standards. Should such equipment redesign be

required, EPA will assess its significance, taking into account the

cost and technical difficulty of such redesign, the need for a

period of stability to reasonably recoup the investment in equipment

redesign to meet the previous standards, the number of equipment

models affected, and other relevant factors. If significant

equipment redesign is required to accommodate engines meeting the

Later

[[Page 207]]

Standards, EPA will propose appropriate measures to address the

burden of such redesign. Such measures would include flexibilities

similar to those set forth in Section 5 below, a minimum two-year

3 adjustment of the time between the previous standards and

Later Standards for all engine families in each affected power

category, an adjustment to the Later Standards to address the need

for the redesign, or some combination thereof. EPA also may propose

additional measures as appropriate under the Clean Air Act. EPA and

ARB acknowledge that this SOP will require the industry to make a

commitment to meet the Later Standards that will require a

substantial period of stability.

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\3\ Minimum three years and one year for engines in the 175-300

hp and 300-600 hp categories, respectively.

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EPA's review and assessment of the feasibility and cost of the

Later Standards will include a review of the costs associated with

the Later Standards on a marginal cost basis, taking into

consideration total equipment production and operating costs, not

just engine costs. If this assessment shows that the nonroad

equipment industry will experience significant adverse impacts from

changes in standards that are too frequent, rapid, or costly, EPA

further commits to propose relaxing the standards and/or delaying

the effective date of the standards, consistent with relevant

provisions of the Clean Air Act.

The Signatories shall meet periodically to provide updates on

their efforts and progress in complying with this SOP.

5. Implementation Flexibility

The Signatories recognize that new emission standards may create

challenges for engine and equipment manufacturers beyond simply

developing low-emission technologies. The nonroad industry is

characterized by a diversity in engine models and equipment

applications, many of which have small markets, making it difficult

to rapidly and frequently implement design changes across wide

product lines. Even small changes in engine designs can create major

difficulties for equipment makers with low volume models, diverse

product lines, or inadequate leadtime to respond to the changes. If

engine makers were to discontinue engine models made in small

volumes, this could cause market disruptions, especially for small

manufacturers of equipment who buy these engines, and their

customers.

Problems of this sort could be dealt with by phasing new

standards in very gradually. However, in order to gain the desired

air quality benefits as early as possible, this SOP instead aims to

resolve the problem by broadening the flexibility granted to

equipment manufacturers by providing them implementation options.

Thus, EPA will propose programs whereby, on an annual basis, an

equipment manufacturer would be allowed to install engines not

meeting the otherwise applicable Tier 2 or 3 standards for engines

50 hp or higher in some of its equipment (Tier 1 standards for

engines less than 50 hp). The following subsection describes two

such programs that will be proposed, based on a percent-of-sales

approach. The Signatories agree to work together in developing

alternative flexibility proposals, with the understanding that these

alternatives will not involve a projected loss in overall emission

benefits over that entailed in the below-described program. One

alternative approach under consideration would exempt equipment on

an application-specific basis; EPA will, at a minimum, seek comment

on such an approach in the NPRM.

a. Equipment Manufacturer Phase-in

Engines 50 hp or higher. For engines rated at 50 hp or higher,

EPA will propose to allow each equipment manufacturer to install

engines certified to the Tier 1 standards in a maximum of 15 percent

of the equipment produced for sale in the United States during the

first year that a new Tier 2 standard applies, and in a maximum of 5

percent during each of the six years thereafter. This allowance

would continue for a total of seven years after Tier 2 standards

become effective for each engine category. At the end of this

allowance period, equipment manufacturers would be required to

install Tier 3 engines (or Tier 2 engines in any engine categories

without Tier 3 standards) in all new equipment using engines in the

category. However, if the effective dates of Tier 3 standards in any

engine category are delayed beyond those set forth in Section 2, the

allowance period for that engine category would be extended by the

same period of time. For manufacturers electing to take advantage of

the special flexibility provision for farm and logging equipment

described below, the above-described flexibility provision would

apply to just the non-farm/logging equipment the manufacturer sells.

To avoid disadvantaging smaller companies with limited product

offerings, manufacturers would be allowed to exceed the above

percent of production allowances during the same years affected by

the above allowance program, provided they limit the installation of

Tier 1 engines to a single equipment model with an annual production

level (for U.S. sales) of 100 pieces or less.

In addition to the above general flexibility allowances, EPA

will propose that manufacturers of farming or logging equipment will

be allowed to install Tier 1 engines in a maximum of 30 percent of

this equipment (produced for sale in the United States) during the

first year that a new Tier 2 standard applies, and in a maximum of

15 percent for each of the seven years thereafter. This allowance

would continue for a total of eight years after Tier 2 standards

become effective for each engine category. At the end of this

allowance period, equipment manufacturers would be required to

install Tier 3 engines (or Tier 2 engines in any engine categories

without Tier 3 standards) in all new farm or logging equipment using

engines in the category. However, if the effective dates of Tier 3

standards in any engine category are delayed beyond those set forth

in Section 2, the allowance period for that engine category would be

extended by the same period of time.

Nothing set forth above would change the rules established in

the Tier 1 standards which allow equipment manufacturers to use up

existing stocks of noncomplying engines at the time a new standard

takes effect.

Engines less than 50 hp. EPA will propose flexibilities as

described above for equipment manufacturers who install X and PM. These provisions will apply to all of the

standards set forth in Section 2 except as discussed below. In

recognition of the role ABT plays in facilitating the introduction

of new standards, EPA will reassess the appropriateness of these

provisions as part of the feasibility review discussed in Section 4.

The Signatories recognize that the manufacturers have agreed to the

standards set forth in this SOP on the condition that the changes

that EPA will propose in the ABT program are finalized and made a

part of these standards.

EPA will also propose three special provisions for the ABT

program for engines rated at less than 25 hp. First, no credits

generated from the sale of these engines would be allowed to be used

to demonstrate compliance for engines rated above 25 hp. Second, all

credits generated from the sale of Tier 1 under 25 hp engines would

expire at the end of 2007. Finally, credits from the sale of Tier 1

under 25 hp engines would only be generated by engine families with

family emission limits of less than 5.6 g/hp-hr (7.5 g/kW-hr) for

NMHC+NOX credits and 0.60 g/hp-hr (0.80 g/kW-hr) for PM

credits, and these credits would be calculated against these

baseline levels rather than against the actual Tier 1 standard

levels.

In addition to these ABT provisions, EPA will propose that

engine manufacturers be allowed to continue to build and sell the

engines needed to meet the market demand created by the equipment

manufacturer flexibility program set forth above. To avoid the

creation of unfair business advantages, the engine manufacturer

Signatories agree that, if they decide to continue the production of

such engines, they will make them available for sale at reasonable

prices to all interested buyers.

Finally, EPA also will propose to allow engine manufacturers to

produce unregulated, Tier 1, or Tier 2 engines, as the case may be,

to meet customer needs for replacement engines, so long as

[[Page 208]]

manufacturers comply with the replacement engine regulations that

EPA is developing.

6. Harmonization

The participants in this SOP recognize the value that

harmonizing standards within the United States would have on the

cost of producing engines and equipment. EPA and the California Air

Resources Board will pursue harmonized standards and test procedures

for nonroad engines covered by this SOP such that an engine family

tested and certified by EPA could be sold in California and,

similarly, an engine family tested and certified in California could

be sold in the rest of the country. California acknowledges that the

emission standards set forth in this SOP meet its needs for emission

reductions for the engines covered by this SOP. However, if these

standards should not be implemented as proposed, California's

obligations to comply with State and Federal law, including its

State Implementation Plan, take precedence over this SOP.

Furthermore, the global nature of the nonroad equipment and

engine markets argues for maximum harmonization between the U.S.

standards and test procedures and those of other nations. In

particular, the European Union has developed standards very similar

to EPA's Tier 1 standards and has proposed its own Tier 2 standards.

The Signatories support the goal of continued harmonization and

intend to work with the EU, Japan, and other regulatory bodies in

developing harmonized future standards, including provisions for

implementation flexibility. Harmonized standards and test procedures

will be pursued in the program developed under this SOP to the

maximum extent possible, provided that these measures do not

compromise the other provisions of this SOP or the primary purpose

of the program, which is to meet the air quality needs of the United

States.

7. Fuels and Lower Emitting Alternatives

The standards set forth above contemplate the possibility of

transferring on-highway technology to nonroad engines. The

Signatories recognize that: (1) on-highway engines currently are

operated on higher quality fuel than nonroad engines, (2) fuel

composition has a significant impact on emission performance, (3)

changes in the composition and improvements in the quality of

nonroad fuels may be needed to make the Tier 3 standards

technologically feasible and otherwise appropriate under the Act.

A number of states and other interested parties have expressed

strong interest in programs to reduce emissions from nonroad engines

beyond the levels established in this SOP. These parties believe

that if a program were in place to certify low emitting engines

(both diesel and alternative fuel engines), a market for these

engines could be created through a variety of incentives including,

but not limited to, marketable emission credits and the prominent

labeling of low-polluting equipment as such. This certification

program would be dependent on the establishment of a test procedure

which reasonably evaluates the effectiveness of these engines in

achieving real in-use emissions reductions.

Therefore, EPA shall propose an optional program for the

certification of very low-emitting engines. This program would

include, as needed, optional test procedures and standards that

would encourage the sale of engines providing benefits beyond those

corresponding to the program described elsewhere in this SOP. In

addition, EPA will consider other programs to encourage the use of

low-emitting engines and emission-reducing fuels.

8. Durability

All Signatories recognize that it is important that emissions

control be maintained throughout the life of the engine. The

Signatories will work together to develop appropriate measures which

ensure that emission improvements are maintained in use.

9. Certification and Compliance

All Signatories recognize that it is important to minimize the

costs associated with certification and they commit to working

together to streamline and simplify the certification process.

Further, the Signatories acknowledge that the standards set forth in

Section 2 of this SOP are based on the assumption that there will be

no changes to the enforcement program adopted as part of the Tier 1

rule, except as specifically set forth in this SOP. Finally, the

Signatories also recognize that engine manufacturers will be

required to undertake significant engineering challenges in

relatively short time frames in order to meet the Tier 2 and Tier 3

standards including the challenge of stabilizing initial production

variability. Therefore, EPA will only impose selective enforcement

audits (SEA's) during the first year in which a standard is in

effect for those engine families where strong evidence exists that

SEA failure would be likely.

10. Research Agreement

The Signatories recognize the benefits of a joint industry/

government research program with the goal of developing engine

technologies which can meet and exceed the standards for nonroad

engines outlined in this SOP. The Signatories will undertake

development of a separate research agreement with goals of reducing

NOX emissions to 1.5 g/hp-hr (2.0 g/kW-hr) and PM emissions to

0.05 g/hp-hr (0.07 g/kW-hr), while maintaining attributes of current

nonroad diesel engines such as performance, reliability, durability,

safety, efficiency, and compatibility with nonroad equipment. These

characteristics have allowed current nonroad diesel engines to serve

as the pillar of the international nonroad equipment industry. This

research agreement would include certain of the industry signatories

below, EPA, ARB, and other organizations, such as the U.S.

Department of Energy, as are approved by the participants.

[FR Doc. 96-32970 Filed 12-31-96; 8:45 am]

BILLING CODE 6560-50-P