Control of Air Pollution: Emission Standards for New Nonroad Compression-Ignition Engines at or Above 37 Kilowatts; Preemption of State Regulation for Nonroad Engine and Vehicle Standards; Amendments to Rules

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 85 and 89

[AMS-FRL-5939-5]

Control of Air Pollution: Emission Standards for New Nonroad

Compression-Ignition Engines at or Above 37 Kilowatts; Preemption of

State Regulation for Nonroad Engine and Vehicle Standards; Amendments

to Rules

AGENCY: Environmental Protection Agency.

ACTION: Direct final rule.

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SUMMARY: This direct final rulemaking, consistent with an order and

opinion from the U.S. Court of Appeals for the District of Columbia

Circuit, amends EPA's regulations setting emission standards for large

(at or above 37 kilowatts) nonroad compression ignition engines, and

EPA's regulations establishing procedures for EPA authorization of

California nonroad emission standards. Specifically, EPA is withdrawing

portions of an interpretive rule which set forth the Agency's position

on the Clean Air Act (Act) regarding the status of certain internal

combustion engines manufactured before the effective date of the final

rulemaking promulgating EPA's definition of nonroad engine.

Additionally, consistent with the D.C. Circuit opinion, EPA also is

amending the remaining text of this interpretive rule, as well as EPA's

regulations issued under section 209(e) of the Act regarding the

Agency's California nonroad standards authorization process, to clarify

that California must seek authorization from EPA prior to enforcing

standards and other requirements relating to emissions from any nonroad

vehicles or engines, and not just new nonroad vehicles and engines,

which was the original language used in these regulations.

DATES: This direct final rule is effective on March 2, 1998 unless

notice is received by January 29, 1998 that any person wishes to submit

adverse comments and/or request a hearing. Should EPA receive such

notice, EPA will publish a timely document in the Federal Register

withdrawing this direct final rule. Any party who sends EPA notice of

intent to submit adverse comments must in turn submit the adverse

comments by March 2, 1998, unless a hearing is requested. Any party

objecting to this direct final rule, at the time it notifies EPA of its

intent to submit adverse comments, can request EPA to hold a public

hearing on this action. If a hearing is requested, it will take place

on March 2, 1998, and interested parties will have an additional 30

days after the hearing (until March 30, 1998) to submit comments on any

information presented at the hearing. Because no hearing will occur

absent a request for one, interested parties should contact Robert M.

Doyle at the number listed below after January 29, 1998 to determine

whether a hearing will take place.

ADDRESSES: Written comments should be submitted (in duplicate if

possible) to: Air Docket Section (6102), Attention: Docket No. A-91-24,

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

D.C. 20460, or hand-delivered to the Air Docket at the above address,

in Room M-1500, Waterside Mall. A copy of written comments should also

be submitted to Robert M. Doyle at the address below.

FOR FURTHER INFORMATION CONTACT: Robert M. Doyle, Attorney/Advisor,

Engine Programs and Compliance Division (6403J), U.S. Environmental

Protection Agency, 401 M. Street, S.W., Washington, D.C. 20560, (202)

564-9258, FAX (202) 233-9596, E-Mail, [email protected]

SUPPLEMENTARY INFORMATION:

I. Regulated Entities

Entities potentially regulated by this direct final rule are the

California Air Resources Board and other state air quality agencies.

Regulated categories and entities include:

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Examples of regulated

Category entities

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State and local government................ California Air Resources

Board.

State and local air quality

agencies.

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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. 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 Electronic Copies of Documents

Electronic copies of the preamble and the regulatory text of this

direct final rule are available via the Internet on the Office of

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

find these documents and other nonroad engine and vehicle related

information and documents by accessing the OMS Home Page and looking at

the path entitled ``Nonroad engines and vehicles.'' This service is

free of charge, except for any cost you already incur for Internet

connectivity. The official Federal Register version is made available

on the day of publication on the primary Web site (http://www.epa.gov/

docs/fedrgstr/EPA-AIR/).

Please note that due to differences between the software used to

develop the documents and the software into which the documents may be

downloaded, changes in format, page length, etc., may occur.

III. Legal Authority and Background

Authority for the actions set forth in this direct final rule is

granted to EPA by sections 209, 213, and 301 of the Clean Air Act as

amended (42 U.S.C. 7543, 7547, and 7601).

A. Amendments and Redesignation of Appendix Containing Interpretive

Rule on Date and Scope of Nonroad Preemption

On May 17, 1993, EPA proposed rules setting standards for emissions

from nonroad compression ignition engines at or above 37 kilowatts

(approximately 50 horsepower) in power (large nonroad engine

rule).1 In this NPRM, EPA was faced with the question (among

many issues) of the manner and the extent to which states could

regulate nonroad engines, which some states and localities previously

had regulated as stationary sources. EPA noted that while emissions

from nonroad engines are excluded from the Act's section 302(z)

definition of stationary source,2 the exclusion would apply

only to those nonroad internal combustion engines that are manufactured

after the effective

[[Page 67734]]

date of the large nonroad engine rule. EPA also noted that nonroad

engines may be subject to state-imposed in-use restrictions such as

limits on hours of use and may be subject to state regulation under

section 209(e)(2).3

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\1\ 58 FR 28809 (May 17, 1993).

\2\ Section 302(z) states that the ``term `stationary source'

means generally any source of an air pollutant except those

emissions resulting directly from an internal combustion engine for

transportation purposes or from a nonroad engine or nonroad vehicle

as defined in section 216.''

\3\ Section 209(e)(2)(A) directs EPA to authorize California to

adopt and enforce standards and other requirements for nonroad

engines and nonroad vehicles (with some categorical exceptions) if

California's regulations meet the criteria set forth in the Act.

Other states may adopt EPA-authorized California nonroad engine or

vehicle standards if the states comply with the criteria listed in

section 209(e)(2)(B).

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During the rulemaking, EPA received comments from several parties

objecting to its interpretation of the correct effective date. These

parties generally asserted that the language in section 302(z) applied

to all nonroad engines in existence on or after November 15, 1990, the

date of the enactment of the Clean Air Act Amendments of 1990 (CAAA).

The effect of this assertion would be that states would be preempted

from promulgating emission standards or other requirements for nonroad

engines produced after that date.

On June 17, 1994, EPA published a final rule 4 setting

the standards for the large nonroad compression ignition engines; the

effective date for this rule was July 18, 1994, 30 days after its

Federal Register publication. In that rule, EPA finalized the

definition of ``nonroad engine,'' which determined whether certain

engines should be considered ``nonroad engines'' or ``stationary

sources.'' After careful consideration of the comments on the rule's

preemption date briefly summarized above, EPA added an interpretive

rule in the form of an appendix (Appendix A) to the regulations

summarizing EPA's decisions on these preemption issues. In Appendix A,

EPA noted basically that it interprets the Act as not precluding state

regulation of internal combustion engines manufactured prior to July

18, 1994, except that state regulation of such engines that are used in

motor vehicles or vehicles used solely for competition is precluded.

Additionally, EPA noted that it believes that states are not precluded

under section 209 of the Act from regulating the use and operation of

nonroad engines. Appendix A has been codified as part of the large

nonroad engine rule and appears in the current volume of 40 CFR part 89

(July 1, 1996).

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\4\ 59 FR 31306 (June 17, 1994).

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On or before August 16, 1994, nine parties timely filed petitions

with the United States Court of Appeals for the D.C. Circuit for review

of the large nonroad engine rule, and of the related rule establishing

the scope of preemption of state or local standards regulating nonroad

engines and the procedures that California must follow when seeking EPA

authorization to adopt and enforce California-specific nonroad engine

standards under section 209(e) of the Act. These nine petitions were

consolidated as Engine Manufacturers Association, et. al., v. EPA,

Docket No. 94-1558, (EMA v. EPA). The petitioners challenged several

aspects of these rules, including the EPA interpretation contained in

Appendix A. After preliminary discussions with petitioners, EPA decided

that it was appropriate to review its interpretation that preemption of

state and local regulations did not effect engines manufactured prior

to July 18, 1994. Therefore, on September 19, 1995, EPA filed with the

Court a Motion for Vacatur and Remand of its interpretation. The

consolidated petitioners did not oppose EPA's Motion.

On October 20, 1995, the Court granted EPA's Motion and ordered

that paragraphs 1 and 2 of Appendix A be vacated and remanded to the

Agency for further consideration. Today's direct final rule implements

the order of the Court by removing paragraphs 1 and 2 from Appendix A,

and retitling Appendix A to be descriptive of its revised content.

EPA notes that although paragraphs 1 and 2 of Appendix A are now

vacated, paragraph 3 remains effective, though this rule revises that

paragraph. This paragraph, which appears in the revised text of

Appendix A, contains EPA's determination that states are not precluded

from regulating the use of nonroad engines. On July 12, 1996, the Court

handed down its decision in EMA v. EPA, and held that EPA had made a

reasonable interpretation of the Act in finding that the preemption of

state regulations did not extend to restrictions on the use of nonroad

engines.5 EPA, however, has deleted the last two sentences

of paragraph 3 and added a new sentence consistent with the Court's

ruling on the scope of implied preemption of state standards, discussed

in detail in Section B. below.

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\5\ EMA v. EPA, 88 F.3d 1075, 1093-94 (D.C. Cir. 1996).

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B. Scope of Implied Preemption of State Standards

Under section 209(e) of the Act as amended, EPA was required to

``issue regulations to implement'' subsection (e), which addressed the

ability of states to adopt emission standards and other requirements

for nonroad engines and vehicles. Under section 209(e): (1) All states

are preempted from adopting emission standards and other requirements

for new nonroad engines used in construction or farm equipment or

vehicles which are smaller than 175 horsepower and for new locomotives

and new engines used in locomotives; (2) California may adopt and

enforce standards and other requirements for nonroad engines other than

the specifically preempted categories listed directly above, after

receiving authorization to do so from EPA; and (3) other states may

adopt California's nonroad emission standards and other requirements

after EPA has authorized the standards and other requirements and the

adopting state has allowed the statutorily required two-year leadtime.

On July 20, 1994, EPA promulgated regulations which established the

process under which the Agency would authorize California nonroad

emission standards and other requirements (section 209(e) regulations).

During the rulemaking, EPA addressed the issue of the scope of the

Act's preemption on state regulation of nonroad engines and vehicles.

Section 209(e)(2) directs EPA to authorize, when all conditions are

met, California emission standards for ``any nonroad vehicles or

engines other than [the new under 175 hp farm and construction

equipment engines and the new locomotive engines] * * * (emphasis

added).'' EPA interpreted the implied preemption of state standards in

section 209(e) to apply only to new nonroad engines rather than any

nonroad engines, which could include both new and used engines. In the

Preamble to these regulations, EPA stated clearly that it believed

``that the requirements of section 209(e)(2) apply only to new nonroad

engines and vehicles (emphasis added).'' 6 Accordingly, the

regulations required California to seek EPA authorization only for

``standards and other requirements relating to the control of emissions

from new nonroad vehicles or engines that are otherwise not

preempted.'' 7

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\6\ 59 FR 36969, 36973 (July 20, 1994).

\7\ 40 CFR 86.1604(a) (July 1, 1996).

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As discussed above, petitions to the D.C. Circuit for review of the

section 209(e) regulations and the large nonroad engine rule were filed

and consolidated as EMA v. EPA. In this litigation, the petitioners

agreed with EPA that section 209(e)(2) implied preemption of state

regulation of nonroad engines and vehicles, but argued that the

preemption applied to standards for all nonroad

[[Page 67735]]

sources, both new and non-new, because the statute did not include the

word ``new'' in specifying what nonroad vehicles and engines for which

California and other states could promulgate standards,8 and

for other reasons. In its opinion in this case handed down July 12,

1996, the Court agreed with the petitioners on this particular point,

and granted the EMA petition ``insofar as they challenge the limitation

of the implied section 209(e)(2) preemption to new nonroad sources.''

9

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\8\Section 209(e)(2)(A) states ``(I)n the case of any nonroad

vehicles or engines other than those referred to in subparagraph (A)

or (B) of paragraph (1), * * *''

\9\EMA v. EPA, 88 F.3d at 1094.

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Today's direct final rule implements the opinion of the Court

regarding the scope of preemption of section 209(e)(2) by amending the

language of the implementing regulations to reflect that California

must request authorization for its emission standards and other related

requirements for all nonroad vehicles and engines.10 EPA has

also deleted the final two sentences of Appendix A, dealing with the

ability of states to require retrofit technologies, as the language as

currently written is inconsistent with the opinion of the Court, and

added a sentence which reflects the Court's holding by noting that

states may adopt only those retrofit requirements for nonroad engines

identical to California requirements which have been authorized by EPA

under section 209 of the Act. EPA has also modified the language of

Appendix A to state more simply and clearly that state regulation of

the use and operation of nonroad engines can occur when the engines are

no longer new.

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\10\ EPA has also amended the text of the implementing

regulations in appropriate places by changing ``states'' to ``states

and any political subdivision thereof'' to make this language fully

consistent with the applicable language of section 209(e) of the

Act. Additionally, EPA has revised the Title of Part 85 to reflect

that this Part contains regulations covering both onroad vehicles

and engines and nonroad vehicles and engines. These amendments were

not directed by the Court, but are being done as part of today's

direct final rule for editorial efficiency.

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C. Public Participation and Effective Date

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 March 2, 1998 unless adverse or critical comments are

received by January 29, 1998. If EPA receives adverse or critical

comments on the revisions discussed in this section, the revisions

receiving adverse comment 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 the

accompanying proposed rule. EPA will not implement a second comment

period on this action. Any parties 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 March 2, 1998.

EPA is continuing to review its policy concerns and options

regarding the date of preemption for the nonroad engine rules. EPA may

in the future determine that it is appropriate to issue a new

interpretation to address this issue.

IV. 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 rule does not change the information collection requirements

submitted to and approved by OMB in association with the large nonroad

engine final rulemaking (59 FR 31306, June 17, 1994).

C. Regulatory Flexibility

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

flexibility analysis in connection with this final rule. This rule will

not have a significant adverse economic impact on a substantial number

of small businesses. The only revisions EPA is making in this final

rule are pursuant to the decision of the Court. These changes are

directed at state and local governments and are expected to affect few,

if any, existing or future local or state regulations.

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 this rule 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.

List of Subjects

40 CFR Part 85

Environmental protection, Administrative practice and procedure,

Air pollution control, Federal preemption, Motor vehicle pollution,

Nonroad engine and vehicle pollution,

[[Page 67736]]

Reporting and recordkeeping requirements, State controls.

40 CFR Part 89

Environmental protection, Administrative practice and procedure,

Air pollution control, Confidential business information, Imports,

Incorporation by reference, Labeling, Nonroad source pollution,

Reporting and recordkeeping requirements.

Dated: December 17, 1997.

Carol M. Browner,

Administrator.

For the reasons set forth in the preamble, parts 85 and 89 of title

40 of the Code of Federal Regulations are amended as follows:

PART 85--CONTROL OF AIR POLLUTION FROM MOBILE SOURCES

1. The heading for part 85 is revised to read as set forth above.

Subpart Q--Preemption of State Standards and Waiver Procedures for

Nonroad Engines and Nonroad Vehicles

2. The authority citation for part 85 is revised to read as

follows:

Authority: 42 U.S.C. 7521, 7522, 7524, 7525, 7541, 7542, 7543,

7547, and 7601(a).

3. Section 85.1603 is amended by revising paragraphs (b), (c) and

(d) to read as follows:

Sec. 85.1603 Application of definitions; scope of preemption.

* * * * *

(b) States and any political subdivisions thereof are preempted

from adopting or enforcing standards or other requirements from new

engines smaller than 175 horsepower, that are primarily used in farm or

construction equipment or vehicles, as defined in this subpart.

(c) States and any political subdivisions thereof are preempted

from adopting or enforcing standards or other requirements relating to

the control of emissions from new locomotives or new engines used in

locomotives.

(d) No state or any political subdivisions thereof shall enforce

any standards or other requirements relating to the control of

emissions from nonroad engines or vehicles except as provided for in

this subpart.

4. Section 85.1604 is amended by revising paragraph (a) to read as

follows:

Sec. 85.1604 Procedures for California nonroad authorization requests.

(a) California shall request authorization to enforce its adopted

standards and other requirements relating to the control of emissions

from nonroad vehicles or engines that are otherwise not preempted by

Sec. 85.1603(b) or Sec. 85.1603(c) from the Administrator of EPA and

provide the record on which the state rulemaking was based.

* * * * *

5. Section 85.1606 is amended by revising the introductory text to

read as follows:

Sec. 85.1606 Adoption of California standards by other states.

Any state other than California which has plan provisions approved

under Part D of Title I of the Clean Air Act may adopt and enforce

emission standards for any period, for nonroad vehicles and engines

subject to the following requirements:

* * * * *

PART 89--CONTROL OF EMISSIONS FROM NEW AND IN-USE NONROAD ENGINES

1. The authority citation for part 89 continues to read as follows:

Authority: 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)).

2. Appendix A to Subpart A is revised including the appendix

heading to read as follows:

Appendix A to Subpart A--State Regulation of Nonroad Internal

Combustion Engines

This appendix sets forth the Environmental Protection Agency's

(EPA's) interpretation of the Clean Air Act regarding the authority

of states to regulate the use and operation of nonroad engines.

EPA believes that states are not precluded under section 209

from regulating the use and operation of nonroad engines, such as

regulations on hours of usage, daily mass emission limits, or sulfur

limits on fuel; nor are permits regulating such operations

precluded, once the engine is no longer new. EPA believes that

states are precluded from requiring retrofitting of used nonroad

engines except that states are permitted to adopt and enforce any

such retrofitting requirements identical to California requirements

which have been authorized by EPA under section 209 of the Clean Air

Act.

[FR Doc. 97-33769 Filed 12-29-97; 8:45 am]

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