# Phase 2 Emission Standards for New Nonroad Spark-Ignition Engines At or Below 19 Kilowatts

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URL: https://www.frixlaw.com/law-library/documents/fr%3A98-941

## Record

- **Collection:** Federal Register
- **Document type:** Proposed Rule
- **Published:** January 27, 1998
- **Citation:** 63 FR 3950

## Text

SUMMARY: Today's action proposes a second phase of regulations to
control emissions from new nonroad spark-ignition engines at or below
19 kilowatts (25 horsepower). These engines are used principally in
lawn and garden equipment, both in nonhandheld applications such as
lawnmowers, and also in handheld applications such as trimmers and
chainsaws. The proposed standards are expected to result in a 30
percent reduction of emissions of hydrocarbons plus oxides of nitrogen
from the current Phase 1 standards. If adopted, the standards would
result in important reductions in emissions which contribute to
excessively high ozone levels in many areas of the United States.

DATES: Written comments on this NPRM must be submitted on or before
March 13, 1998. EPA will hold a public hearing on February 11, 1998
starting at 10:00; requests to present oral testimony must be received
on or before February 6, 1998.

ADDRESSES: Written comments should be submitted (in duplicate if
possible) to: EPA Air and Radiation Docket, Attention Docket No. A-96-
55, Room M-1500 (mail code 6102), 401 M Street, SW, Washington, D.C.
20460. Materials relevant to this rulemaking are contained in this
docket and may be viewed from 8:00 a.m. until 5:30 p.m. weekdays. The
docket may also be reached by telephone at (202) 260-7548. As provided
in 40 CFR part 2, a reasonable fee may be charged by EPA for
photocopying. The public hearing will be held in Ann Arbor, MI at a
location to be determined; call (313) 668-4278 for further information.

FOR FURTHER INFORMATION CONTACT: Robert Larson, Office of Mobile
Sources, Engine Programs and Compliance Division, (313) 668-4278,
[email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Regulated Entities
II. Legal Authority and Background
III. Overview of Proposed Provisions
A. More Stringent Standards and a Shift to Cleaner Technology
1. Nonhandheld Engine HC+NOX Emission Standards
2. Handheld Engine HC+NOX Emission Standards
3. Useful Life Categories
B. Assuring Emission Reductions are Achieved In-use
1. Traditional Compliance Programs for Mobile Sources
2. Compliance Programs for the Small SI Engine Industry
3. The Proposed Phase 2 Compliance Program
4. Alternative Compliance Program Options
IV. Description of Proposed Program
A. Standards and Related Provisions
1. HC+NOX Emission Standards
2. NMHC+NOX Emission Standards for Class I and II
Natural Gas Fueled Nonhandheld Engines
3. CO Emission Standards
4. Useful Life Categories
5. Certification Averaging, Banking and Trading Program
6. Certification Fuel
B. Test Procedures
1. Test Cycle: Requirement for the Use of a Speed Governor
Operation for Testing of Nonhandheld Engines
2. Test Cycle: Adjustments for Weightings for 2-mode Cycle for
Handheld Engines
3. Measurement of NMHC Emissions From Natural Gas Fueled
Nonhandheld Engines
C. Field/Bench Adjustment Program
1. Background and Principles
2. General Methodology
3. Practical Requirements of the Program
4. Alternative Methodology Considered
D. Compliance Program
1. Certification
2. Production Line Testing
3. In-use Emission Testing
4. Criteria for Evaluating Alternatives to Mandatory Recall
E. Flexibilities
1. Overview of Approach to Providing Compliance Flexibilities
2. Proposed Production Volume Cutoffs
3. General Flexibilities
4. Phase-In Flexibilities
5. Flexibilities for Small Volume Engine Manufacturers and Small
Volume Engine Families
6. Flexibilities for Small Volume Equipment Manufacturers and
Small Volume Equipment Models
7. Engine Availability
F. Nonregulatory Programs
1. Voluntary ``Green'' Labeling Program
2. Voluntary Fuel Spillage and Evaporative Emission Reduction
Program
3. Particulate matter and Hazardous Air Pollutant Testing
Program for Handheld Engines
G. General Provisions
1. Model Year Definition and Annual Production Period
Flexibilities During the Transition to Phase 2
2. Definition of Handheld Engines
3. Small Displacement Nonhandheld Engine Class
4. Liquefied Petroleum Gas Fueled Indoor Power Equipment
5. Dealer Responsibility
6. Engines Used in Recreational Vehicles
7. Engines Used in Rescue and Emergency Equipment
8. Replacement Engines
V. Environmental Benefit Assessment
A. Roles of HC and NOX in Ozone Formation
B. Health and Welfare Effects of Tropospheric Ozone
C. Estimated Emissions Impact of Proposed Regulations
D. Health and Welfare Effects of CO Emissions
E. Health and Welfare Effects of Hazardous Air Pollutant
Emissions
F. Particulate Matter
VI. Economic Impacts
A. Engine Technologies
B. Engine Costs
1. Nonhandheld Engine Costs
2. Handheld Engine Costs
C. Equipment Costs
1. Nonhandheld Equipment Manufacturers
2. Handheld Equipment Manufacturers
D. Operating Costs
Nonhandheld Engines
Handheld Engines
E. Cost per Engine and Cost-effectiveness
1. Cost per Engine
2. Cost-effectiveness
VII. Public Participation
A. Comments and the Public Docket
B. Public Hearing
C. Obtaining Electronic Copies of Documents
VIII. Administrative Requirements
A. Administrative Designation and Regulatory Analysis
B. Paperwork Reduction Act
C. Unfunded Mandates Reform Act
D. Regulatory Flexibility

I. Regulated Entities

Entities potentially regulated by this action are those that
manufacture or introduce into commerce new small spark-ignition nonroad
engines or equipment. Regulated categories and entities include:

------------------------------------------------------------------------
Examples of regulated
Category entities
------------------------------------------------------------------------
Industry.................................. Manufacturers or importers
of new nonroad small (at or
below 19 kW) spark-ignition
engines and equipment.
------------------------------------------------------------------------

This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. This table lists the types of entities that 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 company is regulated by this action, you

[[Page 3951]]

should carefully examine the applicability criteria in Sec. 90.1 of
title 40 of the Code of Federal Regulations. If you have questions
regarding the applicability of this action to a particular entity,
consult the person listed in the preceding FOR FURTHER INFORMATION
CONTACT section.

II. Legal Authority and Background

Authority for the actions set forth in this rule 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)).
In the summer of 1992, EPA initiated a convening process to
determine the feasibility of a negotiated rulemaking for the
development of the regulatory program for small nonroad spark-ignited
(SI) engines at or below 19 kilowatts (hereafter referred to as ``small
SI engines''). An August 1992 report recommended an ``Exploratory
Meeting'' which was held November 1992. Following meetings in January
and June 1993, the group decided to pursue a regulatory negotiation
process for the development of Phase 2 regulations for these engines,
while EPA developed a first phase of controls for small SI engines
through the traditional rulemaking process.
On July 3, 1995, EPA published the Phase 1 final rule, Emission
Standards for New Nonroad Spark-ignition (SI) Engines At or Below 19
Kilowatts, hereafter referred to as the Phase 1 small SI engine
regulations.1 The Phase 1 small SI engine regulations
established an effective date of model year 1997. Although the Phase 1
regulations were the first to establish nationwide new engine emission
standards for this industry, the federal regulations were developed to
harmonize with the Tier I 2 standards established by
California's Air Resources Board.3
---------------------------------------------------------------------------

\1\ 60 FR 34582, July 3, 1995, codified at 40 CFR part 90. The
docket for the Phase 1 small SI engine rulemaking, EPA Air Docket
#A-93-25, is incorporated by reference.
\2\ The California utility and lawn and garden equipment engine
(utility engine) emission regulations are contained in Title 13,
California Code of Regulations (CCR), Sections 2400-2407.
\3\ Since the July 3, 1995 promulgation of the Phase 1 program,
four changes have been made to Phase 1. First, provisions for
allowing a streamlined certification process were promulgated May 8,
1996, 61 FR 20738. Second, revisions to the national security
exemption provisions were promulgated October 4, 1996, 61 FR 52088.
Third, revisions to the carbon monoxide (CO) emission standards for
Class I and II engines, and provisions related to crankcase
emissions, were promulgated, November 13, 1996, 61 FR 58296.
Finally, provisions relating to replacement engines and 2-stroke
engines in nonhandheld applications were published August 7, 1997,
62 FR 42637.
---------------------------------------------------------------------------

The engines covered by the existing Phase 1 rule include
nonhandheld engines (Class I and II) used in applications such as
lawnmowers, generator sets and riding mowers, and handheld engines,
(Class III, IV and V), used in applications such as trimmers, edgers,
brush cutters, leaf blowers, leaf vacuums, chain saws, augers and
tillers. The proposed Phase 2 rules contained in today's notice would
apply to the same types of engines and applications covered by Phase 1.
On September 30, 1993, the charter for the Small Nonroad Engine
Negotiated Rulemaking Advisory Committee was filed with Congress. The
purpose of the committee was to help EPA develop Phase 2 small SI
engine regulations. The committee consisted of eleven members
representing the range of stakeholders.4 The committee
adopted protocols and formed four task groups to examine key issues and
bring recommendations to the full committee. The task groups included:
Test Procedure; Technology; Certification; and Public Education and
Market Incentives.
---------------------------------------------------------------------------

\4\ The organizations participating in the regulatory
negotiations as members of the Committee were: the American Lung
Association (ALA); the Auger and Power Equipment Manufacturers
Association (APEMA); the Engine Manufacturers Association (EMA); the
Manufacturers of Emission Controls Association (MECA); the Natural
Resources Defense Counsel (NRDC); the North American Equipment
Dealers Association (NAEDA); the Outdoor Power Equipment Institute
(OPEI); the Portable Power Equipment Manufacturers Association
(PPEMA); the State and Territorial Air Pollution Program
Administrators/Association of Local Air Pollution Control Officials
(STAPPA/ALAPCO); the Wisconsin Department of Natural Resources; and
U.S. EPA.
---------------------------------------------------------------------------

The committee and the task groups met numerous times between
September 1993 and February 1996, with the final committee meeting on
February 16, 1996, in Ann Arbor, Michigan. During the course of its
work, the committee addressed many issues, including: applicability of
the rule; engine/equipment classification; test procedures for engines;
standards and standard structure; effective dates and lead time of the
program; certification, enforcement and compliance strategies; in-use
program; market-based incentive programs; public education programs;
technologies; and dealer responsibility.
The committee developed data and draft language to address most of
these issues, both through the work of the task groups and the work of
the committee as a whole. However, the committee did not reach
consensus on an agreement in principle or draft regulatory language
during the course of the negotiations. While the committee did not
achieve consensus, the regulatory negotiation process produced
substantial useful information and provided EPA with input from
numerous key stakeholders which has helped EPA develop the Phase 2
small SI engine regulatory program being proposed today.5 In
addition, during the meetings there was much useful discussion which
has helped EPA understand the perspectives of the interests represented
at the table.6
---------------------------------------------------------------------------

\5\ EPA initially established EPA Air Docket A-93-29 for the
Phase 2 rulemaking; this docket contains background materials on
this Phase 2 rulemaking, as well as materials related to the Small
Nonroad Engine Negotiated Rulemaking process. EPA Air Docket A-93-29
is hereby incorporated by reference.
\6\ The final report by the facilitators to the regulatory
negotiation process can be found in EPA Air Docket A-93-29, Item
#II-A-10.
---------------------------------------------------------------------------

Following the final meeting of the regulatory negotiation committee
in February 1996, EPA proceeded to develop the Phase 2 rule. EPA and
other interested parties continued working to find areas of agreement
on how certain aspects of a Phase 2 program would be addressed in the
proposed rule. As these discussions proceeded, the involved parties
worked together to develop written documents, Statements of Principles
(SOPs), which have partly formed the basis of today's Phase 2 NPRM (see
62 FR 14740, March 27, 1997). A Statement of Principles (SOP) is a
joint written statement by the U.S. EPA and supporting parties
outlining a comprehensive plan for developing a proposed rulemaking. In
this case, the two SOPs lay out the framework for a proposal for Phase
2 regulations covering small handheld and nonhandheld spark-ignited
nonroad engines, respectively.
The ``Handheld SOP'', addressing issues affecting engines used in
handheld equipment, was signed in May 1996 by EPA, the Auger and Power
Equipment Manufacturers Association (APEMA), the North American
Equipment Dealers Association (NAEDA), the Portable Power Equipment
Manufacturers Association (PPEMA), the State and Territorial Air
Pollution Program Administrators/Association of Local Air Pollution
Control Officials (STAPPA/ALAPCO), and the Wisconsin Department of
Natural Resources. The ``Nonhandheld SOP'', addressing issues affecting
engines used in nonhandheld equipment, was signed in December 1996 by
EPA, Briggs & Stratton Corporation, Kawasaki Motors Corporation,
U.S.A., Kohler Company, Kubota, Mitsubishi Engine North America, Inc.,
Onan Corporation, Suzuki Motor Corporation, Tecumseh Products Company,
The Toro Company,

[[Page 3952]]

and Wis-Con Total Power Corporation. While the two SOPs set out a
framework for EPA's development of the proposed Phase 2 program, the
Agency wishes to stress that they do not represent final decisions
regarding Phase 2 or bind EPA as to how provisions in the final rule
must be promulgated.
EPA published an Advanced Notice of Proposed Rulemaking (ANPRM) in
March 1997 (see 62 FR 14740, March 27, 1997) which announced the
signing of the two SOPs and requested comments on all aspects of the
SOPs for purposes of developing today's proposal. EPA also specifically
requested information on small business issues in the ANPRM.
Significant comments received on the ANPRM are discussed in the context
of the description of the program contained in today's proposal.

III. Overview of Proposed Provisions

EPA is proposing today a second phase of regulations for small SI
engines 19 kW and below (hereafter referred to as small SI engines).
Two principal goals of the proposed Phase 2 rule are to encourage a
shift to cleaner engine technology, and to assure that the air quality
benefits anticipated by the rule are achieved in actual use. To achieve
these goals, the proposed Phase 2 program builds on the current Phase 1
program in two key ways. First, today's proposal includes more
stringent standards for hydrocarbons (HC) plus oxides of nitrogen
(NOX) emissions, with a requirement that engines meet these
emission standards through their useful lives.7 Second, the
proposal adds an in-use component to the Phase 1 compliance program to
assure that the emission benefits are achieved in actual use.
---------------------------------------------------------------------------

\7\ EPA is proposing a set of values for the useful life of the
engines for regulatory purposes. The term ``useful life'' refers to
these regulatory useful life categories, which are discussed in more
detail in Section IV.A.4 of this preamble.
---------------------------------------------------------------------------

As is clear from the analysis supporting this proposed rule (see
Sections V, VI and VII, and draft Regulatory Support Document), further
emission reductions from future model year small SI engines beyond
those achieved through the Phase 1 program can be achieved in a cost-
effective manner. Uncontrolled, small SI engines contribute
approximately 3.4 percent of the national HC emission inventory, 9.3
percent of the mobile source HC emission inventory, and 34.4 percent of
the nonroad mobile source HC emission inventory.
The Phase 1 small SI regulations are expected to reduce the HC
emissions from these engines by 32 percent. However, even with Phase 1
controls in place, small SI engines continue to contribute
significantly to the emission inventory that leads to ozone
concentrations in nonattainment areas. After Phase 1, small SI engines
contribute approximately 3.1 percent HC nationally, 8.4 percent of
mobile source HC, and 31.6 percent of the nonroad mobile source HC
inventory (note that these values do not reflect changes in inventories
from other sectors).
In addition, further control of HC+NOX emissions from
future model year small SI engines beyond Phase 1 levels, as proposed
in today's notice for Phase 2 controls, is achievable through
technology that will be available for the engines to which the
standards would apply, considering cost, lead time noise, energy and
safety factors. For nonhandheld engines, proposed Phase 2 emission
levels are expected to be achieved through a combination of
modifications to current engine technologies, and conversions to
cleaner, more durable technology such as overhead valve engine
technology. For handheld engines, proposed Phase 2 emission levels are
expected to be achieved through improvements to current 2-stroke engine
technologies (see discussion in Section IV.A of this preamble).
If the Phase 2 program is adopted as proposed, many elements of the
existing Phase 1 program would remain essentially the same in the Phase
2 program. First, the types of engines covered by the proposed Phase 2
rule would remain essentially the same as those covered in the Phase 1
program (see discussion, Section IV.G). In addition, EPA would retain
the five engine class categorization from Phase 1 for regulatory
purposes as in Table 1 (see discussion, Section IV.G.3). Third, the
Phase 1 criteria for determining whether an engine family would be
allowed to certify to less stringent handheld standards would be
retained (see Section IV.G.2).

Table 1.--Small SI Engine Classes
----------------------------------------------------------------------------------------------------------------
Nonhandheld Handheld
----------------------------------------------------------------------------------------------------------------
Class I Class II Class III Class IV Class V
----------------------------------------------------------------------------------------------------------------
225 cc. 50 cc
and X emission standards for
nonhandheld and handheld engines that are expected to achieve important
reductions of emissions that contribute to ozone nonattainment. The
standards for Classes II-V would be fully phased-in by the 2005 model
year, with Class I levels effective in the 2001 model year. Engines
would be required to meet these levels throughout their useful lives.
For nonhandheld engines, a certification averaging, banking and trading
program is proposed as an integral part of feasibility of the proposed
HC+NOX emission standards (see Section IV.A.5). A more
complete discussion of the justification of the level of the standards
and the technologies expected to meet these levels can be found in
Section IV.A. This section contains a brief overview of the proposed
nonhandheld engine emission standards, the proposed handheld emission
standards, and the proposal for useful life categories for nonhandheld
and handheld engines.
1. Nonhandheld Engine HC+NOX Emission Standards
The emission standards proposed today for nonhandheld engines,
indicated in Table 2, represent an approximate 25 percent reduction in
HC+NOX levels from Phase 1 levels. These standards are
expected to be achieved in a cost-effective manner by modifications to
current engine technologies and, especially in the case of Class II
engines, by conversion of current side valve (SV) technology engines to
cleaner, more durable technology, such as overhead valve (OHV)
technology engines. For Class I, where engine sales are currently
dominated by side-valve (SV) technology engines, the proposed levels
are expected to result in cleaner and more emissions durable SV
technology engines, but are not in themselves expected to result in
conversion of SV engines to OHV or comparably clean and durable engine
technology. These modifications to SV engines can be accommodated by
2001, the proposed effective date for the Phase 2 standard for Class I
engines. For Class II engines, the proposed levels are expected to
result in complete conversion to clean OHV or comparable technology. To
allow this more significant design change, the proposed Phase II
standards are gradually decreased from 2001 through 2005.

Table 2.--HC+NOX Emission Standards for Nonhandheld Engines in Grams/Kilowatt-Hour
[g/kW-hr] 1
----------------------------------------------------------------------------------------------------------------
Model year Model year Model year Model year Model year
Engine class 2001 2002 2003 2004 2005
----------------------------------------------------------------------------------------------------------------
Class I........................................ 25.0 25.0 25.0 25.0 25.0
Class II....................................... 18.0 16.6 15.0 13.6 \2\ 12.1
----------------------------------------------------------------------------------------------------------------
\1\ Optional non-methane hydrocarbon (NMHC) plus NOX emission standards for natural gas fueled engines only, and
carbon monoxide (CO) emission standards, are also proposed in today's notice, and are discussed in Section
IV.A.
\2\ The 12.1 g/kW-hr Class II standard assumes a phase-in from 50 percent in model year 2001 to 100 percent in
model year 2005 of OHV or comparably clean and durable technology.

A key aspect of the proposed Phase 2 program for nonhandheld
engines is the belief that low emission standards for nonhandheld
engines can be met through engine technology that can be low emitting
both when the engine is new, and also when the engine has experienced
hour accumulation to the engine's useful life. Therefore, these Phase 2
standards are based on useful life emission performance.
a. OHV and SV Engine Technologies. EPA believes that features
inherent to the design of OHV technology engines are superior to those
of SV engines and allow for lower new engine emissions as well as lower
emission deterioration characteristics. In general, the combustion
chamber and cylinder head design of OHV technology engines give these
engines the potential to produce lower emissions both when new and also
in-use. These engines have potential to exhibit lower emissions when
new due to location of the combustion chamber directly over the piston,
rather than partly to the side of the piston as in SV technology
engines. This location allows a shorter combustion time, shorter flame
propagation, better fuel combustion, and better cooling
characteristics. In addition, OHV technology engines are designed with
lower surface to volume ratios, which enhance fuel combustion. OHV
technology engines also have the potential to exhibit improved in-use
engine durability characteristics due to the location of the valves in
the cylinder head rather than in the block, which affords more uniform
exposure of the valves to heat sources and thus lower distortion of
valves and valve seats. However, the Agency recognizes that the design
of the engine is all-important,

[[Page 3954]]

and that it is possible to improve features of both SV and OHV
technology engines to enhance new and in-use emission characteristics
(e.g., cylinder heads, advanced carburetion, fuel injection). The
Agency requests comment on the fundamental supposition of this rule
that OHV technology engines have the potential to be superior to SV
technology engines for new and in-use emissions characteristics.
Further discussion of SV and OHV technology engines is contained in
Section IV.A and Chapter 3 of the Draft Regulatory Support Document
(RSD).
b. Class I Use of OHV Technology. The nonhandheld small SI engine
market has traditionally been dominated by SV technology engines, with
SV technology engines accounting for as much as 90 percent of engine
sales in Class I and 65 percent of engine sales in Class II. The
majority of Class I SV engines are used in low cost, consumer products
such as walk-behind mowers. Recently, the market has been moving
towards OHV for Class II, in recognition of OHV advantages in engine
performance, engine durability, fuel economy, and emissions
characteristics. These advantages would be expected to be more
important in commercial equipment which tend to make up significant
market for Class II engines. For Class I engines, there has not been
this same trend to OHV technology.
One barrier to increased penetration of OHV technology engines into
the Class I market, which is dominated by residential, low cost
equipment, may have been the cost associated with the conversion of
product lines from SV technology to OHV technology. These conversion
costs to the engine manufacturer are expected to be in the range of $5
to $14 per engine, depending on volume; cost to the consumer would
likely be even higher (see Section VI for further discussion of these
costs). For residential, low cost equipment, the OHV engine's
advantages in performance and durability may not outweigh the
associated higher purchase price when compared to equipment using less
expensive SV equipment, at least in the near term and in light of the
lead time EPA is proposing for the proposed Class I standard. If
consumers of residential equipment are particularly price sensitive,
they may choose not to purchase new equipment if priced higher due to
the use of an OHV engine. Rather, to the extent four stroke SV engines
tend to continue providing operable service, consumers may choose to
spend money on equipment maintenance, extending both the life of the
equipment and the number of hours the existing, non-Phase II SV engines
would be used. If this happens, sales of cleaner, Phase II engines
could be depressed and the extended use of SV engines toward the end of
their useful life would add disproportionately to emission from small
engines as the emission performance of these engines tends to continue
deteriorating with use. Moreover, promulgation of a more stringent
Class I standard, combined with the proposed Class II standard, would
raise questions about the need for providing significantly longer lead
time before the standards became effective. Additionally lead time
might be necessary to allow manufacturers to invest the greater level
of engineering and production resources necessary to convert both Class
I and Class II engines to OHV technology for their entire product line
as could be necessary for a nationwide program. This additional lead
time could delay the environmental benefits of the program.
Due to uncertainties as to consumer acceptance of OHV engines in
typical Class I equipment applications if required nationwide and how a
more stringent Class I standard might effect lead time for the program
as a whole and the resulting uncertainty of emissions benefit, the
Agency is not at this time proposing Class I standards which would
mandate the conversion of Class I engines to OHV technology. However,
EPA is requesting comments on the likely impacts of such a standard.
Even if it is not appropriate to adopt more stringent Class I standards
now, in the future, as uncertainties regarding consumer acceptance of
OHV Class I engines and other issues are resolved, EPA will be able to
re-evaluate the stringency of the proposed standard and pursue any
necessary and appropriate revisions. Additionally, the experience in
California will likely provide useful information.
While today's proposed emission standard for Class I engines are
not expected to require additional conversion from SV to OHV
technology, EPA does desire to encourage the production and sale of OHV
engines into the Class I market on a mass volume basis. In order to
encourage this, EPA has entered into Memoranda of Understanding (MOUs)
with two individual engine manufacturers.8-10 These two
companies currently represent over 80 percent of all Class I engine
sales. The two MOUs detail the specifics of Class I OHV engine
demonstration programs which are designed as experiments to explore the
consumer acceptance and feasibility of developing low cost OHV
technology which can be applied to mass production Class I engines. The
two programs include a series of reports to EPA on the level of
success, impediments encountered, market response, costs, emission
rates, and so forth. The two Class I OHV demonstration programs will
begin prior to the proposed effective dates for the Phase 2 rule. While
the MOUs are outside the scope of the regulatory process, if
successful, this voluntary program may generate considerable emission
benefits in addition to those anticipated to result from the proposed
standards.
---------------------------------------------------------------------------

\8-10\ Copies of these MOUs are in EPA Air Docket A-96-55, Items
II-B-03 and II-B-04.
---------------------------------------------------------------------------

In addition, the proposed voluntary ``green labeling'' program is
designed to encourage manufacturers to produce engines that are
substantially below the standards proposed today. In Class I in
particular, manufacturers may decide for market reasons to convert
current SV engines to OHV or comparably clean and durable technology
engines, in order to qualify for the ``green label'' (see discussion of
the program in Section IV.F.1).
EPA requests comment on the general issue of the impact of moving
to OHV technology for Class I engines, including the potential impact
on sales of new equipment, the extended use of existing SV engines, the
impact of a more stringent Class I standard on the ability of
manufacturers to meet the proposed Class II standard under the proposed
schedule, any options in addition to the voluntary ``green labeling''
program which would encourage the sale of clean OHV technology engines
and the implications for emissions impact which would likely result
from these actions.
c. Class II Use of OHV Technology. The 12.1 g/kW-hr HC +
NOX emission standard proposed to take effect in the 2005
model year for Class II engines is expected to result in complete
conversion to clean OHV or comparably clean and durable engine
technology. As is discussed below in Section IV.A, this is an
aggressive standard for Class II engines. The transition to OHV
technology should be eased by the phase-in of the standard and the
certification averaging, banking, and trading provisions proposed today
for nonhandheld engines.
2. Handheld Engine HC+NOX Emission Standards
The standards proposed today for handheld engines represent an
approximate 35 percent reduction from Phase 1 levels, to be phased-in
on a

[[Page 3955]]

percentage of production basis between the 2002 and 2005 model year, as
indicated in Table 3. These standards are expected to be achieved in a
cost-effective manner by use of improved 2-stroke technology engines
(as discussed in more detail in Section IV.A).

Table 3.--HC+NOX Emission Standards for Handheld Engines
[In g/kW-hr]
----------------------------------------------------------------------------------------------------------------
HC+NOX
emission Model year Model year Model year Model year
Engine class standard (g/ 2002 2003 2004 2005
kW-hr) (percent) (percent) (percent) (percent)
----------------------------------------------------------------------------------------------------------------
Class III...................................... 210
Class IV....................................... 172 20 40 70 100 1
Class V........................................ 116
----------------------------------------------------------------------------------------------------------------
1 The standards would be phased-in on the basis of percentage of total eligible sales. In this proposed rule,
``eligible sales'' or ``U.S. sales'' is defined as Phase 2 engines sold for purposes of being used in the
United States, and includes any engine exported and subsequently imported in a new piece of equipment, but
excludes any engine introduced into commerce, by itself or in a piece of equipment, for use in a state that
has established its own emission requirements applicable to such engines pursuant to a waiver granted by EPA
under section 209(e) of the Clean Air Act.

Two-stroke technology engines have traditionally been the dominant
engine design used for handheld equipment applications. These engines
have been well suited to meet the weight, multipositional use, and
power requirements of these applications. However, 2-stroke technology
engines also have very high engine emissions, compared with 4-stroke
technologies, due in large part to fuel scavenging losses.
With the advent of emission control requirements federally and in
California, research into other technologies to further control
emissions from engines used in handheld applications has occurred.
Promising technologies include light weight 4-stroke technology
engines, and 2-stroke technology engines with aftertreatment. However,
little is known about the in-use performance, in-use emissions
characteristics and cost of these technologies, or how appropriate it
is to consider these technologies across the full range of handheld
equipment applications. Because of these uncertainties, today's
standards would not require conversion to 4-stroke engine technology or
the use of aftertreatment for handheld engines. However, EPA wants to
encourage introduction of technologies into today's market which are
cleaner than required by the proposed standards. For example, EPA
recognizes that some engine manufacturers have recently developed and
marketed cleaner, lightweight 4-stroke engines for use in handheld
equipment. The Agency believes potentially cleaner 4-stroke engines, 2-
stroke engines with aftertreatment and other advanced two-stroke
technologies may enter the market to a limited extent on a national
level during the time frame of the Phase 2 program. EPA's goal is to
encourage development of such technology, and EPA believes that the
proposed ``green labeling'' program, (discussed in Section IV.F.1)
should provide important incentives to manufacturers to introduce
cleaner technologies on a national basis. In addition, the Agency
intends to conduct a technology review and a possible Phase 3
rulemaking to address the possibility that technological advances and/
or cost reductions may occur after promulgation of the Phase 2 rule
that could make greater, but still cost-effective reductions feasible
in handheld engine emission levels.
3. Useful Life Categories
Today's proposal would require that engines meet the proposed
emission standards throughout their useful lives. EPA is today
proposing multiple useful life categories, indicated in Tables 4 and 5,
given the numerous applications in which these engines are used, and
wide variation in expected engine useful life in these different
applications. In addition, the use of these engines in applications
which experience primarily commercial rather than primarily consumer or
residential usage can also impact the useful life of the engine.

Table 4.--Useful Life Categories for Nonhandheld Engines
[Hours]
------------------------------------------------------------------------
Category Category Category
C B A
------------------------------------------------------------------------
Class I................................ 66 250 500
Class II............................... 250 500 1000
------------------------------------------------------------------------

Table 5.--Useful Life Categories for Handheld Engines
[Hours]
------------------------------------------------------------------------
Residential Commercial
------------------------------------------------------------------------
Class III, IV and V........................... 50 300
------------------------------------------------------------------------

EPA is proposing that at the time of certification, engine
manufacturers would have the responsibility to select the useful life
period which most typically represents the in-use operating periods for
the majority of engines in the engine family, based on information
about that engine family including design and durability information,
as well as information about the equipment in which the engine is
expected to be used. Manufacturers would label the engine according to
the useful life selection. See Section IV.A.4 for further discussion of
the proposed useful life provisions for nonhandheld and handheld
engines.

B. Assuring Emission Reductions are Achieved In-use

The goal of the in-use component of the proposed Phase 2 program is
to provide assurance that the emission reduction benefits anticipated
by the program are achieved in actual use. This section describes how
EPA's traditional compliance programs for mobile sources achieve this
goal, outlines various challenges in designing a compliance program for
the small SI industry, provides an overview of the compliance program
proposed today for nonhandheld and handheld engines, and discusses
alternative compliance program options.

[[Page 3956]]

1. Traditional Compliance Programs for Mobile Sources
EPA has traditionally used three-step compliance programs to
implement and enforce mobile source emission standards. For a given
engine family, the first of the three steps is certification, where,
based on emission data from test engines, which are often prototype
engines, EPA issues a license to the engine manufacturer known as a
certificate of conformity. This license enables the manufacturer to
introduce engines covered under the certificate into commerce in the
United States. This step typically includes some means of projecting
the emissions characteristics of the engine family over its useful
life. If the manufacturer demonstrates according to the regulatory
provisions that the engine family meets the emission standards for the
useful life of the engines, EPA issues a certificate of conformity.
The second step is production line testing where the engine
manufacturer demonstrates that actual production line engines meet
emission standards. Production line testing provides an opportunity for
EPA and the manufacturer to verify that designs approved based on
certification testing are translated into mass production engines that
meet standards and to catch production problems before they become in-
use problems.
The last step involves the testing of in-use engines to ascertain
whether the engines continue to meet standards during their useful
lives in the hands of typical customers. EPA has the authority under
Section 207(c) of the Clean Air Act to require a mandatory recall of
vehicles or engines that have been shown not to comply with standards
for their useful life. Such recalls are instigated based on evidence of
nonconformities discovered through a variety of means, the most common
of which are cases in which nonconformities are found either through
production line testing or through in-use testing programs. In EPA's
on-highway emission control programs, EPA's recall authority and recall
practices have provided clear incentives to manufacturers to produce
emissions durable engines and vehicles.
2. Compliance Programs for the Small SI Engine Industry
The Phase 1 emission control program for small SI engines does not
follow this typical three-step compliance program. This is because,
unlike other programs, the Phase 1 program includes ``new engine''
standards only, that is, standards that the engines must meet when new,
without the requirement that they continue to meet those standards in-
use throughout their useful lives. As such, while the Phase 1 program
contains programs for certification and production line testing (in the
form of EPA initiated Selective Enforcement Audits), the program does
not contain a requirement for manufacturers to project the emissions
characteristics of the engine family over its useful life at the time
of certification (e.g., to determine a deterioration factor, or ``df'',
for the engine family), nor does it contain mandatory in-use testing
provisions. EPA promulgated such a program for Phase 1 for several
reasons, including the belief that for a first phase of emission
controls, significant emission reductions would occur in this sector
even with the ``new engine'' standards. Equally important was the lack
of data available to the Agency at the time of the rulemaking on which
to base an in-use program (e.g., information supporting appropriate
regulatory useful life periods and engine deterioration rates). In
addition, EPA made clear its intention to address in-use issues in a
second Phase of regulation.
In addition to determining appropriate useful life periods and
engine emission deterioration characteristics for this proposed Phase 2
program, the Agency has also faced a key challenge of how to conduct an
effective in-use testing program for these engines, and whether or not
a recall program modeled on the traditional on-highway recall program
could be an effective compliance tool for this sector of the nonroad
engine industry. As EPA has begun to regulate a wide range of nonroad
engines pursuant to Section 213 of the Clean Air Act, it has become
evident that a mandatory recall program, as has been traditionally
conducted for the on-highway industry, may not be the most effective
program for some sectors of the nonroad engine industry, as compared
with other means of assuring compliance in-use. This is especially true
for the small SI engine industry, in which many of the engines are
installed in consumer products which are not registered and thus would
be difficult to track in the event of a recall, and in which the cost
of conducting a potential recall could be large relative to the cost of
the actual engines being recalled.
For certain nonroad engine industry sectors, such as the spark-
ignition marine engine sector and the small SI engine sector, EPA has
sought to develop alternative programs designed to provide reasonable
means to address emissions exceedances identified through production
line testing and in-use testing programs. For example, the spark-
ignition marine engine program includes a voluntary in-use credit
program that EPA expects will be an effective way to address
exceedances identified through in-use testing, and the program also
includes provisions for the use of certification credits to address
exceedances identified through production line testing (see 40 CFR Part
91).
EPA believes that these alternative programs, designed to provide a
means to address emission exceedances, should meet several criteria in
order to be considered as effective as EPA's traditional mandatory
recall programs. First, they should provide an incentive to
manufacturers to build emission-durable engines. Second, they should be
practical to implement. Third, they should provide an incentive to
perform accurate testing. Fourth, such programs should offset
additional emissions that occur as a result of the exceedence of the
standards. Finally, such programs should not be unduly burdensome to
manufacturers.
The compliance programs proposed today for small SI nonhandheld and
handheld engines are intended to meet these criteria. While EPA retains
the authority to order a recall if a substantial number of engines are
found to be in nonconformity, and while this Phase 2 proposal does
include regulatory language governing EPA's action in ordering recalls
(see proposed Subparts I and M), EPA anticipates considering programs
which would be effective alternatives to ordering a mandatory recall of
Phase 2 certified engines. Instead, EPA would expect these alternatives
to recall would address the exceedances of the emission standards in
ways that meet the five criteria identified above. For nonhandheld
engines, in some cases, the use of certification credits would be
allowed to offset exceedances of the family emission limit
11, 12 in the event of PLT exceedances. For handheld
engines, the use of in-use credits would be allowed as one means of
addressing potential exceedances of standards in the event of
exceedances determined through production line testing or in-use
testing programs. For both nonhandheld and handheld engines, other
possible alternatives for addressing exceedances of emissions standards
would include voluntary recall and other possible alternative projects
(these issues are discussed

[[Page 3957]]

further in Section IV.D of this preamble).
---------------------------------------------------------------------------

\11, 12\ For nonhandheld engines participating in the averaging,
banking, and trading program described in more detail in Section
IV.A.5, compliance would be demonstrated with the family emission
limit, or FEL, rather than the standard.
---------------------------------------------------------------------------

3. The Proposed Phase 2 Compliance Program
Today's program proposes ``in-use'' standards for the first time
for this industry.13 New elements of the Phase 2 compliance
program include processes for determining deterioration factors
(``dfs'') at the time of certification, a manufacturer-run Production
Line Testing program, and in-use testing components.
---------------------------------------------------------------------------

\13\ The fact that the proposed Phase 2 emissions standards are
``in-use'' standards, compared with the Phase 1 standards which are
``new engine'' standards, together with the fact that these engines
do experience emissions deterioration over time, is why, when
compared numerically with the Phase 1 levels, Phase 2 levels in fact
are higher in the case of Class I. Despite this apparent numerical
discrepancy, EPA still anticipates important reductions from all
engine classes as a result of the proposed Phase 2 standards. Since
Phase 2 designs will account for in-use deterioration, in-use
emission levels will be lower under the proposed Phase 2 regulations
compared to Phase 1 engines.
---------------------------------------------------------------------------

i. Certification and In-Use Testing. Today's proposal includes
three different approaches to certification df determination and in-use
testing, based on engine class and engine technology, which are
discussed briefly below. These approaches comprise the basic program
proposed today. EPA is also proposing additional procedures for some
engine classes and engine technologies to increase the flexibility of
the rule.14 All the approaches are discussed in more detail
in Section IV.D.
---------------------------------------------------------------------------

\14\ For example, for nonhandheld OHV technology engines,
manufacturers would have an option to use a ``calculated df'' rather
than the ``assigned df'' described below.
---------------------------------------------------------------------------

First, for nonhandheld OHV technology engines, manufacturers would
be allowed to apply an assigned deterioration factor or ``assigned df''
to new engine test values at the time of certification to determine a
useful life certification value. Compared to an alternative of testing
an engine over its full useful life to determine deterioration, these
engines would be allowed to undergo this lower burden certification
effort, in return for participation in an industry-wide OHV field
durability and in-use emission performance demonstration program (as
described in Sections IV.D.1 and IV.D.3). Second, for nonhandheld side-
valve technology engines and engines with aftertreatment, manufacturers
would certify their engines based on accumulating hours on the engines
to the engines' full useful lives at the time of certification. This
relatively heavier burden at the time of certification is balanced by a
decreased in-use testing burden. Following full useful life
certification, these engines would not be subject to further in-use
testing requirements. Third, for all handheld engines, manufacturers
would certify their engines to full useful life standards at the time
of certification using new engine test values and dfs determined based
on ``good engineering judgment.'' Handheld engine manufacturers would
then conduct an in-use testing program, by which each manufacturer
would age and emissions test engines to ensure compliance in-use. A
handheld engine manufacturer would in-use test up to 25 percent of its
engine families each year.
Other than the addition of the requirements to demonstrate that
engines meet the emission standards throughout their useful lives, and
to determine a deterioration factor at the time of certification, the
certification procedures proposed today for the Phase 2 program are
essentially the same as those for Phase 1. In particular, EPA is
proposing to retain a streamlined certification application form and
process, with simple procedures for electronic submittal of
information, as discussed further in Section IV.D.1.
ii. Production Line Compliance. Today's proposal would add a
manufacturer-run Production Line Testing program known as CumSum to
replace a Selective Enforcement Audit (SEA) program as the primary
method of determining the compliance of new production engines. SEA
would remain an optional or backstop program depending upon the class
of engine, as described in Section IV.D.2.
iii. Aging Engines To Their Useful Lives. EPA believes that aging
engines in field usage in typical representative applications would be
the most accurate possible program for verifying in-use emissions. As
such, the proposed OHV field durability and in-use emissions
performance program (``Field Durability Program'') is designed to
produce significant quantities of reliable test data from OHV engines
aged in typical field usage, and to verify that the conclusions used in
the certification process with respect to the durability of OHV engines
are accurate.
While aging engines in typical field usage would be the optimal
program for assuring the emission reductions are being achieved in use,
EPA recognizes that costs associated with aging engines in the field
and administering a field aging program could be higher than, for
example, costs of a bench aging program. It is for this reason that EPA
is proposing that for full useful life certification for nonhandheld
side-valve technology engines or engines with aftertreatment, and for
in-use testing for handheld engines, manufacturers may age engines on
bench cycles, in lieu of field aging, provided that a field/bench
adjustment factor has previously been established, as discussed in
Section IV.C. EPA requests comment on the proposal to allow
manufacturers in some cases to age engines on bench cycles in lieu of
field aging.
In addition, for nonhandheld engine manufacturers, who could be
field aging engines for the OHV Field Durability Program and also for
the field/bench adjustment program, EPA is proposing a cap on the
number of field engine tests required in a given year. EPA requests
comments on all aspects of the compliance program proposed today for
Phase 2 small SI engine regulation.
4. Alternative Compliance Program Options
The program proposed today for Phase 2 regulation of small SI
engines is essentially the same as the program described in the ANPRM
for this rulemaking. EPA received comments on the ANPRM relating to the
differences between the nonhandheld and handheld sides of the industry,
and the merits of applying concepts and programs outlined for one side
of the industry to the other. One commenter stressed that the
nonhandheld and handheld engine industries are very different in
composition, in marketing, in technology, as well as in application.
This commenter suggested that the program for nonhandheld engines
described in the ANPRM is an integrated whole, with each provision
linked to other provisions, and that it would be a mistake to graft
parts of the handheld program on to the nonhandheld program. Another
commenter suggested that the Agency should take a comprehensive and
balanced view of the program for the two sides of the industry, and
that elements of the two proposals should be used to create a simpler
and more effective regulation.
EPA is concerned that any changes to the programs being proposed
today should be considered carefully as to their impact on the program
as a whole, given linkages between the various elements of the programs
proposed today. For example, the compliance program proposed for
nonhandheld OHV technology engines is designed as an integrated whole.
The proposal to allow manufacturers to use the assigned dfs for
certification is reasonable because it is linked to the proposal for an
industry-wide OHV Field Durability Program designed to verify the
assumptions with respect to stable and low dfs. In addition, EPA
believes this

[[Page 3958]]

conversion of engines to OHV or comparably clean and durable
technology, together with the OHV Field Durability Program, is one of
the strongest elements of today's proposal, an element which links
stringent standards forcing clean technology with a field testing
program to verify that those emission reductions are being achieved in
use.
However, EPA believes that there are multiple ways to design
effective programs for reducing emissions from small SI engines, and
for ensuring that those reductions are achieved in use. EPA requests
comment on alternative compliance options. For example, EPA requests
comment on an option which would allow nonhandheld manufacturers to
establish certification dfs for SV engines and engines with
aftertreatment through good engineering judgment (instead of the
proposed program for full useful life aging for certification), linked
to a program for field aging SV engines and engines with aftertreatment
to verify the dfs established through good engineering judgment. EPA
also requests comment on applying the in-use testing program proposed
today for handheld engines to the nonhandheld side of the industry. EPA
requests comments on these or other ways in which programs for the two
sides of the industry could be designed to achieve the goals of
providing assurance of environmental benefits in-use, easing the
implementation burden for EPA and the industry, and achieving greater
commonality in the programs for the two sides of the industry, where
appropriate.

IV. Description of Proposed Program

Section IV of today's document contains a description of the
programs proposed for nonhandheld and handheld small SI engines for
Phase 2 regulations, including discussion of standards and related
provisions, test procedures, a field/bench adjustment program,
compliance programs, flexibilities, nonregulatory programs, and other
general provisions.

A. Standards and Related Provisions

This section provides a detailed discussion of the standards being
proposed for the Phase 2 program, as well as related provisions
including useful life categories, certification averaging, banking, and
trading provisions, and certification fuel.
The Agency is aware of the levels which the California Air
Resources Board (CARB) is considering for their Tier 2 standards for
their Utility, Lawn, and Garden Engine regulation. The CARB Tier 2
levels are more stringent and occur in a shorter time frame than the
levels being proposed by the Agency for a Federal Phase 2 program.
Although EPA's approach is not structured identically with CARB
regulations, EPA believes there are two valid reasons for the
distinction. First, Congress has recognized the need for California to
maintain its own mobile source emission control program (see section
209 of the CAA) because it faces difficult and distinct air pollution
problems and, as a result, may need to adopt measures more stringent
than those that apply in the nation as a whole (see, e.g., Motor &
Equipment Manufacturers Association v. EPA, 627 F.2d 1095, 1110-11
(D.C. Cir. 1979)). Second, EPA's nonroad emission standards are not
allowed to be more stringent than is achievable for this nationwide
program after consideration of cost and lead time according to section
213(a)(3) of the CAA. Although California is constrained by similar
criteria per the authorization criteria of section 209(e),
consideration of such criteria is limited to the State of California.
The Agency must consider cost and lead time when nonroad emission
regulations affect the nation as a whole. As discussed in the remainder
of this section, the Agency believes the standards contained in today's
proposal meet the section 213(a)(3) requirements to consider cost and
lead time in setting Federal standards.
1. HC+NOX Emission Standards
The Agency believes the level of the standards contained in today's
proposal would achieve the greatest degree of emission reduction
achievable through application of technology which will be available
and considering lead time under the proposed schedule of compliance,
noise, energy, safety, and cost factors associated with applying such
technology to a nationwide program. The sections below discuss how EPA
addressed and weighed these factors in developing the proposed
standards.
EPA is proposing in-use HC+NOX standards of 25 g/kW-hr
effective in model year 2001 for Class I engines, and 12.1 g/kW-hr to
be phased-in between model years 2001 and 2005 for Class II engines, as
presented in Table 6. EPA expects that the Class II levels would result
in a complete shift in engine technology from side-valve (SV) to
cleaner overhead valve (OHV) or comparably clean and durable technology
by 2005.

Table 6. HC+NOX Emission Standards for Nonhandheld Engines
[In g/kW-hr]
----------------------------------------------------------------------------------------------------------------
Model year Model year Model year Model year Model year
Engine class 2001 2002 2003 2004 2005
----------------------------------------------------------------------------------------------------------------
Class I........................................ 25.0 25.0 25.0 25.0 25.0
Class II....................................... 18.0 16.6 15.0 13.6 12.1
----------------------------------------------------------------------------------------------------------------

EPA is proposing in-use HC+NOX emissions levels for
Class III, IV and V engines to be phased-in between model years 2002
and 2005 based on a percentage of U.S. sales as presented in Table 7.

Table 7.--HC+NOX Emission Standards for Handheld Engines
[In g/kW-hr]
----------------------------------------------------------------------------------------------------------------
HC+NOX
emission Model year Model year Model year Model year
Engine class standard (g/ 2002 2003 2004 2005
kW-hr) (percent) (percent) (percent) (percent)
----------------------------------------------------------------------------------------------------------------
Class III...................................... 210
Class IV....................................... 172 20 40 70 100

[[Page 3959]]

Class V........................................ 116
----------------------------------------------------------------------------------------------------------------

Unlike the nonhandheld Phase 2 program, for handheld engines, the
phase-in process of mandatory percentages would result in Phase 1 and
Phase 2 handheld engines being produced in the same model year, i.e.,
at least 20 percent of the engines produced in model year 2002 would be
Phase 2 engines subject to the Phase 2 program, and up to 80 percent of
the handheld engines produced in model year 2002 would be Phase 1
engines subject to the Phase 1 program, followed by a 40/60 split in
model year 2003, and a 70/30 split between Phase 2/Phase 1 engines in
model year 2004.
The remainder of this section describes the analysis and supporting
data for the proposed HC+NOX standards for Class I
nonhandheld engines, Class II nonhandheld engines, and Class III, IV,
and V handheld engines. Each of these subsections is organized into the
following topics: (i) Historical Sales Trends by Engine Technology--
Historical trends are important to consider when assessing the range of
field proven technologies. Historical trends assist in understanding
what technologies have been demonstrated in actual use, what
manufacturers' current production capabilities are, and the
availability of new and in-use emission performance data; (ii) In-use
HC and NOX Emission Performance of Uncontrolled Engines--The
Agency presents this information to highlight the in-use performance
characteristics associated with small engine technologies and the need
for careful consideration of the in-use performance of various control
technologies. Phase 1 new engine emission performance data is available
from Federal certification data. However, in-use emission performance
on engines pulled from the field is limited; therefore, a discussion of
the in-use performance of uncontrolled engines is warranted; (iii) New
Engine and In-use HC and NOX Performance of Phase 1
Technology Engines--A summary of the information available on the new
and in-use emission performance of Phase 1 engines is presented. This
information is used to assess the current status of the small engine
industry, which is critical for the Agency's analysis when trying to
predict the impact of technology changes on the industry; (iv)
Technologies Considered for Phase 2 HC+NOX Standards--
Discussion of the technologies the Agency considered when determining
the level of the proposed standards is presented. This includes a
discussion of new and in-use emission performance of each technology,
and the per engine cost associated with each technology, and; (v)
Proposed Phase 2 HC+NOX Standard--A discussion of the Phase
2 standards the Agency is proposing, including information on why the
proposed standards are achievable, the proposed lead time, and a
discussion and request for comment on more stringent standards (such as
the CARB Tier 2 levels).
a. HC+NOX Emission Standard for Class I Nonhandheld
Engines. This section presents information used by the Agency to
determine the appropriate level for the proposed HC+NOX
exhaust emission standards for nonhandheld Class I engines. A more
detailed explanation of the engine technologies and costs described in
this section is contained in the Draft Regulatory Support Document
(RSD) for this proposal, a copy of which is available in the public
docket for this rule.
i. Class I Historical Sales Trends by Engine Technology
Class I engine (X Emission Performance of Uncontrolled
Class I Engines
Unregulated Class I engines have demonstrated high new engine
emission rates for HC and CO, and low levels of NOX, as well
as poor in-use performance (large deterioration factors) for HC and CO,
with little deterioration of new engine NOX
values.15 HC deterioration has been shown to be greater than
two times the new engine value in as little as four years of engine
use.
---------------------------------------------------------------------------

\15\ See ``Emission Tests of In-use Small Utility Engines''
Southwest Research Institute, Sept. 1991, EPA Air Docket A-91-24,
Item #II-A-8, and ``Nonroad Engine and Vehicle Emission Study'' U.S.
EPA Report #21A-2001, Nov. 1991, EPA Air Docket A-91-24, Item #II-A-
10.
---------------------------------------------------------------------------

iii. New Engine and In-use HC and NOX Performance of Phase 1
Class I Technology Engines
Phase 1 engines have improved new engine emission performance over
uncontrolled engines, and may have improved in-use performance. The
Draft RSD for this proposal contains publicly available information on
engine families from all engine classes certified to the Phase 1
program. This information shows both SV and OHV technology can meet the
Phase 1 Class I new engine standard.
The Agency has recently examined information presented by several
engine manufacturers concerning emissions deterioration from Phase 1
technology Class I side-valve and over-head valve engines.16
A more detailed discussion of this data is presented in the Draft RSD.
This information covers over 50 Class I engines field aged by
manufacturers, with usage varying from 20 to 300 hours. Table 8
contains a summary of the HC+NOX deterioration factors
resulting from an analysis of this data.
---------------------------------------------------------------------------

\16\ See ``Tier 1 Deterioration Factors for Small Nonroad
Engines'', Sept. 1996, a report by Air Improvement Resources,
available in EPA Air Docket A-96-55, Item #II-D-11.

[[Page 3960]]

Table 8.--Summary of In-use Deterioration of Phase 1 Technology Class I
Engines
------------------------------------------------------------------------
Class I Class I
OHV SV
------------------------------------------------------------------------
Estimated HC+NOX df at 66 Hours................... 1.35 1.87
------------------------------------------------------------------------

Analysis of this information indicates Class I SV HC+NOX
deterioration is higher than Class I OHV engines. The lower new engine
emission levels of Class I OHV over SVs combined with lower in-use
deterioration results in better in-use emission performance for Class I
OHV engines compared to Class I SV engines.
iv. Technologies Considered for Phase 2 Class I HC+NOX
Standards
The Agency analyzed the emission performance and cost of several
technologies which could be applied to Class I engines, including
improvements to existing SV engines, conversion of existing SV engines
to OHV technology, and the application of catalytic converters to
existing SV and OHV engines. Four-stroke SV technology utilizes an
engine configuration in which the intake and exhaust valves are located
to one side of the combustion chamber (also called an L-head design),
as compared to four-stroke OHV technology in which the intake and
exhaust valves are located directly above the combustion chamber.
Catalytic converters are add-on after treatment devices which operate
by chemically reducing or oxidizing exhaust gases. The Draft RSD for
this proposal contains additional information regarding these three
technologies.
As discussed previously, the majority of Class I engines utilize SV
technology. Table 8 shows that Class I SV technology have
HC+NOX deteriorations on the order of 1.87 times new engine
levels at 66 hours of use. Combining this with the Phase 1
certification level of 16.1 g/kW-hr HC+NOX indicates an in-
use level of approximately 30 g/kW-hr HC+NOX. The Agency
believes additional reductions can be achieved with improvements to
existing Phase 1 SV engines. A more detailed discussion of these
improvements is contained in the Draft RSD. A summary of the
improvements are: lowering of new engine emission levels achieved
through enleanment of intake air-fuel ratio; improvements to valve seat
material which will lower in-use distortion, resulting in decreased
valve leakage and deposit formation; improvements in cylinder ring
design, which will result in better combustion chamber sealing and
lower oil consumption and lower combustion chamber deposits; continued
structural improvements to cylinder design to lower cylinder distortion
inherent in side-valve configurations; and addition of valve stem seals
to limit the creepage of oil into the combustion chamber. As presented
in the Draft RSD, the Agency estimates the improvements to Class I SV
engines would cost the manufacturer as much as $4 to $7 per engine,
depending on the engine family volume. The Agency estimates changes
would result in improvements to both new and in-use emission
performance, combining for a 10 to 20 percent improvement in the in-use
HC+NOX performance beyond Phase 1 designs.
As indicated by Table 8, Phase 1 OHV engines have better in-use
performance compared to Phase 1 SV engines. A new engine level equal to
the Phase 1 standard of 16.1 g/kW-hr combined with a HC+NOX
df of 1.35 at 66 hours results in an in-use emission rate of 21.7 g/kW-
hr. This level is well below the performance of Class I SV engines,
therefore the Agency has considered the conversion of existing Class I
SV to OHV engines in developing the proposed Phase 2 levels. Based on
the Federal Phase 1 new engine certification data analyzed for this
proposal, the average Class I OHV engine emits around 10.5 g/kW-hr.
Based on the deterioration information presented in Table 8 and design
improvements discussed elsewhere, the Agency estimates a well designed
nonhandheld OHV engine could have an HC+NOX deterioration
factor of 1.3. Assuming a 10 percent compliance margin, these specific
Class I OHV engines could achieve an average in-use emission level of
around 15 g/kW-hr. However, it should be noted that only about 10
percent of current Class I engines are OHV designs. The performance of
these specific engines may not be representative of what would occur if
all Class I engines were converted to OHV technology.
Federal certification data indicates a small number of Class I
engines have certified to the Federal Phase 1 standards using catalyst
technology. Though it is technologically feasible to apply catalysts to
both SV and OHV engines, the Agency has little information regarding
in-use durability and emission performance of engines equipped with
catalysts. As discussed previously, the in-use emission performance of
small engines is a critical component of the analysis EPA has
undertaken in the development of the Phase 2 proposal. The Agency's
experience with on-highway catalyst technology has shown considerable
in-use deterioration of catalysts can occur. In recent years several
technical papers have been published regarding catalyst durability on
small engines, however, these papers have relied on laboratory
durability programs, such as aging catalysts on dynamometers
17. The Agency is not aware of any actual field-aged in-use
catalyst durability information. The Agency requests comment on the
relationship between laboratory durability data and in-use field data,
any information on typical in-use aged catalyst performance, and all
available data on individual catalysts aged under typical in-use
conditions experienced by equipment using Class I engines. The Agency
requests additional information regarding new engine emission
performance, in-use emission performance, and cost of catalyst
technology for Class I SV and OHV engines.
---------------------------------------------------------------------------

\17\ See Society of Automotive Engineers Technical Papers
930076, 932445, 941807, and 961735 for bench aged catalyst
information.
---------------------------------------------------------------------------

v. Proposed Phase 2 Class I HC+NOX Standard
The Agency is proposing a corporate average exhaust emission level
of 25 g/kW-hr HC+NOX for Class I engines beginning in model
year 2001 (for discussion of the averaging, banking, and trading
program, see Section IV.A.5). The Agency believes this level is
technologically achievable, and, as discussed previously, can be met by
improvements to existing Class I SV engines. The Agency has performed
an analysis using the existing Phase 1 certification data (which
contains confidential sales projections) combined with reasonable
assumptions for in-use deterioration. This analysis indicates an
averaging standard of 25 g/kW-hr is achievable with improvements to
existing SV engines and considering the emission performance of
existing Phase 1 OHV engines. A standard of 25 g/kW-hr would not
require an increase in the penetration of Class I OHV sales.
Manufacturers would need to make improvements to existing SV engine
families which would require improvements to several engine components.
However, major retooling of engine production lines would not be
required. In addition, the use of ABT provides manufacturers with
considerable flexibility for determining the most appropriate
expenditure of resources when deciding which engine families will need
specific improvements to meet the proposed levels. The lead time
between the

[[Page 3961]]

finalization of this rule and model year 2001 would be sufficient for
manufacturers to meet the proposed HC+NOX level.
The Agency has considered emission standard levels more stringent
than the proposed 25 g/kW-hr HC+NOX. As discussed above, a
level more stringent than 25 g/kW-hr could be met by the conversion of
existing SV technology engines to OHV technology. The Agency's analysis
of existing Phase 1 certification data combined with confidential sales
information indicates an in-use level of around 15 g/kW-hr could be met
by current Phase 1 Class I OHV engines with some design improvements to
assure in-use emissions durability. However, these Class I OHV engines
represent only about 10 percent of Class I sales; it is uncertain what
level of emission could be achieved by complete conversion to OHV
technology. As discussed previously, the percentage of Class I OHV
engine sales has remained fairly constant for the past eight years,
despite superior durability, performance, and fuel economy. Several
Class I engine manufacturers, including the two largest which represent
the majority of the market in terms of sales, have discussed with the
Agency their past attempts to sell low cost OHV engines, likely in
competition with less expensive SV engines. Manufacturers have
indicated they have seen little success in drawing consumers away from
the even lower cost Class I SV engines. Engine manufacturers have
indicated that the principle reason for the failure of OHVs to
penetrate further into the Class I market is the cost difference
between the two engine technologies, and consumers' unwillingness to
pay this premium. Several engine manufacturers have indicated that low
cost Phase 1 Class I SV engines have manufacturing costs on the order
of $60 to $70 per engine. Engine manufacturers contend that for these
low cost engines, the cost increase to purchase an OHV engine is large
enough to prevent a larger market penetration by OHV engine, at least
when they would have to compete in the market with SV engines (see 62
FR 14752, ``Class I OHV Demonstration Program''). The Agency estimates
the manufacturer's cost for conversion to OHV to be between $5 and $14
per engine. Engine manufacturers have indicated concern over what they
perceive to be the potentially dramatic impacts on the Class I engine
sales which would result from a standard which requires conversion to
OHV technology. As discussed in the Overview Section III.A, above, EPA
is also concerned that possible adverse impact on sales and the
potential need for additional lead time could result in reduction in at
least the near term emission benefits anticipated by this proposal. The
Agency requests comment on the market concerns expressed by engine
manufacturers, on the potential impact on lead time associated with
more stringent Class I standards and on the potential for delay in at
least the near term emission reduction benefits available from Class I
engines if more stringent standards were adopted.
The Agency is aware of the emission standards being considered by
CARB for the CARB Tier 2 Utility, Lawn, and Garden Engine (ULGE)
regulation. The Agency's current understanding is that CARB is
considering Class I engine in-use standards of 16.1g/kW-hr
NMHC+NOX to be met by model year 2000, followed by a
standard of 12.0g/kW-hr in model year 2004. In their comments to the
ANPRM, California recommended a nationwide level of control equivalent
to that being considered by CARB. Further, CARB suggested these
standards could be met with the use of available technology,
specifically, total conversion to OHV technology to achieve compliance
with a 16.1 g/kW-hr NMHC+NOX standard and the addition of
catalyst control to meet a 12.0 g/kW-hr NMHC+NOX standard.
EPA understands that CARB is still evaluating its Tier 2 ULGE program
and may adopt regulations which differ from these specific levels or
implementation dates or both. As discussed under Section IV.A of this
proposal, section 209 of the CAA allows California to set its own
standards, considering criteria as they apply to the State of
California. However, as discussed later in this section, the Agency
requests comment on whether application of these emission control
technologies as being considered by CARB are appropriate for a Federal
program at this time, the level of emission control expected from such
application of these technologies and what adjustments to the proposed
Federal program might be necessary to accommodate standards which would
require such widespread application of OHV and catalyst technology.
The Agency has considered the potential impacts associated with the
conversion of Class I SVs to OHV technology. Due to uncertainties as to
consumer acceptance of OHV engines in typical Class I equipment
applications and as to how a more stringent Class I standard might
effect lead time for the program as a whole and the resulting
uncertainty of emissions benefits, the Agency has chosen not to propose
Class I standards which would mandate the conversion of Class I engines
to OHV or comparably clean technology. However, the Agency requests
comment on such an option. EPA specifically requests additional
supporting information regarding this issue to be made available to the
Agency through the public comment process on this proposed rule to
supplement that which informed EPA's analysis of CARB's proposed Tier 2
levels and EPA's cost estimates of converting Class I engines to OHV.
The Agency requests comment on all aspects of the proposed Class I
standards.
b. HC+NOX Emission Standard for Class II Nonhandheld
Engines.This section presents information used by the Agency to
determine the appropriate level for the proposed HC+NOX
exhaust emission standards for nonhandheld Class II engines. A more
detailed explanation of the engine technologies and costs described in
this section is contained in the Draft RSD for this proposal, a copy of
which is available in the public docket.
i. Class II Historical Sales Trends by Engine Technology
Class II engine sales have been dominated by 4-stroke SV engines in
the past. As described in the Draft RSD, Class II engines were
predominantly SV technology in the 1970's and early 1980's. Beginning
in about 1985, OHV engines have steadily increased their annual sales
penetration into the Class II market, averaging about a 3 percent
increase per year; by 1995 OHV engine sales represented approximately
35 percent of the Class II market, with the remaining 65 percent being
SV engines.
ii. In-use HC and NOX Emission Performance of Uncontrolled
Class II Engines
Information regarding new engine and in-use emission performance of
uncontrolled Class II engines is limited. While some new engine data is
available, the Agency does not have in-use emission information on
uncontrolled Class II engines. The limited new engine information from
uncontrolled engines comes from the CARB Technical Support Document for
the CARB ULGE program.18 The Agency used this information to
estimate the new engine emission factors for the 1991 Nonroad Engine
and Vehicle Emission Report. Those estimates were between 15.2 and 15.4
g/kW-hr for

[[Page 3962]]

typical new engine Class II HC+NOX emission factors.
---------------------------------------------------------------------------

\18\ California Air Resources Board Mail Out #92-06, Technical
Support Document for California Exhaust Emission Standards and Test
Procedure for 1994 and Subsequent Model Year Utility and Lawn and
Garden Equipment Engines, January 1992.
---------------------------------------------------------------------------

iii. New Engine and In-use HC and NOX Performance of Phase 1
Class II Technology Engines
Table 9 is a summary of the new engine emission values for gasoline
fueled SV and OHV engine families certified to the Federal Phase 1
regulations as of September 1997.

Table 9.--Summary of Federal Phase 1 Class II Gasoline Fueled Engine Families
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average new HC+NOX Minimum new HC+NOX Maximum new HC+NOX
Technology Number of families (g/kW-hr) (g/kW-hr) (g/kW-hr)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Federal Phase 1 OHV............................................. 64 9.0 5.3 12.9
Federal Phase 1 SV.............................................. 14 11.3 9.4 12.9
--------------------------------------------------------------------------------------------------------------------------------------------------------

The values in Table 9 are an average of the certified new engine
rates. EPA has access to manufacturers' confidential sales estimates
for model year 1997. Using these projections the sales weighted new
engine HC+NOX emission rate is 11.7g/kW-hr for Class II SV
engines, and 8.3g/kW-hr for Class II OHV. This certification data shows
that OHV new engine HC+NOX emissions tend to be lower than
SV emissions.
In 1996 the Agency received a report from several engine
manufacturers regarding the deterioration of Phase 1 technology Class
II SV and OHV engines.19 A more detailed discussion of this
information is contained in the Draft RSD for this proposal. Table 10
contains a summary of this information.
---------------------------------------------------------------------------

\19\ ``Tier 1 Deterioration Factors for Small Nonroad Engines''
September 1996, a report by Air Improvement Resources, available in
EPA Air Docket A-96-55, Item #II-D-11.

Table 10.--Summary of In-Use Deterioration Factors for Phase 1 Class II
Engines
------------------------------------------------------------------------
Class Class II
II OHV SV
------------------------------------------------------------------------
Estimated HC+NOX df 250 hours..................... 1.4 1.6
------------------------------------------------------------------------

iv. Technologies Considered for Phase 2 Class II HC+NOX
Standards
The Agency analyzed the emission performance and cost of several
technologies which could be applied to Class II engines, including
improvements to existing SV engines, conversion of existing SV engines
to OHV technology, improvements to existing OHV engines, and the
application of catalytic converters to existing SV and OHV engines. The
Draft RSD for this proposal contains additional information regarding
these technologies.
The Agency considered the costs and emission performance potential
which would result from manufacturers making improvements to Phase 1
Class II SV engines. As discussed in the Draft RSD, several areas for
improvement potentially exist, including: improvements to carburetors
to lower variability and maintain more precise air/fuel control;
enhancements to the cylinder structural integrity; improvements to
valve stems and valve seats; and changes in piston ring design. These
improvements would lower production variability and improve both new
engine and in-use emission performance. The Agency estimates these
changes would cost the manufacturer as much as $7 to $20 per engine
depending on engine family volume and the improvements required.
However, the Agency believes the improvement in the in-use emission
performance from Phase 1 levels would be small. All spark-ignited
engines have a lean performance limit, i.e., an air/fuel ratio beyond
which additional enleanment will result in unstable combustion and poor
engine performance. The basic design of the SV combustion chamber
results in a lean performance limit which is reached relatively soon
(compared to OHV technology). Improvements in the in-use performance
can be made, but the Agency believes these improvements will also be
relatively small. The Agency estimates that the improvements to SV
technology considered would result in an overall 10 to 20 percent
reduction in the in-use emissions from Phase 1 SV levels. With the
Phase 1 Class II new engine standard equal to 13.4 g/kW-hr
HC+NOX, and a Phase 1 Class II SV df of 1.6, the Phase 1 in-
use emission rate is 20.1g/kW-hr at 250 hours. A 10 to 20 percent
reduction translates to an in-use emission rate between 16.8 and 18.9
g/kW-hr.
As described above in Section IV.A.1.a, the principal difference
between SV and OHV engines is the location of the intake and exhaust
valves with respect to the combustion chamber; in SV engines the valves
are located to one side of the combustion chamber, while in OHV the
valves are located at the top of the combustion chamber directly above
the piston. The OHV location offers many performance advantages over
the SV engine, including lower valve seat distortion, lower combustion
chamber surface-to-volume ratio, and the ability to run stably at
leaner air-fuel ratios. These differences are described in more detail
in the Draft RSD. These differences can result in better new engine and
in-use HC+NOX emission performance for OHV over SV
technology. Based on confidential Phase 1 Class II OHV Federally
certified engine families sales projections, the Agency believes an
average new engine emission rate of 9.3 g/kW-hr, which includes a 10
percent compliance margin, is achievable from OHV technology engines.
This would result in an in-use emission level of 12.1 g/kW-hr (1.3 *
9.3 g/kW-hr), which is a 42 percent reduction from Phase 1 SV levels
(Phase 1 SV = 13.4 g/kW-hr * 1.6 = 20.1 g/kW-hr). As presented in the
Draft RSD, the Agency estimates the conversion of Class II SV to OHV
technology would cost the manufacturer between $10 and $17 per engine,
depending on the engine family volume. Engine manufacturers have
indicated the higher cost associated with conversion of Class II SV to
Class II OHV technology is reasonable because the equipment using Class
II engines is typically more expensive than the equipment targeted
toward the residential market, and the increased cost resulting from
conversion to OHV design would not have a significant adverse impact on
Class II engine sales. While EPA has no independent information on
consumer price sensitivity for equipment using Class I engines, it is
understandable that the higher price of this equipment and the typical
commercial use of such equipment could allow the performance, fuel
efficiency, and durability benefits of Class II OHV engines to outweigh
the incremental impact on equipment price.

[[Page 3963]]

The Agency also considered improvements to existing Phase 1 OHV
engines in determining the appropriate level of the Class II standard.
In many cases, engine manufacturers have already optimized new engine
emission performance and have incorporated improvements to engine
designs to optimize in-use emission performance. However, as discussed
in the Draft RSD, the Agency believes that for some Class II OHV engine
families internal engine improvements can still be made which would
result in lower new engine and/or better in-use performance. These
changes include leaner carburetor calibrations to lower new engine
HC+NOX, optimization of combustion chamber design, and
improvements to oil control. As discussed previously, the sales
weighted new engine Phase 1 Class II OHV HC+NOX level is
8.3g/kW-hr, and as shown in Table 10, the Class II HC+NOX df
is estimated to be 1.4 at 250 hours. The Agency believes changes to
existing Class II OHV engines will primarily improve in-use emission
performance. As presented in the Draft RSD, the Agency estimates these
changes would cost the manufacturer as much as $3 to $8 per engine,
depending on the engine family production volume and the improvements
required. However, the Agency believes many engine families have
already incorporated these design improvements. Based on existing
Federal certification data and the deterioration information contained
in Table 10, the Agency estimates these improvements will result in an
in-use HC+NOX deterioration rate of 1.3 at 250 hours, and
average new engine emission rates (including a ten percent compliance
margin) of 9.3 g/kW-hr, for an average in-use emission rate of 12.1 g/
kW-hr.
Federal certification data indicates a small number of Class II SV
and OHV engines families have certified to the Federal Phase 1
standards using catalyst technology. However, the majority of these
engines are intended for indoor use on applications such as generators
or floor buffers, where lowering CO emissions appears to be the primary
focus. The majority of these catalyst equipped Class II engine families
operate on propane fuel. No catalyst equipped Class II engine families
have certified to the Phase 1 rule for use in lawn and garden
equipment. Though it is technologically feasible to apply catalysts to
both SV and OHV engines, the Agency has little information regarding
in-use emission performance of engines equipped with catalysts. The
Agency's experience with on-highway catalyst technology has shown that
considerable in-use deterioration can occur. As previously discussed in
the Class I standard section, information on laboratory aged small
engine catalysts has appeared in recent years in the technical
journals. The Agency requests comment on the relationship between
laboratory and field aged catalyst durability data, any information on
typical in-use aged catalyst performance and all available data on
individual catalysts aged under typical in-use conditions experienced
by equipment using Class II engines. The Agency requests additional
information regarding the new engine emission performance, in-use
emission performance, and cost of catalyst technology for Class II
engines, particularly Class II engines designed for lawn and garden
type applications.
v. Proposed Phase 2 Class II HC+NOX Standard
The Agency is proposing a corporate average HC+NOX
emission standard of 12.1 g/kW-hr which will be phased in over five
years, beginning in model year 2001. Based on the information presented
in this section, the Agency believes an in-use level of 12.1g/kW-hr can
be met by the conversion of Phase 1 SV engines to OHV technology, and
by internal improvements to some existing Phase 1 OHV engines.
The proposed standards would require significant production line
changes for many Class II engine manufacturers to convert existing SV
models to OHV designs, as well as modifications to some Phase 1 OHV
models which may need internal improvements to meet the 12.1 g/kW-hr
level. To accommodate a smooth transition of existing SV engine family
production lines to the new OHV technology or other comparably clean
technology, the Agency is proposing a five year phase-in period,
starting with a level of 18 g/kW-hr in 2001 and ramping down to the
final year level of 12.1 in model year 2005. The Agency expects the
proposed standards for Class II engines would result in increased
penetration of and virtual total conversion to clean OHV technology by
2005. However, the proposal does not preclude other technologies from
meeting the proposed standard.
The Agency recognizes that there are large differences in
technology mixes currently being produced by Class II engine
manufacturers. Some Class II engine manufacturers have already made
significant investments in OHV technology prior to and during the Phase
1 program. For some of these manufacturers the standards in the early
years of the Phase 2 phase-in (i.e., the 2001 standard of 18g/kW-hr and
the 2002 standard is 16.6 g/kW-hr) may not require additional
reductions in Class II engine emissions. At the same time, the Phase 1
standards do not require a shift to clean, durable OHV technology or
comparably clean technology, and several Class II engine manufacturers
currently produce a significant number of SV engines. For manufacturers
who are relying on SV technology the proposed phase-in period will
allow them to shift their production to new, cleaner technology which
is capable of meeting the 2005 standard of 12.1g/kW-hr. The Agency
believes the phase-in standards will address the inequities among
manufacturers' current technology mixes but will also require
manufacturers to produce the clean, durable 12.1g/kW-hr engines in
2005. Manufacturers have indicated the early banking provision will
pull ahead clean technology and ease the transition to the 12.1
standard. However, due to the wide discrepancy between manufacturers'
current technology mixes, some manufacturers may generate significant
credits during the phase-in period. The Agency has recently performed
an analysis, based on Federal Phase 1 certification data, which
indicates under some conditions, early banking would result in
significant credits being generated during the phase-in period which
may in fact undermine the Agency's assumptions that the 12.1 standard
in model year 2005 would require a virtual 100 percent shift to OHV or
comparably clear technology for Class II engines. To insure the EPA's
goals are met, the Agency is proposing a declining set of caps on how
high the sales-weighed average level of HC+NOX family
emission limits (FELs) could be for Class II engine families beginning
in 2005. A discussion of this proposal is contained in Section IV.A.5.
Engine manufacturers have commented that, while 12.1 g/kW-hr
HC+NOX can be met with engines designed for a typical 250-
hour useful life, engines designed for the longer proposed useful life
categories of 500 and 1000 hours need a higher standard due to their
higher expected df as measured over these longer hour
periods.20 Specifically, they recommend a 500-hour engine
standard of 13.0 g/kW-hr and a 1000-hour standard of 14.0 g/kW-hr
HC+NOX. In arriving at these recommendations, the
manufacturers

[[Page 3964]]

assumed the new engine emission levels would be the same regardless of
useful life category; this is also assumed by the Agency in developing
its proposal. However, while the manufacturers also predict
improvements in in-use emission durability, they do not expect these
improvements would allow a constant deterioration factor (full useful
life emission level divided by new engine emission level) regardless of
useful life category. Rather, the manufacturers expect improved
durability would allow typical deterioration factors of around 1.4 for
500-hour engines and 1.5 for 1000-hour engines. In making these
recommendations, the manufacturers acknowledge that they have not
provided any data or analyses to validate their recommendations, but
also argue that the Agency has no full useful life data for these
higher hour categories which substantiate the feasibility of the
Agency's proposed standards. EPA requests any additional data and other
pertinent information which would help the Agency reassess the
appropriate level of standards for the 500-hour and 1000-hour engines.
---------------------------------------------------------------------------

\20\ See the discussion in the March 27, 1997, ANPRM, 62 FR
14740, and the Memo to the Docket regarding the October 3, 1997
meeting between U.S. EPA and the Engine manufacturers Association,
EPA Air Docket A-96-55, Item #II-E-11.
---------------------------------------------------------------------------

Based on the May, 1997 CARB Workshop on their Tier 2 standards, the
Agency believes CARB may propose a Tier 2 in-use standard of 12.0 g/kW-
hr NMHC+NOX in model year 2000, followed by a level of 9.4
g/kW-hr NMHC+NOX in model year 2004. CARB's 12.0 level may
be achievable with OHV technology and is very similar to the Agency's
proposed Phase 2 level. CARB's 9.4 g/kW-hr level is more stringent than
the Agency's 12.1 g/kW-hr proposal. CARB suggests an in-use 9.4g/kW-hr
standard would require technology beyond conversion to OHV, such as an
OHV engine equipped with a catalyst. The Agency believes the costs and
lead time which could be necessary to achieve a 9.4 g/kW-hr level for a
national program would be considerably greater than the program
contained in today's proposal. However, as discussed under Section IV.A
of this proposal, section 209 of the CAA allows California to set their
own standards, considering criteria as they apply to the State of
California. However, as discussed below, the Agency requests comment on
whether the application of the technology anticipated by the standards
being considered by CARB would be appropriate for a Federal program at
this time.
The Agency requests comment on all aspects of the proposed Class II
standards, and especially requests data, analyses and other information
on the expected emission performance capability of Class II engines
designed for in-use operating lives of 500 hours and 1000 hours.
c. HC+NOX Emission Standards for Class III, IV and V
Handheld Engines. This section presents information used by the Agency
to determine the appropriate level for the proposed HC+NOX
exhaust emission standards for handheld engines (engine Class III, IV
and V). A more detailed explanation of the engine technologies and
costs described in this section is contained in the Draft RSD for this
proposal, a copy of which is available in the public docket for this
rule.
i. Class III, IV and V Historical Sales Trends by Engine Technology
Handheld engine sales have historically been dominated by crankcase
charge scavenged two-stroke engines (``traditional 2-strokes'').
Historical sales data indicate that until the recent introduction by
one manufacturer, Ryobi, of a 4-stroke trimmer, 100 percent of gasoline
engine powered handheld equipment used traditional 2-stroke engines.
ii. In-use HC and NOX Emission Performance of Uncontrolled
Class III, IV and V Engines
Information on uncontrolled 2-stroke engines is limited. However,
what information is available indicates 2-stroke technology has the
potential to experience high rates of in-use deterioration of HC, on
the order of two times the new engine value.21
---------------------------------------------------------------------------

\21\ See ``Emission Tests of In-use Small Utility Engines''
Southwest Research Institute, September 1991, EPA Air Docket A-91-
24, Item #II-A-8, ``Nonroad Engine and Vehicle Emission Study'' U.S.
EPA Report #21A-2001, November 1991, EPA Air Docket A-91-24, Item
#II-A-10, ``Emission Testing of In-use Handheld Engines'' Southwest
Research Institute, March 1994, EPA Air Docket A-93-25, Item #II-A-
06, and ``Regulatory Impact Analysis and Regulatory Support
Document, Control of Air Pollution, Emission Standards for New
Nonroad Spark-Ignition Engines at or Below 19 kilowatts'' U.S. EPA,
May 1995, EPA Air Docket A-93-25, Item #V-B-01.
---------------------------------------------------------------------------

This same information indicated that little in-use deterioration of
NOX emissions occur from traditional 2-stroke engines.
iii. New Engine and In-use HC and NOX Performance of Class
III, IV and V Phase 1 Technology Engines
Federal Phase 1 certification data shows that over 150 two-stroke
engine families have been certified for the 1997 and 1998 model years.
A summary of the emission performance of these Phase 1 technology
engine families is shown in Table 11.

Table 11.--Summary of Federal Phase 1 Handheld 2-stroke Engine Families
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average new HC+NOX Minimum New HC+NOX Maximum New HC+NOX
Engine class Number of families (g/kW-hr) (g/kW-hr) (g/kW-hr)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Class III....................................................... 4 216 177 258
Class IV........................................................ 131 189 97 236
Class V......................................................... 19 136 90 161
--------------------------------------------------------------------------------------------------------------------------------------------------------

The average emission rates for the Phase 1 Class III, IV and V
traditional 2-stroke engines are 28 percent, 23 percent and 18 percent
below the combined Phase 1 HC and NOX standards. Federal
certification data also show three Class IV four-stroke technology
engine families and three Class IV two-stroke with catalysts engine
families have been certified to the Federal rule. The average
HC+NOX certification levels for these engine families are 27
and 165 g/kW-hr respectively.
Information on in-use emission performance of Phase 1 technology 2-
strokes is also limited. In preparation for the Phase 1 regulation,
several members of the Portable Power Equipment Manufacturers
Association (PPEMA) ran a test program which included manufacturer
controlled field testing of seven Phase 1 technology 2-stroke engines,
six aged to 50 hours, and one to 225 hours.22 This data
shows relatively low deterioration in HC+NOX emissions, with
dfs ranging from slightly less than 1.0 to approximately 1.2 at 50
hours, and slightly less than 1.0 for the 225 hour engine.
---------------------------------------------------------------------------

\22\ See Appendix C of ``Regulatory Support Document, Control of
Air Pollution, Emission Standards for New Nonroad Spark-Ignition
Engines at or Below 19 kilowatts'' U.S. EPA, May 1995, EPA Air
Docket A-93-25, Item #V-B-01.

---------------------------------------------------------------------------

[[Page 3965]]

The Agency has little information on the in-use performance of 4-
stroke handheld technology or on handheld catalyst technology.
iv. Technologies Considered for Phase 2 Class III, IV and V
HC+NOX Standards
The Agency analyzed the emission performance and cost of several
technologies which could be applied to handheld engines. These include
improvements to existing 2-stroke engines, conversion of existing 2-
stroke engines to 4-stroke technology, and the application of catalytic
converters to existing 2-stroke engines. The Draft RSD for this
proposal contains additional information regarding these technologies.
For Phase 1 2-stroke technology engines, fuel lost during the
scavenging process represents the largest fraction of exhaust HC
emissions, and HC emissions represent greater than 95 percent of the
exhaust HC+NOX emissions. The Agency believes several types
of improvements can be made to Phase 1 technology 2-stroke engines. The
following is a summary of potential areas for lowering
HC+NOX emissions: (1) improvements in carburetors to reduce
production variability and tighter air/fuel ratio control; (2) redesign
of the combustion chamber to promote more complete combustion; (3)
optimizing port shapes and timing to reduce scavenging losses; (4)
leaner carburetor calibrations to reduce HC emissions; and (5) tighter
manufacturing tolerances for engine components to reduce component
variation. These improvements are discussed in more detail in the Draft
RSD. As described in the Draft RSD, the Agency estimates the cost of
these improvements would cost the manufacturer as much as $2 to $6 per
engine, depending on the production volume of the engine family and the
improvements required. The Agency would expect these changes to lower
the new and in-use emission rates of Phase 1 two-stroke technology
engines. PPEMA members have indicated they believe a well designed,
properly maintained 2-stroke engine is capable of performing with no
in-use deterioration of HC+NOX emissions. Based on the small
amount of in-use data from Phase 1 technology engines, the Agency
estimates the in-use performance of an improved Phase 1 technology 2-
stroke engine would deteriorate approximately 10 percent during its
useful life. The Agency estimates that for the majority of handheld
engines, improvements to Phase 1 2-stroke designs would result in a 30
percent reduction in the in-use emission rates from Phase 1 designs.
The Agency also analyzed the benefits and associated costs which
would occur from the conversion of existing 2-stroke handheld engines
to 4-stroke designs. Two engine manufacturers, Ryobi and Honda, have
successfully demonstrated that 4-stroke designs are viable in at least
some handheld equipment applications, notably a string trimmer
application. However, the Agency is uncertain that 4-stroke technology
would be viable in all handheld applications, particularly those
applications which require high power and low weight, such as large,
commercial chainsaw applications, where the lower power-to-weight ratio
of 4-stroke engines may impede equipment performance. Four-stroke
technology does not have the scavenging loss problem associated with
traditional 2-strokes. Therefore 4-stroke exhaust HC emissions are
substantially below those of a 2-stroke design. Federal Phase 1
certification data for Class IV engines indicates a 4-stroke string
trimmer produces new engine HC+NOX emission rates of about
27 g/kW-hr, which is approximately 80 percent below the Phase 1
standard. Deterioration information on small displacement 4-stroke
engines is limited, and the Agency has no deterioration information on
handheld 4-stroke engines. The Agency has heard from one small engine
manufacturer that the smaller 4-stroke engines would likely have higher
deterioration than Class I OHV 4-stroke engines, which is on the order
of 1.4 at 66 hours.23 The Agency requests comment and
additional information on the deterioration of smaller 4-stroke
engines. As described in the Draft RSD, the Agency estimates the cost
of converting an existing handheld 2-stroke to a 4-stroke engine would
cost the manufacturer between $7 and $10 per engine, depending on the
production volume of the engine family.
The Agency also considered the application of catalytic convertors
to Phase 1 2-stroke technology. One handheld engine manufacturer,
Husquvarna, has certified three engine families to the Phase 1 rule
which utilize a 2-stroke engine with catalyst. This engine has been
designed for lower scavenging losses to reduce engine out emissions,
has improved fuel metering, and also uses a catalyst to further reduce
exhaust emissions. EPA's testing of this engine showed new engine
emission results for HC+NOX at the nominal carburetor
setting on the order of 90 g/kW-hr, which is 63 percent below the
combined Phase 1 Class IV HC+NOX new engine standard. The
Agency does not have information regarding the actual in-use
performance of this or other catalyst equipped 2-stroke engines. The
Agency estimates the cost of adding a catalytic convertor to an
improved 2-stroke handheld engine would cost the manufacturer between
$6 and $12 per engine, depending on the production volume of the
family. This cost estimate does not include any of the additional
improvements to the Phase 1 technology 2-stroke mentioned previously,
such as combustion chamber improvements or scavenging design
improvements. As previously discussed, such improvements to existing 2-
stroke designs would cost the manufacturer an additional $2 to $6 per
engine. Therefore, the Agency estimates an improved 2-stroke design
with a catalytic convertor would cost the manufacturer from $8 to $18
per engine. Comments are requested on these cost estimates.
---------------------------------------------------------------------------

\23\ See Item # II-E-08 in EPA Air Docket A-96-55 referencing a
meeting between EPA and Honda.
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v. Class III, IV and V Proposed Phase 2 HC+NOX Standard
The Agency is proposing an in-use HC+NOX standard of
210, 172 and 116 g/kW-hr for Class III, IV and V engines, respectively.
As presented in Table 7, the proposed standards would begin in model
year 2002, with a requirement that 20 percent of a manufacturer's U.S.
sales meet the standards, followed by an increased percentage each year
until model year 2005, when 100 percent of a manufacturer's U.S. sales
would be required to meet the proposed standards.
The Agency expects the proposed in-use standards can be met
primarily through improvements to existing Phase 1 technology 2-stroke
engines. As presented previously, the Agency believes improvements to
Phase 1 technology 2-stroke engines should result in approximately a 30
percent reduction in the in-use emissions of Phase 1 engines, which
would be required to meet the proposed standards.
PPEMA members have indicated the proposed standards would require
significant research and development time as well as a large capital
investment to change existing production capabilities. The proposed
phase-in period plus the lead time anticipated after this rule is
finalized will allow manufacturers at least 6 years to make the
necessary changes to existing product lines in order to meet the
proposed standards, which should accommodate the manufacturers'
concerns regarding lead time.

[[Page 3966]]

The Agency has not proposed a handheld standard which would require
catalyst or 4-stroke technology. The Agency's experience with on-
highway technology indicates catalysts and engine technology evolved
together to prevent significant in-use deterioration. As previously
discussed in the section on the Class I engine standard, publicly
available information on bench aged catalysts used on 4-stroke engines
has become available in recent years. The Agency requests comment on
the relationship between bench aged and typical in-use aged catalyst
performance, and all available data on individual catalysts aged under
typical in-use conditions experienced by handheld equipment. The Agency
requests additional information on the new and in-use emission
performance of catalyst-equipped handheld engines. Two engine
manufacturers have introduced 4-stroke engines into string trimmer
applications. There are likely some applications, such as high power
chainsaws, where 4-stroke technology may not be feasible as a power
unit because of weight concerns. As previously discussed, the Agency
estimates that conversion to 4-stroke designs would cost the
manufacturer between $7 and $10 per engine. PPEMA has reported that in
1993 and 1994 the average retail price of a 2-stroke gasoline powered
string trimmer or leaf blower was approximately $100, and the average
retail price of a chainsaw was approximately $200. PPEMA members, who
do not currently manufacture 4-stroke handheld products, have expressed
concern regarding what they perceive to be the potential negative
impacts on sales which would result from a large increase in engine
costs, such as the cost of conversion to 4-stroke technology for
handheld engines. While EPA has no independent information on consumer
price sensitivity, it is concerned that the higher cost of equipment
which would likely result if catalyst or 4-stroke technology were
necessitated by a more stringent standard could result in significant
financial burden if the industry were to absorb the cost impact or
adverse impact on sales if the increase in cost were passed along to
the consumer. EPA is also concerned that mandating near term conversion
to 4-stroke technology could significantly increase the lead time
necessary before implementing the standards and delay the emission
benefits of the standards. The Agency requests comment on the market
concerns expressed by these engine manufacturers as well as the
potential impact on lead time of a more stringent standard and
information on the cost to the consumer and in-use emissions
performance if 2-stroke engines were required to be equipped with a
catalyst.
The Agency believes that during the next several years additional
information regarding the in-use performance of new technologies, such
as handheld 4-strokes, or traditional 2-strokes equipped with
catalysts, may become available, perhaps in response to the CARB Tier 2
program. In addition, EPA recognizes that technological advances and/or
cost reductions may occur after promulgation of the Phase 2 rule that
could make greater, but still cost-effective reductions feasible in
handheld emission levels. The Agency proposes to conduct a technology
review to address this possibility. In this review, EPA expects to
examine issues including the potential for further reductions from
existing 2-stroke engines, stratified charge 2-stroke technology,
direct injection 2-stroke injection, the use of catalysts on handheld
engines, and the conversion to 4-stroke technology. Following a
technical review, the Agency intends to publish a Notice of Proposed
Rulemaking in 2001 announcing any possible amendments to the standard
levels or other program elements, or EPA's intention to maintain the
existing handheld standards or program. The Agency expects that the
final rulemaking would be completed by 2002 and, if adopted, Phase 3
standards would be phased in on a percentage basis and over of a period
of time similar to Phase 2, beginning no earlier than model year 2007.
This schedule is intended to provide a minimum five year period before
the implementation of any Phase 3 standards in order to allow
manufacturers to recoup their investments in Phase 2 technology and
ensure the cost-effectiveness of the Phase 2 program.
The Agency is aware that CARB is considering a Tier 2 standard for
all handheld engines of 72 g/kW-hr HC+NOX, which is more
stringent than the levels being proposed for the Federal program. CARB
has stated this level could be met by the complete conversion of
existing 2-stroke technology to 4-stroke technology. The Agency
believes the costs and lead time which would be necessary to achieve a
72 g/kW-hr level for a national program could be considerably higher
than the program contained in today's proposal. However, as discussed
under Section IV.A of this proposal, section 209 of the CAA allows
California to set its own standards, considering criteria as they apply
to the State of California. However, as discussed below, the Agency
requests comment on whether 4-stroke technology for all handheld
applications would be appropriate for a Federal program at this time.
The Agency requests comment on all aspects of the proposed handheld
standards, and on what adjustments to the proposed Federal program
might be necessary to accommodate such standards.
d. Proposed California Standards. As mentioned previously, the
State of California has proposed standards for both handheld and
nonhandheld small SI engines which are considerably more stringent than
the standards which the Agency is proposing today. In this proposal,
the Agency has noted several reasons why the level of control being
considered by California is not being proposed today, including
uncertainties regarding cost, the possible impact of potential price
increases on consumer sales, and the lead time necessary for the
industry should they be required to adopt the required changes in
technology nationwide. However, EPA requests comment on the feasibility
in the Federal program of requiring such technology as anticipated by
the standards being considered by California, the level of emission
control which would result, the costs of such technology for a
nationwide program, and any impact on lead time necessary to allow the
adoption of such levels of control nationwide.
2. NMHC+NOX Emission Standards for Class I and II Natural
Gas Fueled Nonhandheld Engines
EPA is proposing optional separate standards for Class I and Class
II natural gas fueled engines only, due to the fact that for these
engines methane has very low ozone forming potential, i.e., low
reactivity. The total hydrocarbon (THC or HC) emissions from Phase 1
technology 4-stroke gasoline engines is between 5 and 10 percent
methane by mass. For natural gas engines, methane is on the order of 70
percent of total HC mass emissions. For natural gas fueled nonhandheld
engines, the Agency is proposing an optional NMHC+NOX
standard, as presented in Table 12.

[[Page 3967]]

Table 12.--NMHC + NOX Emission Standards for Natural Gas Fueled Nonhandheld Engines
[g/kW-hr]
----------------------------------------------------------------------------------------------------------------
Model year Model year Model year Model year Model year
Engine class 2001 2002 2003 2004 2005
----------------------------------------------------------------------------------------------------------------
Class I........................................ 23.0 23.0 23.0 23.0 23.0
Class II....................................... 16.7 15.3 14.0 12.7 11.3
----------------------------------------------------------------------------------------------------------------

These proposed NMHC+NOX standards have been adjusted so
that these standards are of equivalent stringency to the
HC+NOX standards for gasoline fueled engines, i.e., 11.3 g/
kW-hr NMHC+NOX is a deteriorated new engine
NMHC+NOX level, assuming a new engine THC+NOX
level of 9.3 g/kW-hr, a NMHC+NOX deterioration factor of
1.3, and a new engine split of 54 percent NMHC, 6 percent methane and
40 percent NOX.
The Agency is proposing that for natural gas fueled engines, the
standard be based on the level of NMHC+NOX reduction which a
Phase 2 technology gasoline fueled nonhandheld engine could be expected
to meet, not on the performance of a Phase 2 technology natural gas
fueled engine. Natural gas fueled engines represent less than 1 percent
of annual small engine sales and EPA recognizes that this is a
technology that as a matter of environmental policy it may be desirable
to encourage. The Agency believes very little environmental benefit
would occur from basing this optional NMHC+NOX standard on
the performance of Phase 2 technology natural gas engines. In
consideration of the energy and safety factors associated with using
natural gas technology rather than gasoline technology, EPA is
proposing the NMHC+NOX standard at a level that gives
manufacturers a greater incentive, as a result of the ABT program, to
use natural gas technology. The Agency requests comment on this
approach, and on whether it poses a meaningful risk of allowing over
generation of positive credits in the ABT program.
The NMHC+NOX standard would require an additional
testing burden for natural gas engine manufacturers, because these
manufacturers would need an additional emission analyzer to measure the
methane content of the exhaust gas. However, because natural gas engine
manufacturers have requested this optional NMHC standard, and the
Agency does not see any adverse effects for the formation of ozone, the
Agency believes it is appropriate for this proposal. EPA is not
proposing NMHC + NOX standards for handheld engines. EPA is
not aware of any natural gas fueled handhe

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A98-941. Public record. Not legal advice.