Control of Air Pollution; Amendments to Emission Requirements Applicable to New Nonroad Spark Ignition Engines At or Below 19 Kilowatts and New Marine Spark Ignition Engines: Provisions for Replacement Engines and the Use of Two Stroke Engines on Certain Nonhandheld Equipment

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 90 and 91

[FRL-5871-1]

Control of Air Pollution; Amendments to Emission Requirements

Applicable to New Nonroad Spark Ignition Engines At or Below 19

Kilowatts and New Marine Spark Ignition Engines: Provisions for

Replacement Engines and the Use of Two Stroke Engines on Certain

Nonhandheld Equipment

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: This final rule amends the regulations applicable to spark-

ignition nonroad engines at or below 19 kilowatts (kW) and spark-

ignition marine engines to address situations that have arisen

regarding the implementation of regulations applicable to these nonroad

engines. No significant air quality impact is expected from these

amendments.

These amendments will allow engine manufacturers to provide

uncertified engines to replace older engines when major engine failures

occur and no suitable certified engine is available that will fit in

the nonroad equipment or marine outboard or personal watercraft. These

amendments will also broaden a provision in the existing regulations

which permits the use of two stroke engines to power lawnmowers,

subject to a phase-out schedule described in the regulations. The

amendments will extend this provision to other types of nonhandheld

equipment subject to appropriate constraints.

DATES: This final rule is effective October 6, 1997 unless adverse or

critical comments are received by September 8, 1997. If the effective

date is delayed, timely notice will be published in the Federal

Register.

ADDRESSES: Written comments should be addressed to: EPA Air Docket (LE-

131), Attention: Docket Number A-97-25, room M-1500, 401 M Street, SW.,

Washington, DC 20460 (telephone 202-260-7548, fax 202-260-4400). Please

contact the individual listed below before submitting comments.

Materials relevant to this rulemaking are contained in the docket

listed above and may be reviewed at that location from 8:00 a.m. until

5:30 p.m. Monday through Friday. As provided in 40 CFR part 2, a

reasonable fee may be charged by EPA for photocopying.

FOR FURTHER INFORMATION CONTACT: John Guy, Office of Mobile Sources,

Engine Programs and Compliance Division (6403J), 401 M Street SW.,

Washington, DC 20460, 202-233-9276.

SUPPLEMENTARY INFORMATION:

I. Regulated Entities

Entities potentially regulated by this action are those which

manufacture and use spark-ignition marine outboard or personal

watercraft (including jetboat) engines and spark-ignition small nonroad

engines of 19 kW or less. Regulated categories and entities include:

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Category Examples of regulated entities

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Industry.......................... Manufacturers and users of spark

ignition engines of 19 kW or less.

Manufacturers and users of marine

spark ignition outboard or personal

watercraft engines.

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This table is not intended to be exhaustive, but rather provides a

guide for readers regarding entities likely to be regulated by this

action. This table lists the types of entities that EPA is now aware

could potentially be regulated by this action. Other types of entities

not listed in the table could also be regulated. To determine whether

your product is regulated by this action, you should carefully examine

the applicability criteria in Secs. 90.1 and 91.1 of title 40 of the

Code of Federal Regulations. If you have questions regarding the

applicability of this action to a particular product, consult the

person listed in the preceding FOR FURTHER INFORMATION CONTACT section.

II. Obtaining Copies of the Regulatory Language

Electronic Copies of Rulemaking Documents

Electronic copies of the preamble and the regulatory text of this

rulemaking are available via the Internet on the Office of Mobile

Sources (OMS) Home Page (http://www.epa.gov/OMSWWW/). Users can find

Nonroad Engines and Vehicles information and documents through the

following path once they have accessed the OMS Home Page: ``Nonroad

Engines and Vehicles,'' ``Equipment'' or ``Marine''. Electronic copies

of the preamble and the regulatory text of this rulemaking are also

available on the Office of Air Quality Planning and Standards (OAQPS)

Technology Transfer Network Bulletin Board System (TTN BBS). Users are

able to access and download TTN BBS files on their first call. After

logging onto TTN BBS, to navigate through the BBS to the files of

interest, the user must enter the appropriate command at each of a

series of menus. The steps required to access information on this

rulemaking are listed below. The service is free, except for the cost

of the phone call. TTN BBS: 919-541-5742 (1,200-14,400 bps, no parity,

eight data bits, one stop bit). Voice help: 919-541-5384; Internet

address: TELNET ttnbbs.rtpnc.epa.gov; Off-line: Mondays from 8:00-12:00

Noon ET.

1. Technology Transfer Network Top Menu: Gateway to TTN Technical

Areas (Bulletin Boards)

2. TTN Technical Information Areas: OMS--Mobile Sources Information

3. OMS BBS===Main Menu File Transfers: Rulemaking & Reporting

4. Rulemaking Packages: Nonroad

5. Nonroad Rulemaking Area: File Area #2 . . . Nonroad Engines

6. Nonroad engines

At this stage, the system will list all available nonroad engine

files. To download a file, select a transfer protocol which will match

the terminal software on your computer, then set your own software to

receive the file using that same protocol. If unfamiliar with handling

compressed (i.e., ZIP'd) files, go to the TTN topmenu, System Utilities

(Command: 1) for information and the necessary program to download in

order to unZIP the files of interest after downloading to your

computer. After getting the files you want onto your computer, you can

quit TTN BBS with the oodbye command.

III. Table of Contents

IV. Statutory Authority and Background

A. Statutory Authority

B. Background

V. Use of Uncertified Engines for Replacement of Failed Engines in

Older Equipment and Marine Outboard Engines and Personal Watercraft

(Including Jetboats)

A. Discussion

B. Regulatory Approach

VI. Use of Two Stroke Engines in Nonhandheld Equipment

A. Discussion

B. Regulatory Approach

[[Page 42639]]

VII. Final Action

VIII. Cost Effectiveness

IX. Administrative Requirements

A. Administrative Designation

B. Reporting and Recordkeeping Requirements

C. Regulatory Flexibility

D. Submission to Congress and the General Accounting Office

E. Unfunded Mandates Act

IV. Statutory Authority and Background

A. Statutory Authority

Authority for the actions in this notice is granted to EPA by

sections 202, 203, 204, 205, 206, 207, 208, 209, 213, 215, 216, and

301(a) of the Clean Air Act as amended (42 U.S.C. 7521, 7522, 7523,

7524, 7525, 7541, 7542, 7543, 7547, 7549, 7550, and 7601(a)).

B. Background

(1) Replacement Engines

EPA promulgated final regulations applicable to spark-ignition

nonroad engines at or below 19kW (Small SI engines) on July 3, 1995 (60

FR 34582, codified at 40 CFR part 90) and final regulations applicable

to spark-ignition marine outboard and personal watercraft (including

jetboat) engines (Marine SI engines) on October 4, 1996 (61 FR 52088,

codified at 40 CFR part 91) 1. The Small SI regulations take

effect with model year 1997 for the majority of covered engines but not

until the 1998 model year for certain higher displacement handheld

engines. The Marine SI rule takes effect with 1998 or 1999 engines,

depending upon their usage, and involves a corporate average standard

which tightens each year through 2006. Both rules prohibit engine

manufacturers from introducing into commerce any engine not covered by

a certificate of conformity issued by EPA under the regulations (40 CFR

90.1003(a)(1)(i); 40 CFR 91.1103(a)(1)(i)). The rules also prohibit

equipment and vessel manufacturers from introducing new nonroad

equipment and vessels into commerce unless the engine in the equipment

or vessel is certified to comply with the applicable nonroad emission

requirements (40 CFR 90.1003(a)(5); 40 CFR 91.1103(a)(5)) 2.

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\1\ The preamble to the final Marine SI rule (61 FR 52090)

explains that for purposes of the Marine SI rule, jetboats are

considered as personal watercraft, except where their engines are

derived from sterndrive or inboard type marinized automotive blocks.

\2\ The regulations also prohibit, in the case of any person,

the importation of Small SI engines and Marine SI engines

manufactured after the applicable implementation date for the

engine. The regulations also prohibit the importation of equipment

containing Small SI engines unless the engine is covered by a

certificate of conformity. (40 CFR 90.1003(a)(1)(ii) and 40 CFR

91.1103(a)(1)(ii)).

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These prohibitions have caused or will cause engine manufacturers

to be unable, in the event of a major engine failure, to provide

uncertified replacement engines to repower pre-regulation nonroad

equipment and outboards and personal watercraft (including jetboats),

as well as outboards and personal watercraft (including jetboats)

certified to an earlier standard 3. Equipment and engine

manufacturers have indicated that for many items of older equipment,

older outboards and older personal watercraft (PWCs), no certified

engine is, or will be, available that will fit. Amendments in this

package will alleviate this unintended side effect of the current

regulations for users of Marine SI and Small SI engines.

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\3\ The Marine SI standards take effect with the 1998 or 1999

model year, depending upon application, and then become

progressively tighter each year through 2006. Some engines certified

early in the program will be discontinued as the standards tighten

down. Consequently, Marine SI engine manufacturers may need to

provide uncertified replacement engines for pre-regulatory engines

as well as for engines built to meet an earlier standard. The Phase

1 Small SI standards take effect with the 1997 or 1998 model year,

depending upon application, and remain the same throughout Phase 1.

At least during Phase 1, the Small SI manufacturers will only need

to provide uncertified engines for pre-regulatory equipment.

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While this rulemaking addresses the needs of both the Marine SI and

Small SI engine manufacturers for a replacement engine provision

together, there are differences in the products and structure of the

industries that should be noted here. The majority of the engines

subject to the Marine SI rule are outboard engines where the engine

manufacturer produces the complete outboard engine containing both the

powerhead (engine) and the drive unit (the lower part of an outboard

engine which contains the drive shaft and exhaust system and holds the

propeller). Outboard engines are sold to consumers and vessel

manufacturers who affix them to the outside rear of boats. With respect

to replacement engine provisions for Marine SI engines in this

rulemaking, the term ``engine'' refers to the powerhead of an outboard

engine or the analogous power unit of a personal watercraft or jet

boat.

Small SI engines can be split into two factions. Nonhandheld

engines are produced by engine manufacturers and sold to equipment

manufacturers that produce lawnmowers, tillers, garden tractors,

commercial mowing, farm and construction equipment, small generators

and other such equipment. Some of this equipment can be extremely

expensive relative to the cost of a new engine. When engine failures

occur, equipment operators may desire to replace the engine. Handheld

engines are generally produced by companies that make chainsaws, string

trimmers, hedge trimmers, backpack blowers and cut off saws. The

handheld industries are generally integrated, producing the entire

consumer product, while the nonhandheld industries are not. For

handheld products, the engine comprises a substantial portion of the

value of the equipment, and most equipment is of low value relative to

engine repair or replacement costs. Consequently, handheld engine

replacement is expected to be extremely rare even in high end,

professional usage products.

(2) Use of Two Stroke Engines in Nonhandheld Equipment

The Small SI final rule provides for separate categories for

handheld and nonhandheld engines. Within each category are different

displacement classes with different emission standards. Handheld

engines use predominantly two stroke combustion technology because of

the need for light-weight engines that can be used multipositionally,

including upside down and sideways, in handheld equipment. Nonhandheld

engines, which are not so constrained by weight and generally operate

in limited positions, are nearly all four stroke combustion technology.

Because of their operating characteristics and design, two stroke

engines have much greater hydrocarbon (HC) emissions than four stroke

engines.4 The standards for two stroke and four stroke

engines reflect these differences--the nonhandheld hydrocarbon plus

oxides of nitrogen standards are designed around four stroke engines

and are significantly more stringent than the corresponding handheld

engine standards.

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\4\ A two stroke or two cycle engine produces power strokes

twice as often as a four stroke or four cycle engine, and therefore

produces greater power for a given weight. Also, two stroke engines

are lubricated by oil which is added to the fuel, while four stroke

engines require a crankcase full of oil that must remain at the

bottom of the engine. Consequently, two stroke engines can be

operated multipositionally, but burn oil with their gasoline. Four

stroke engines can not typically be operated multipositionally, but

do not burn oil with their fuel. The two additional strokes used by

a four stroke engine serve to push the exhaust gases out of the

cylinder before any fresh fuel and air is admitted. In a two stroke

engine, these extra strokes do not occur and there is considerable

mixing of fresh fuel and air with the exhaust stream. The presence

of this unburned fuel along with the byproducts of oil combustion

cause two stroke engines to exhibit high HC emissions.

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[[Page 42640]]

While nearly all nonhandheld equipment is powered by four stroke

engines, some lawnmowers have historically used two stroke engines. A

special provision was incorporated into the final rule to ease the

transition to four stroke engines for the affected manufacturers. See,

40 CFR 90.103(a)(3). This provision allows certain manufacturers of

lawnmowers to continue to use two stroke engines, subject to a

declining production cap, up through model year 2002, provided the

engines are certified to meet the handheld standards. This provision is

discussed in greater detail in the preamble to the final rule (60 FR

34582, 34593-34594 (July 3, 1995)).

Recently, EPA has learned that some very low volume, specialized

nonhandheld equipment has also historically been produced with two

stroke engines. This equipment would require substantial modification

and redesign to utilize four stroke engines. An amendment in this

package will extend the flexibility provided for manufacturers of two

stroke lawnmowers to manufacturers of other nonhandheld equipment,

provided the equipment manufacturer can demonstrate to EPA its

inability to readily convert to four stroke engines. If EPA approval is

granted, this provision would then allow those equipment manufacturers

to have the same opportunities to modify their equipment to use four

stroke engines that the two stroke lawnmower manufacturers have. This

provision is expected to affect a very small number of low volume,

specialty equipment manufacturers.

V. Use of Uncertified Engines for Replacement of Failed Engines in

Older Equipment and Marine Outboard Engines and Personal Watercraft

(Including Jetboats)

A. Discussion

As indicated above, the Marine SI and the Small SI rules prohibit

the introduction into commerce of any new nonroad engines subject to

those regulations unless the engines are covered by a certificate of

conformity issued by EPA. According to letters received from Small SI

and Marine SI engine manufacturers, the Engine Manufacturers

Association and a number of nonroad equipment manufacturers, these

prohibitions pose a hardship to engine manufacturers and their

customers when equipment produced before the applicable effective date

of the rules, and therefore equipped with uncertified engines, or

marine equipment with engines certified to an earlier standard,

experiences catastrophic engine failures. 5, 6 In such

cases, particularly for newer equipment still under warranty, engine

manufacturers desire to be able to provide an entire new engine.

However, certified engines that will fit in pre-regulatory equipment or

equipment subject to an earlier standard will not always be available

for reasons discussed below.

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\5\ For simplicity, from this point on in this preamble

discussion, unless otherwise specified, the term ``equipment''

refers to both nonroad equipment using handheld or nonhandheld

engines and to marine propulsion units including outboard and jet

engines and their drive units. Therefore, the term ``engine'' as it

pertains to marine engines will mean the powerhead of an outboard

engine or the analogous power unit of a jet engine used in a

personal watercraft or jet boat.

\6\ Copies of these letters are available in the docket for

today's rulemaking.

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Under current regulations, an equipment owner who experiences a

major engine failure with an uncertified engine or a marine engine

certified to an earlier standard is limited to the following options.

It can:

(1) Obtain a new, uncertified engine or a marine engine certified

to an earlier standard from a manufacturer's or distributor's

inventory. Engine manufacturers have informed us that because of the

many variations of engines they produce, inventorying quantities of

older marine engines or uncertified engines produced before the

effective date of the regulations for anticipated replacement purposes

would be impractical and prohibitively expensive. The Small SI

regulations at 40 CFR 90.1003(b)(4) specifically provide

* * * Nonroad vehicle manufacturers may continue to use noncertified

nonroad engines built prior to the effective date until noncertified

engine inventories are depleted; however, stockpiling (i.e. build up

of an inventory of engines outside of normal business practices) of

noncertified nonroad engines will be considered a violation of this

section.7

\7\ No correponding provision is found in the Marine SI rule,

however this regulation is essentially a codification of

longstanding EPA policies implementing the prohibitions of section

203(a) of the Act. These policies are similarly applicable to marine

engines. See, for example, EPA's letter of November 22, 1989 to the

Public Transportation Division of the City of High Point, North

Carolina. Copy in docket.

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EPA does not regard engines inventoried beyond the end of a model

year for reasonable anticipated warranty needs to be ``stockpiled''.

However, because of the manufacturers' understandable desire to avoid

inventory costs, this option would not likely be able to supply

significant numbers of replacement engines.

(2) Obtain a used or remanufactured engine. EPA has no restrictions

on the installation of used or remanufactured engines in equipment that

predates the relevant effective date of the Marine SI or Small SI rule.

Further, marine engines certified to an earlier standard may be

remanufactured to be identical to a certified configuration of the same

or later model year and used for replacement applications. However,

engine and equipment manufacturers have informed us that there is no

significant rebuilding industry for Small SI engines as there is for

categories of larger engines. Rebuilding of marine engines is more

common, however marine engine manufacturers have informed us that

rebuilt engines are not commonly available to replace engines that are

less than approximately five years old and even then may not be widely

available for some configurations.

(3) Repair the individual engine using a ``short block''. In this

case, a new cylinder block with pistons, connecting rods, crankshaft

and timing gear (a ``short block'') serves as a repair part. EPA has a

long standing policy that a short block is not a new engine and will

not result in a new engine when combined with the used components from

the original engine.8

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\8\ Letters of December 11, 1989 and April 6, 1990 from Charles

N. Freed, EPA to Mitsubishi Motors America, Inc. Copies located in

docket.

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(4) Replace the failed engine with a new, certified engine. In this

case, a new certified engine is installed in place of the uncertified

engine or older marine engine. This is the most desirable option from

the Agency's point of view, however in many cases certified engines

will not fit in equipment that may have been designed around

uncertified engines or older marine engines. Engines certified to the

latest standards may be equipped with additional or different

components which impact the external dimensions of or connections to

the engines and therefore limit their abilities to fit in engine

compartments of older equipment.

From the engine and equipment manufacturers' point of view, all of

the current options described above have limitations. The manufacturers

point to long standing industry practices of being able to provide

complete, new replacement engines expeditiously when catastrophic

engine failures occur, particularly when those failures affect

equipment in the first few years of use, and even more particularly

when it may still be under warranty. Many of the Small SI engines are

used in specialized agricultural or construction equipment. Timely

repairs can be crucial when the broken engine is in a piece of

[[Page 42641]]

construction equipment and a construction project sequence is being

held up. Many Marine SI engines are used in commercial fishing or

tourist vessels where downtime means loss of income to the operator.

Also, many users of Small SI powered equipment and Marine SI engines

are small businesses who can not afford the additional downtime and

expense that may be associated with waiting for an engine overhaul.

Further, because of the diversity of nonroad products using Small SI

engines, suitable replacement or rental nonroad equipment is not always

readily available. The equipment and engine manufacturers have also

explained that the need to repair an engine using a short block leads

to delays and extra costs that would not occur if the old, broken

engine could simply be exchanged for a new uncertified engine. They

argue that the short block option requires greater skills and

facilities and more time to complete than an engine swap and produces

an engine that is not a factory-tested and adjusted unit. From an air

quality standpoint, they argue that an entire new uncertified engine

might be better than an old engine repaired with a new short block or

replaced with a remanufactured engine.

The two major U.S. manufacturers of outboard marine engines have

indicated to EPA that replacement powerheads comprise less than one

percent of annual U.S. sales. Engine replacement is rare in walk-behind

lawnmowers which is the most common application of nonhandheld Small SI

engines. Further, the two major manufacturers of walk-behind mower

engines have indicated that their certified configurations will fit

older mower applications. One of these companies has told EPA that

replacement engines are less than one percent of its business. Another

Small SI engine manufacturer has indicated to EPA that only about two

percent of its annual sales are for replacement purposes, and that many

of these will be certified engines. This particular manufacturer

pointed out that its sales of replacement engines are probably higher

than the industry average, because it produces mostly larger, more

expensive nonhandheld engines used in ``high end'' equipment where the

value of the equipment drives the decision toward replacing the engine

rather than the entire piece of equipment.

Engine manufacturers are still producing uncertified complete

engines for export, or are sometimes willing to produce small

quantities for domestic replacement purposes, and desire to be able to

sell them (or provide them under warranty) for replacement purposes.

EPA notes that the California Air Resources Board, in its regulation of

both Small SI engines and large nonroad compression ignition engines,

permits the introduction into commerce of uncertified engines for

replacement purposes up through January 1, 1999 and January 1, 2000

respectively. (California does not regulate Marine SI engines.) In a

direct final rulemaking very similar to today's rulemaking that was

published on November 12, 1996 (61 FR 58102), EPA established

provisions to permit the sale of uncertified large compression ignition

(Large CI) nonroad engines for replacement purposes in pre-regulation

equipment based on considerations consistent with those described

above.

The Agency is amending the Small SI and Marine SI regulations to

permit the sale of uncertified replacement engines in those cases where

a new, certified engine is not available with appropriate physical or

performance characteristics to repower the equipment, as a reasonable

way to balance achieving the air quality benefits of the Small SI and

Marine SI programs with the desire to minimize disruption to equipment

owners accustomed to using replacement engines. However, if a certified

engine is available with sufficient torque and horsepower that will fit

in the equipment, then the certified engine should be used so that the

goals of the Clean Air Act to convert the fleet of Small SI and Marine

SI engines to certified status are promptly fulfilled. The amended

Small SI regulations will permit a nonroad engine in a piece of

equipment that predates the applicable implementation date of the Small

SI rule to be replaced with a new, uncertified engine. Similarly, the

amended Marine SI regulations will permit the powerhead in an outboard

or PWC (including a jetboat) that predates the applicable

implementation date of the Marine SI rule to be replaced with a new,

uncertified engine. The amended Marine SI regulation will also permit

powerheads certified in an earlier year of the phase in, but not

certified in the then current model year to be replaced with a new,

uncertified powerhead provided the powerhead is of a configuration

identical in all material respects to that of the failed powerhead or a

later model year powerhead.

Given the small percentage of engines that will likely require

replacement, the fact that some of those will get replaced with

certified engines and the likelihood that a new replacement engine will

be at least as clean as a remanufactured engine or an engine repaired

with a short block, EPA concludes that permitting the use of

uncertified replacement engines in these situations will not pose an

environmental threat or reduce the environmental benefit of the Small

SI or Marine SI rules. Further, EPA concludes that it would be

unreasonable to impose upon equipment operators, the costs associated

with having to replace failed engines with certified engines, where

appropriate certified engines are not available for pre-regulatory

equipment or for marine engines built to less stringent standards.

B. Regulatory Approach

EPA is implementing this provision through amendments to the

Prohibited Acts sections at 40 CFR 90.1003 and 91.1103. To ensure that

the replacement engine provision is properly used, these amendments

will include controls nearly identical to those adopted in the direct

final rule for Large CI engines referenced above. EPA is requiring that

any uncertified Small SI engine produced for replacement purposes be

clearly labeled as such and that such label include a warning that any

use of the engine in post-regulation nonroad equipment constitutes a

violation of the Act subject to civil penalty. EPA is adopting these

same provisions for replacement marine engines except that the labeling

requirement will be different to reflect the phase in of the marine

standards. In this case the label must reflect that the engine may be

used to replace only pre-regulation engines or engines certified for a

model year that is no later than the last year in which the replacement

engine was certified. For both Marine SI and Small SI engines, EPA is

requiring that the manufacturer ascertain that no certified engine with

appropriate characteristics is available that will fit in the equipment

and that the manufacturer or its agent takes possession of the old

engine. Requiring the equipment owner to ``turn in'' an old engine

provides the manufacturer or its agent with a clear opportunity to

confirm the existence of an old engine, evaluate its configuration and

make sure the appropriate replacement engine is supplied. Unlike in the

Large CI replacement engine rule, we are providing that EPA may approve

alternative control measures to the requirement that the manufacturer

or its agent take possession of the old engine when selling an

uncertified replacement engine. We believe this flexibility may be

necessary to accomodate some distribution channels through which small

engines and marine engines may be sold if these channels are shown to

be unable to accomodate old engines. EPA would approve alternate

[[Page 42642]]

approaches if persuaded that the approach provides equivalent control

to the requirement to turn in the old engine to the manufacturer or its

agent.

VI. Use of Two Stroke Engines in Nonhandheld Equipment

A. Discussion

Presently, the Small SI rule contains provisions at 40 CFR

90.103(a)(3) and 90.107(e)(1) through (5) to permit manufacturers of

two stroke lawnmower engines to continue to sell those engines through

model year 2002 provided they can certify them to the handheld

standards appropriate for their displacement. These provisions require

the engine manufacturer to establish a baseline annual sales number

based on their 1992 through 1994 sales of such engines and then comply

with a declining production cap through the 2002 model year. In 2003,

the engines would have to meet the appropriate nonhandheld standards,

either those contained in the current rule or in any superseding rule.

As discussed in the preamble to the final Phase 1 rule, these

provisions were established to minimize the economic hardship of the

small engine rule on two stroke lawnmower engine and equipment

manufacturers and to provide adequate lead time for compliance with the

nonhandheld standards. See 60 FR 34593-34594. EPA incorporates that

discussion by reference. Recently, EPA has become aware of a very small

manufacturer (less than 100 units per year) of specialty lawn care

equipment who has historically used two stroke engines on its products,

was unaware of the promulgation of the Phase 1 rule until recently, and

would face severe lead time problems and economic hardship if it had to

quickly switch over to four stroke engines to power its equipment. Its

equipment will require substantial redesign to use four stroke engines

for which additional lead time is necessary. EPA believes there may be

other small entities with similar situations but does not believe there

are any that produce substantial volumes of equipment. In the case of

small volume manufacturers, the per unit cost of forcing equipment

redesign to accommodate four stroke engines is especially high. EPA has

concluded that it is equitable and appropriate to treat such companies

in the same manner as the two stroke lawnmower engine manufacturers are

being treated and has determined it is appropriate to expand the

provisions providing relief for lawnmowers to encompass any nonhandheld

equipment that has historically been produced with two stroke engines,

provided that the manufacturer can demonstrate to EPA that no suitable

four stroke engine is available and that substantial redesign of the

equipment requiring additional lead time to avoid economic hardship

would be necessary to accommodate a four stroke engine. Without

providing relief to address these situations, the cost of compliance

with the nonhandheld standards would be unreasonably high. In order to

avoid this result, EPA has determined that it is more reasonable to

provide a relaxation of standards in these situations.

With regard to the declining annual cap imposed in Sec. 90.107(e)

upon the lawnmower engine manufacturers, EPA believes that a declining

cap may not be appropriate or necessary for specialty equipment whose

production is already very low, and could serve to eliminate any

benefit that the provision may offer to a small equipment manufacturer,

because it might force them to produce both two and four stroke

versions at the same time to maintain sales levels. Therefore, EPA is

adding a provision at Sec. 90.107(g) that would allow the cap to be

waived by EPA upon a demonstration by the engine or specialty equipment

manufacturer that compliance with the cap would not be economically

feasible. This waiver authority would not be extended to the high

volume lawnmower manufacturers currently covered under Sec. 90.107(e),

nor would it be extended to any other high-volume nonhandheld engine

manufacturer, in the unlikely event that one might come forward and

seek relief to enable it to use a two stroke engine.

B. Regulatory Approach

The regulatory change will be implemented by modifications to

sections on Exhaust Emission Standards (Sec. 90.103) and the

Application for Certification (Sec. 90.107). The relevant provision at

Sec. 90.103(a)(3) previously applied only to manufacturers of two

stroke lawnmowers and will now be expanded to include ``lawnmowers or

other nonhandheld equipment''. In Sec. 90.107, a new paragraph will be

added to provide the criteria by which EPA can approve the use of two

stroke engines in nonhandheld equipment other than lawnmowers. Because

the provision for two stroke engines in lawnmowers was based on

substantial information about the impact of the Small SI nonhandheld

standards on certain manufacturers and because EPA desires nonhandheld

equipment manufacturers to use engines certified to nonhandheld

standards whenever possible, EPA is including a requirement, applicable

to manufacturers of nonhandheld equipment other than lawnmowers, that

the equipment manufacturer must demonstrate that a suitable engine

meeting nonhandheld standards is not available to fit the existing

equipment design and that the equipment can not be converted to accept

an engine meeting the nonhandheld standards without substantial and

costly redesign for which additional lead time is necessary.

The original regulation included a declining production cap at

Sec. 90.107 to provide for the phase out of two stroke equipped

lawnmowers. The declining cap approach was designed to address

relatively high-volume two stroke lawnmower manufacturers who would be

able to gradually shift their production to four stroke mowers.

Nonhandheld equipment other than lawnmowers that may qualify to use two

stroke engines is expected to be produced only in very small quantities

and EPA believes that a declining production cap may be unnecessary for

such equipment. Consequently, a provision has been added to permit EPA

to waive the declining cap for equipment other than lawnmowers, if the

equipment manufacturer can make a demonstration that complying with the

cap would be economically infeasible.

VII. Final Action

EPA is publishing this rule without prior proposal because EPA

views these amendments as noncontroversial and anticipates no adverse

comments. However, in the event that adverse or critical comments are

filed, EPA has prepared a Notice of Proposed Rulemaking (NPRM)

proposing the same amendments. This NPRM is contained in a separate

document in this Federal Register publication. The direct final action

will be effective October 6, 1997, unless adverse or critical comments

are received by September 8, 1997. If EPA receives adverse or critical

comments on either the relevant revisions discussed in Section V or

those discussed in Section VI, the revisions described in that section

will be withdrawn. If adverse or critical comments are received on the

revisions described in both sections, then both sections will be

withdrawn before the effective date. In case of the withdrawal of all

or part of this action, the withdrawal will be announced by a

subsequent Federal Register document. All public comments will then be

addressed in a subsequent final rule based on this action serving as a

proposed rule. EPA will not provide a second comment period on this

action. Any parties

[[Page 42643]]

interested in commenting on this rule should do so at this time. If no

adverse comments are received, the public is advised that the rule will

be effective October 6, 1997.

VIII. Cost Effectiveness

This rulemaking alters an existing provision by allowing nonroad

equipment manufacturers to have greater flexibility in their choice of

engines under certain circumstances. It also permits nonroad engine

manufacturers to sell engines that the original rule would not permit.

Therefore, because this rulemaking alters existing provisions, and that

alteration provides regulatory relief, there are no additional costs to

original equipment manufacturers associated with this specific final

action.

The costs and emission reductions associated with the Small SI rule

were developed for the July 3, 1995 final rulemaking. The costs and

emission reductions associated with the Marine SI rule were developed

for the October 4, 1996 rulemaking. We do not believe the changes being

implemented today affect the costs and emission reductions published as

part of those rulemakings.

IX. Administrative Requirements

A. Administrative Designation

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

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

and therefore subject to OMB review and the requirements of the

Executive Order. The Order defines ``significant regulatory action'' as

one 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. It has been determined

that this rule is not a ``significant regulatory action'' under the

terms of Executive Order 12866 and is therefore not subject to OMB

review.

B. Reporting and Recordkeeping Requirements

This final rulemaking does not change the information collection

requirements submitted to and approved by OMB in association with the

Small SI final rulemaking (60 FR 34582, July 3, 1995) or submitted to

OMB in association with the Marine SI final rulemaking (61 FR 52088,

October 4, 1996). An Agency may not conduct or sponsor and a person is

not required to respond to a collection of information unless it

displays a currently valid OMB control number. The OMB control numbers

for EPA's regulations are listed in 40 CFR part 9 and 48 CFR Chapter

15.

C. Regulatory Flexibility

EPA has determined that it is not necessary to prepare a regulatory

flexibility analysis in connection with this final rule. EPA has also

determined that this rule will not have a significant adverse economic

impact on a substantial number of small entities. This is because

today's rulemaking will provide regulatory relief to both large and

small volume engine and equipment manufacturers by permitting greater

flexibility in engine choices in equipment. Moreover, the provisions in

this rulemaking simply permit long-standing business practices to

continue.

D. Submission to Congress and the General Accounting Office

Under 5 U.S.C. 801(a)(1)(A) as added by the Small Business

Regulatory Enforcement Fairness Act of 1996, EPA submitted a report

containing this rule and other required information to the U.S. Senate,

the U.S. House of Representatives and the Comptroller General of the

General Accounting Office prior to publication of the rule in today's

Federal Register. This rule is not a ``major rule'' as defined by 5

U.S.C. 804(2).

E. Unfunded Mandates Act

Under Section 202 of the Unfunded Mandates Reform Act of 1995

(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA

must prepare a budgetary impact statement to accompany any proposed or

final rule that includes a Federal mandate that 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, EPA

must select the most cost effective and least burdensome alternative

that achieves the objectives of the rule and is consistent with

statutory requirements. Section 203 requires EPA to establish a plan

for informing and advising any small governments that may be

significantly or uniquely impacted by the rule. EPA has determined that

the action proposed today does not include a Federal mandate that may

result in estimated costs of $100 million or more to either State,

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

sector. Therefore, EPA has not prepared a budgetary impact statement

for this rule.

List of Subjects in 40 CFR Parts 90 and 91

Environmental protection, Air pollution control, Confidential

business information, Imports, Labeling, Nonroad source pollution,

Reporting and recordkeeping requirements, Research, Warranties.

Dated: July 30, 1997.

Carol M. Browner,

Administrator.

For the reasons set out in the preamble, title 40, chapter I, of

the Code of Federal Regulations, is amended as follows:

PART 90--CONTROL OF EMISSIONS FROM NONROAD SPARK-IGNITION ENGINES

1. The authority citation for part 90 continues to read as follows:

Authority: Sections 203, 204, 205, 206, 207, 208, 209, 213, 215,

216, and 301(a) of the Clean Air Act, as amended (42 U.S.C. 7522,

7523, 7524, 7525, 7541, 7542, 7543, 7547, 7549, 7550, and 7601(a)).

2. Section 90.103 is amended by revising paragraph (a)(3) to read

as follows:

Sec. 90.103 Exhaust emission standards.

(a) * * *

(3) Notwithstanding paragraph (a)(2) of this section, two stroke

engines used to power lawnmowers or other nonhandheld equipment as

allowed in Sec. 90.107 (e), (f) and (h) may meet class III, IV, or V

standards until model year 2003.

* * * * *

3. Section 90.107 is amended by adding a new paragraph (h) to read

as follows:

Sec. 90.107 Application for certification.

* * * * *

(h)(1) The Administrator may, upon receipt of a written request

from an equipment manufacturer, accompanied by sufficient

documentation, permit two stroke engines produced for nonhandheld

equipment other than lawnmowers to meet the standards specified in

Sec. 90.103(a)(3) under the schedule outlined in paragraph (e) of this

section. The equipment manufacturer must demonstrate to the

satisfaction of the Administrator that:

[[Page 42644]]

(i) Four stroke engines for such equipment are not available with

suitable physical or performance characteristics; and

(ii) The equipment can not be converted to use four stroke engines

without substantial redesign for which additional lead time is

necessary to avoid economic hardship.

(2) The Administrator may waive the phase-in percentages of

paragraphs (e)(3) and (e)(4) of this section for engines used in low

volume nonhandheld equipment other than lawnmowers where the equipment

manufacturer demonstrates to the satisfaction of the Administrator that

compliance with the production cap is not economically feasible.

4. Section 90.1003 is amended by adding paragraph (b)(5) to read as

follows:

Sec. 90.1003 Prohibited acts.

* * * * *

(b) * * *

(5) A new nonroad engine, intended solely to replace an engine in a

piece of nonroad equipment that was originally produced with an engine

manufactured prior to the applicable implementation date as described

in Sec. 90.2, Sec. 90.103 and Sec. 90.106, shall not be subject to the

requirements of Sec. 90.106 or prohibitions of paragraphs (a)(1) and

(b)(4) of this section provided that:

(i) The engine manufacturer has ascertained that no engine produced

by itself or the manufacturer of the engine that is being replaced, if

different, and certified to the requirements of this subpart, is

available with the appropriate physical or performance characteristics

to repower the equipment; and

(ii) Unless an alternative control mechanism is approved in advance

by the Administrator, the engine manufacturer or its agent takes

ownership and possession of the engine being replaced; and

(iii) The replacement engine is clearly labeled with the following

language, or similar alternate language approved in advance by the

Administrator:

This engine does not comply with federal nonroad or on-highway

emission requirements. Sale or installation of this engine for any

purpose other than as a replacement engine in a nonroad vehicle or

piece of nonroad equipment whose original engine was not certified

is a violation of Federal law subject to civil penalty.

PART 91--CONTROL OF EMISSIONS FROM MARINE SPARK-IGNITION ENGINES

5. The authority citation for part 91 continues to read as follows:

Authority: Sections 203, 204, 205, 206, 207, 208, 209, 213, 215,

216, and 301(a) of the Clean Air Act, as amended (42 U.S.C. 7522,

7523, 7524, 7525, 7541, 7542, 7543, 7547, 7549, 7550, and 7601(a)).

6. Section 91.1103 is amended by adding paragraph (b)(4) to read as

follows:

Sec. 91.1103 Prohibited acts.

* * * * *

(b) * * *

(4) A new marine spark-ignition engine intended solely to replace

an engine in an outboard engine, or other engine to which this Part is

applicable as determined by Secs. 91.1, 91.101, 91.106 that was

originally produced with an engine manufactured prior to the applicable

implementation date as described in Secs. 91.2, and 91.106 and

91.205(a)(1), or that was originally produced in a model year in which

less stringent emission standards under this part were in effect shall

not be subject to the requirements of Sec. 91.106 or the prohibitions

of paragraph (a)(1) of this section provided that:

(i) The engine manufacturer has ascertained that no engine produced

by itself or the manufacturer of the engine that is being replaced, if

different, and certified to the requirements of this subpart, is

available with the appropriate physical or performance characteristics

to repower the outboard, personal watercraft or jetboat; and

(ii) Unless an alternative control mechanism is approved in advance

by the Administrator, the engine manufacturer or its agent takes

ownership and possession of the engine being replaced; and

(iii) The replacement engine is clearly labeled with the following

language, or similar alternate language approved in advance by the

Administrator:

This engine does not comply with Federal nonroad or on-highway

emission requirements. Sale or installation of this engine for any

purpose other than as a replacement engine in a marine vessel whose

original engine was not certified, or was certified to less

stringent emission standards than those that apply to the year of

manufacture of this engine, is a violation of Federal law subject to

civil penalty; and

(iv) Where the replacement engine is intended to replace an engine

built after the applicable implementation date as described in

Secs. 91.2, 91.106 and 91.205(a)(1), but built to less stringent

emission standards than are currently applicable, the replacement

engine shall be identical in all material respects to a certified

configuration of the same or later model year as the engine being

replaced.

[FR Doc. 97-20821 Filed 8-6-97; 8:45 am]

BILLING CODE 6560-50-P