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

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 90

[FRL-6374-7]

RIN 2060-AE29

Phase 2 Emission Standards for New Nonroad Spark-Ignition

Handheld Engines At or Below 19 Kilowatts

AGENCY: Environmental Protection Agency (EPA).

ACTION: Supplemental notice of proposed rulemaking (SNPRM).

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SUMMARY: In this action, EPA is reproposing a second phase of emission

regulations to control emissions from new nonroad spark-ignition

handheld engines at or below 19 kilowatts (25 horsepower). The engines

covered by this proposal are used principally in handheld lawn and

garden equipment applications such as trimmers, leaf blowers and

chainsaws. EPA originally proposed standards for these engines in

January 1998, however, recent dramatic advancements in small engine

emission control technology have led EPA to repropose significantly

more stringent standards for handheld engines than originally proposed.

The newly proposed standards are expected to result in an estimated 78

percent reduction of emissions of hydrocarbons plus oxides of nitrogen

from those achieved under the current Phase 1 standards applicable to

handheld engines. The proposed standards for handheld engines are

scheduled to be phased in beginning with the 2002 model year. The

standards would result in important reductions in emissions which

contribute to excessively high ozone levels in many areas of the United

States.

Today's action also includes two provisions that would affect Phase

2 nonhandheld engines. EPA is proposing standards for two additional

classes of nonhandheld engines that would apply to engines below 100

cubic centimeters displacement used in nonhandheld equipment

applications. EPA is also proposing an option that allows manufacturers

to certify engines greater than 19 kilowatts and less than or equal to

one liter in displacement to the small engine Phase 2 standards. EPA

recently adopted Phase 2 regulations for small SI engines used in

nonhandheld equipment generally, and today's proposed standards for

additional classes of nonhandheld engines and the option to include

engines greater than 19 kilowatts and less than or equal to one liter

in displacement would partially modify the scope of the recent final

rule.

DATES: Written comments on this SNPRM must be submitted on or before

September 17, 1999. EPA will hold a public hearing on August 17, 1999

starting at 10:00 a.m.; requests to present oral testimony must be

received on or before August 13, 1999.

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, DC

20460, and to the EPA contact person listed below. Materials relevant

to this supplemental proposed 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 the National

Vehicle and Fuel Emission Laboratory, 2000 Traverwood; call (734) 214-

4270 for further information.

For further information on electronic availability of this

supplemental proposed rulemaking, see SUPPLEMENTARY INFORMATION below.

FOR FURTHER INFORMATION CONTACT: Philip Carlson, U.S. EPA, Office of

Mobile Sources, Engine Programs and Compliance Division, (734) 214-

4270; [email protected].

SUPPLEMENTARY INFORMATION:

Regulated Entities

Entities potentially regulated by this action are those that

manufacture or introduce into commerce new small spark-ignition

handheld or nonhandheld nonroad engines or equipment. Regulated

categories and entities include:

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Category Examples of regulated entities

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Industry............................ Manufacturers or importers of new

nonroad small (at or below 19 kW)

spark-ignition handheld or

nonhandheld engines and

equipment.

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

guide for readers regarding entities likely to be regulated by this

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

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

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

your company is regulated by this action, you 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.

Obtaining Electronic Copies of the Regulatory Documents

The preamble, proposed regulatory language and Supplemental Draft

Regulatory Impact Analysis are also available electronically from the

EPA Internet Web site. This service is free of charge, except for any

cost already incurred for Internet connectivity. The electronic version

of this supplemental proposed rule is made available on the day of

publication on the primary Web site listed below. The EPA Office of

Mobile Sources also publishes Federal Register notices and related

documents on the secondary Web site listed below.

1. http://www.epa.gov/docs/fedrgstr/EPA-AIR/(either select desired

date or use Search feature).

2. http://www.epa.gov/OMSWWW/(look in What's New or under the

specific rulemaking topic)

Please note that due to differences between the software used to

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

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

Table of Contents

I. Introduction

A. Background

B. Overview of Re-Proposed Program

II. Content of the Supplemental Proposed Rule

A. Emission Standards and Related Provisions

1. Class Structure

2. Emission Standards

3. NMHC+NOx Standard for Class I-B Natural Gas-Fueled Engines

4. Useful Life Categories

5. Selection of Useful Life Category

B. Averaging, Banking, and Trading

C. Compliance Program

1. Certification

2. Production Line Testing--Cumulative Summation Procedure

3. Voluntary In-Use Testing

4. Selective Enforcement Auditing

D. Flexibilities

1. Carry-Over Certification

2. Flexibilities for Small Volume Engine Manufacturers and Small

Volume Engine Families

3. Small Volume Engine Manufacturer Definition

4. Small Volume Engine Family Definition

5. Flexibilities for Equipment Manufacturers and Small Volume

Equipment Models

6. Small Volume Equipment Manufacturer Definition

7. Small Volume Equipment Model Definition

[[Page 40941]]

E. General Provisions and Recommendations

1. Definition of Handheld Engine

2. Engines Used in Recreational Vehicles and Applicability of

the Small SI Regulations to Model Airplanes

3. Engine Labeling

4. Emission Warranty

III. Projected Impacts

A. Environmental Benefit Assessment

1. Roles of HC and NOx in Ozone Formation

2. Health and Welfare Effects of Tropospheric Ozone

3. Estimated Emissions Impact of the Supplemental Proposed

Regulations

4. Health and Welfare Effects of CO Emissions

5. Health and Welfare Effects of Hazardous Air Pollutant

Emissions

B. Cost and Cost-Effectiveness

1. Class I-A and Class I-B

2. Engine Technologies for Handheld Engines

3. Handheld Engine Costs

4. Handheld Equipment Costs

5. Handheld Operating Costs

6. Cost Per Engine and Cost-Effectiveness

IV. Public Participation

V. Administrative Requirements

A. Administrative Designation and Regulatory Analysis

B. Regulatory Flexibility

C. Paperwork Reduction Act

D. Unfunded Mandates Reform Act

E. National Technology Transfer and Advancement Act

F. Executive Order 13045: Protection of Children's Health

G. Executive Order 12875: Enhancing the Intergovernmental

Partnership

H. Executive Order 13084: Consultation and Coordination with

Indian Tribal Governments

VI. Statutory Authority

I. Introduction

A. Background

On January 27, 1998, EPA issued a Notice of Proposed Rulemaking

(NPRM) proposing a second phase of regulations to control emissions

from new handheld and nonhandheld nonroad SI engines at or below 19

kilowatts (25 horsepower) hereafter referred to as ``small SI engines''

(63 FR 3950). This action was preceded by a March 27, 1997, Advance

Notice of Proposed Rulemaking (62 FR 14740). EPA solicited comment on

all aspects of the January 1998 NPRM. EPA held a public hearing on

February 6, 1998, and the public comment period for the January 1998

NPRM closed March 13, 1998. EPA finalized Phase 2 standards and

compliance program requirements for Class I and Class II nonhandheld

engines on March 30, 1999 (64 FR 15208). In the final rule for

nonhandheld engines, EPA noted that it planned to address the Phase 2

program for handheld engines in future Federal Register documents. The

purpose of today's supplemental proposal is to propose revised Phase 2

standards and compliance program requirements for handheld engines.

Today's supplemental proposal also includes proposed standards and

compliance program requirements for two newly designated classes of

nonhandheld engines with displacements below 100 cubic centimeters

(cc), hereafter referred to as Class I-A and Class I-B engines.

Today's proposed action is taken in response to section 213(a)(3)

of the Clean Air Act which requires EPA's standards for nonroad engines

and vehicles to achieve the greatest degree of emission reduction

achievable through the application of technology which the

Administrator determines will be available, giving appropriate

consideration to cost, lead time, noise, energy and safety factors. The

standards and other compliance program requirements being proposed

today are intended to satisfy this Clean Air Act mandate.

The January 1998 NPRM contained lengthy discussion of the first set

of proposed standards, the expected costs of their implementation, the

technologies that EPA expected manufacturers would use to meet the

standards, and the potential costs and benefits of adopting more

stringent standards such as those that were then under consideration by

the California Air Resources Board (ARB). In the January 1998 NPRM, EPA

explicitly asked for comment regarding the level of the proposed

standards and the impacts and timing for implementing more stringent

standards, so as to allow EPA to establish the most appropriate

standards in the final rule. In particular, EPA requested comment on

the impacts and timing for implementing emission standards that would

require the same types of technology as anticipated by proposed rules

under consideration at that time by the California ARB.

After the close of the comment period and upon reviewing the

information supplied during and after the comment period, EPA

determined that it was desirable to get further details regarding the

technological feasibility, cost and lead time implications of meeting

standards more stringent than those contained in the January 1998 NPRM.

EPA's January 1998 NPRM already contained estimates of the costs and

feasibility of more stringent standards. Some commenters had charged

that, based on these 1998 NPRM discussions, EPA's proposed standards

would not be stringent enough to satisfy the stringency requirements of

Clean Air Act section 213(a)(3). For the purpose of gaining additional

information on feasibility, cost and lead time implications of more

stringent standards, EPA had several meetings, phone conversations, and

written correspondence with specific engine manufacturers, with

industry associations representing engine and equipment manufacturers,

with developers of emission control technologies and suppliers of

emission control hardware, with representatives of state regulatory

associations, and with members of Congress. EPA also sought information

relating to the impact on equipment manufacturers, if any, of changes

in technology potentially required to meet more stringent standards

than were contained in the January 1998 NPRM. Additionally, EPA

received numerous comments on the January 1998 NPRM requesting closer

harmonization with the compliance program provisions that were

ultimately adopted by the State of California. In some cases, EPA also

discussed these harmonization issues with manufacturers and industry

association representatives to improve the Agency's understanding of

the needs and benefits to the industry of such harmonization.

As stated on prior occasions, in adopting final Phase 2

requirements for small SI engines, EPA wished to consider all relevant

information that became available during the rule development process.

This includes information received during the comment period on the

January 1998 NPRM, and, to the extent possible, important information

which became available after the formal comment period had concluded on

the January 1998 NPRM. To the extent that post-NPRM information has

expanded or updated the knowledge of the Agency regarding technological

feasibility, production lead time estimates for incorporating improved

designs, costs to manufacturers, costs to consumers and similar

factors, it is reasonable to expect that the improved information may

result in changing assessments of how a pending rule can best achieve

regulatory goals compared to what had been expected at the time of the

January 1998 NPRM. This is especially true in the case of a rulemaking

concerning an industry, like the small SI engine industry, that is

undergoing relatively rapid technological innovation.

EPA published a Notice of Availability on December 1, 1998

highlighting the additional information gathered in response to the

January 1998 NPRM (see 63 FR 66081). After analyzing this information,

the Agency concluded that more stringent standards for Class I

nonhandheld engines, used in applications such as lawn mowers,

[[Page 40942]]

consistent with those adopted by California were indeed achievable on

the national scale with existing, well-understood overhead valve

technology. EPA had discussed issues regarding the use of this

technology in nonhandheld equipment in the January 1998 NPRM. In

response to the additional information and to the comments on the NPRM,

EPA adopted a final rule for nonhandheld engines that included emission

standards considerably more stringent than those proposed for Class I

nonhandheld engines in the January 1998 NPRM. In the same final rule,

EPA also adopted standards for Class II engines at the levels proposed

in the January 1998 NPRM that were based on the use of the same

overhead valve technology.

However, since the publication of the January 1998 NPRM, there have

been rapid and dramatic advances in emission reduction technologies for

handheld engines used in applications such as trimmers, brush cutters,

and chainsaws. EPA had not been able to fully evaluate these

technologies or discuss their possible availability at the time of the

January 1998 NPRM. Having reviewed the available information regarding

these new technologies, EPA now believes this new information supports

proposed Phase 2 standards for handheld engines that are significantly

more stringent than those proposed in the January 1998 NPRM. In light

of this information, and in the interest of providing an opportunity

for public comment on the stringent levels being considered for the

Phase 2 handheld engine emission standards and the technologies

available for meeting these standards, EPA is reproposing the Phase 2

regulations for handheld engines in this Supplemental Notice of

Proposed Rulemaking (SNPRM).

With today's SNPRM, EPA is also proposing standards for two new

classes of small displacement nonhandheld engines. EPA requested

comment on the need for such standards in the January 1998 preamble and

received comments from a number of engine manufacturers supporting such

standards. Originally, the Agency did not propose different standards

for small displacement nonhandheld engines citing the availability of

the averaging, banking and trading program as a reason for not

proposing separate standards. However, because the standards EPA

recently finalized for nonhandheld Class I engines are more stringent

than originally proposed in the January 1998 NPRM and because it is

technologically more difficult to meet a given level of emissions as

the engine displacement is decreased, manufacturers who would likely

produce such small displacement engines would not likely be able to

meet the Phase 2 Class I standards recently finalized and would not be

able to produce such small displacement nonhandheld engines even if

they could take advantage of the averaging, banking and trading

program. Therefore, EPA is proposing standards for two classes of small

displacement nonhandheld engines. The first small displacement class

would cover nonhandheld engines with displacements below 66 cc and

would be referred to as Class I-A engines. The second small

displacement class would cover nonhandheld engines at or above 66 cc

and below 100 cc and would be referred to as Class I-B engines.

In response to a request from small SI engine manufacturers,

today's SNPRM is proposing to allow manufacturers the option of

certifying engines greater than 19 kW and less than or equal to one

liter in displacement to the small SI engine Phase 2 regulations for

nonhandheld engines beginning with the 2001 model year. Because of

their size, these engines would not need to be certified under the

current Phase 1 small SI engine program. However, because there are a

small number of these engines that are primarily derivatives of other

certified small SI engines at or below 19 kW, EPA believes it would be

appropriate for manufacturers to have the option to certify these

engines to the Phase 2 requirements for small SI engines. Engines

certified under this option would be required to certify for the

longest useful life period of 1,000 hours. This requirements of this

option would be consistent with a recently adopted requirement by the

California ARB that allows engines above 19 kW and less than or equal

to one liter in displacement to certify as small SI engines with a

useful life of 1,000 hours.

EPA is also proposing a number of changes to the compliance program

for handheld engines originally proposed in the January 1998 NPRM. Most

of these proposed changes are to make the Phase 2 handheld engine

compliance program the same as the compliance program requirements

recently finalized for Phase 2 nonhandheld engines. The proposed

requirements for handheld engines are intended to establish a

consistent approach to the compliance program for all nonroad small SI

engines.

The reader is referred to the March 1999 final rule for nonhandheld

engines, the December 1998 Notice of Availability, the January 1998

NPRM, as well as to the docket for this rulemaking, for the range of

information upon which the Agency has relied in reproposing Phase 2

standards and compliance program requirements for small SI handheld

engines, and for proposing standards for Class I-A and I-B nonhandheld

engines.

B. Overview of Re-Proposed Program

The following provides an overview of the reproposed Phase 2

provisions for handheld engines and the proposed provisions for Class

I-A and Class I-B nonhandheld engines. Additional detail explaining the

program as well as discussion of information and analyses which led to

the selection of these proposed requirements is contained in subsequent

sections. The reader should note there are a number of provisions

contained in the January 1998 NPRM that EPA is not revising in this

SNPRM. Thus, those proposed provisions remain as part of EPA's proposed

Phase 2 program for handheld engines. Such provisions may not be

addressed in detail in this SNPRM, but they could become part of the

final program for Phase 2 handheld engines and will be addressed in the

final rulemaking document that establishes the Phase 2 requirements for

handheld engines, as appropriate.

Consistent with Phase 1 rules, the recently finalized Phase 2

program for nonhandheld engines and this SNPRM distinguish between

engines used in handheld equipment and those used in nonhandheld

equipment. In today's action, Phase 2 emission standards are proposed

for distinct engine size categories referred to as ``engine classes''

within the handheld engine equipment designation. Table 1 summarizes

the re-proposed hydrocarbon plus oxides of nitrogen (HC+NOx) emission

standards for Class III, Class IV, and Class V handheld engines in

grams per kilowatt-hour (g/kW-hr) and when these standards are proposed

to take effect under this SNPRM. For comparison purposes, Table 2

contains the Phase 2 standards for handheld engines originally proposed

in the January 1998 NPRM. The standards originally proposed in the

January 1998 NPRM would have required manufacturers to certify a

specified percentage of their sales to the proposed Phase 2 standards

during the 2002 to 2005 model years. (The proposed percentages were 20

percent in 2002, 40 percent in 2003, 70 percent in 2004, and 100

percent in 2005.) Table 2 also lists the effective standards factoring

in the mix of Phase 1 and Phase 2 engines assuming the proposed phase

in schedule contained in the January 1998 NPRM.

[[Page 40943]]

Table 1.--Re-Proposed Phase 2 HC+NOx Emission Standards for Handheld Engines

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Re-Proposed HC+NOx Standards (g/kW-hr) by Model Year

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Engine Class 2008 and

2002 2003 2004 2005 2006 2007 later

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Class III................... 226 200 150 100 50 50 50

Class IV.................... 187 168 129 89 50 50 50

Class V..................... .......... .......... 138 129 110 91 72

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Table 2.--Originally Proposed Phase 2 HC+NOx Emission Standards for Handheld Engines and Effective Dates

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Originally Effective HC+NOx Standards (g/kW-hr) by Model

Proposed HC+NOx Year

Engine Class Standards (g/kW------------------------------------------------

hr) in January 2005 and

1998 NPRM* 2002 2003 2004 later

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

Class III...................................... 210 282 264 237 210

Class IV....................................... 172 231 217 194 172

Class V........................................ 116 156 146 131 116

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*The originally proposed Phase 2 standards were to be phased in at 20% in 2002, 40% in 2003, 70% in 2004 and

100% in 2005 and later model years.

After complete phase-in, the re-proposed emission standards

contained in this SNPRM for handheld engines (see Table 1) are

considerably more stringent than the proposed standards included in the

January 1998 NPRM (see Table 2). In addition, except for Class V, the

reproposed standards are more stringent during all years of the phase-

in than were originally proposed in the January 1998 NPRM. For Class V,

the reproposed standards have been delayed until 2004 to allow

manufacturers additional time to comply with the significantly more

stringent standards included in today's SNPRM. EPA believes that the

limited emission reductions forfeited in the short term with the

delayed implementation date for Class V engines would be offset in the

long term by significantly greater emission reductions once the

reproposed standards take effect due to the increased stringency of the

reproposed Phase 2 standards.

The more stringent reproposed standards reflect the Agency's

analysis of the information received in direct response to the

questions posed in the January 1998 NPRM concerning the desirability

and feasibility of more stringent standards than the levels first

proposed, as well as other information made available to the Agency

since the January 1998 NPRM. When fully phased in, these newly proposed

Phase 2 standards are expected to result in an estimated 78 percent

annual reduction in combined HC+NOx emissions from small SI

handheld engines compared to the Phase 1 emission requirements for such

engines. The HC+NOx reductions expected from the standards

contained in today's SNPRM represent more than a 100 percent increase

in reductions over the standards proposed in the January 1998 NPRM once

the Phase 2 standards are fully phased in.

One feature of the newly proposed Phase 2 handheld standards is

that they would decline over a number of model years, allowing

manufacturers to transition orderly and efficiently from their existing

Phase 1 engine designs and technologies to those necessary to meet the

new Phase 2 requirements. In addition, as described later, EPA is

proposing a certification averaging, banking and trading (ABT) program

that would include handheld engines. As an example, under today's

proposal, a manufacturer of Class III engines would be required to meet

a gradually decreasing standard on average for this segment of its

product line during model years 2002 through 2006. During this time

frame, EPA anticipates that a manufacturer would begin selling engine

designs certified to meet the California ARB's Tier 2

HC+NOx standard of 72 g/kW-hr nationwide while continuing to

change more and more of its Class III engine designs to designs capable

of meeting a 50 g/kW-hr standard, averaging emission performance with

older designs and thus meeting on average the declining standard in

effect for that model year as noted in Table 1. Finally, EPA expects

that the manufacturer would have had sufficient time and resources to

change the remainder of its engine designs and production tooling to

meet a 50 g/kW-hr standard on average for all of its Class III engines

by 2006 or shortly thereafter. Because the reproposed standards are a

fleet average standard, a manufacturer could continue selling Class III

engines certified above the 50 g/kW-hr HC+NOx standard even

after the 2006 model year provided it has sufficient ABT credits from

engines certified below the standard in the same model year, credits

banked from previous model years, and/or credits obtained from another

small SI engine manufacturer.

As noted earlier, EPA is also proposing to add two new classes of

small SI nonhandheld engines that were not proposed in the January 1998

NPRM. As proposed, Class I-A would cover engines with displacement less

than 66 cc that are installed in nonhandheld equipment. Class I-B would

cover engines equal to or greater than 66 cc but less than 100 cc that

are installed in nonhandheld equipment. Table 3 contains the proposed

HC+NOx standards for Class I-A and Class I-B engines.

Without these added classes and their specific standards, all engines

less than 225 cc would be included in Class I and would have to meet

the recently finalized Phase 2 standard adopted for Class I engines

(also noted in Table 3).

[[Page 40944]]

Table 3.--Proposed Phase 2 HC+NOx Emission Standards for Class I-A and

Class I-B Engines and the Final Phase 2 HC+NOx Emission Standard for

Class I Engines

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HC+NOx

Engine Class Standard g/ Time

kW-hr frame

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

Class I-A........................................ 50 2000

Class I-B........................................ 40 2000

Class I.......................................... I6.1 2007

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EPA is proposing the Class I-A and Class I-B designations in

response to comments submitted on the January 1998 NPRM indicating that

new applications for nonhandheld equipment were being developed which

would use engines in these displacement ranges. Because it is generally

more technically difficult to control emissions of smaller engines, at

this time EPA believes it is too costly to require manufacturers to

design engines under 100 cc for use in nonhandheld equipment to achieve

the Phase 2 Class I HC+NOx standard of 16.1 g/kW-hr and

still have the power and performance capabilities to be useful in

powering such equipment. Although EPA does not anticipate that

significant numbers of equipment in this category will be produced in

comparison to the other engine classes, EPA believes it is reasonable

to provide the opportunity to market such equipment since, if sold,

such equipment will have reasonably demonstrated consumer value.

Further, at the low production volumes anticipated, the contribution to

the emissions inventory from such small engines would be extremely

small.

As noted above, EPA is proposing to allow manufacturers the option

of certifying engines greater than 19 kW and less than or equal to one

liter in displacement to the small SI engine Phase 2 regulations

beginning with the 2001 model year. Because of their power rating,

these engines are currently unregulated by EPA and therefore are not

required to meet any emission standards at the federal level. EPA

recently issued a Notice of Proposed Finding (see 64 FR 6008) which

announced EPA's intent to propose regulations for ``large nonroad SI

engines.'' EPA is expecting to issue a NPRM for large nonroad SI

engines sometime in 2000. Based on information released along with the

Notice of Proposed Finding, EPA expects to propose that engines greater

than 19 kW and less than one liter in displacement would be required to

comply with the small SI nonroad engine requirements. Therefore,

allowing manufacturers to optionally elect to certify engines above 19

kW with displacement less than or equal to one liter is consistent with

the program EPA expects to propose for large SI nonroad engines. If for

some reason, EPA does not finalize such a requirement for engines above

19 kW and less than or equal to one liter in displacement as part of

the large SI nonroad engine program, EPA would expect to consider

reasonable approaches to minimize disruption to the affected engine

industry. In addition, interested parties would be able to suggest any

approaches they believed were appropriate in comments on the large SI

nonroad engine NPRM.

To offer an incentive for the early introduction of clean engines

and to provide engine manufacturers with additional flexibility in

meeting the reproposed Phase 2 handheld standards, EPA is proposing to

make the recently adopted ABT program for Phase 2 nonhandheld engines

also available to handheld engines, as well as to Class I-A and Class

I-B engines. EPA did not originally propose an ABT program for handheld

engines in the January 1998 NPRM. However, because of the increased

stringency of the proposed handheld engine standards contained in this

SNPRM, and after manufacturers have indicated an interest in such a

program, EPA believes that an ABT component can be an integral part of

the Phase 2 standards being proposed for Classes III, IV, and V as well

as Classes I-A and I-B.

The standards and the compliance program elements being reproposed

today also consider expected in-use deterioration. In contrast to the

Phase 1 rules which only regulate the emission performance of engines

when new, the Phase 2 standards being proposed today would require

manufacturers to account for expected deterioration in emission

performance as an engine is used. Manufacturers would be required to

evaluate the emission deterioration performance of their engine designs

and certify their designs to meet the proposed standards after

factoring in the anticipated emission deterioration of a typical in-use

engine over its useful life. As contained in today's SNPRM, a handheld

engine manufacturer would select from one of three different useful

life categories based on the type of engine and equipment in which the

engine is installed. Under the proposed program, handheld engines would

be certified to the emissions standards for a period of 50, 125, or 300

hours of use based on design features and the intended use of the

installation. (A high priced piece of industrial equipment would more

likely be equipped with an engine with design features intended to make

it most durable and thus certified to the emission standards assuming a

useful life period of 300 hours, for example.) For Class I-A engines,

EPA is proposing the handheld engine useful life periods of 50, 125,

and 300 hours. For Class I-B engines, EPA is proposing that a

manufacturer would choose to certify for a useful life period of 125,

250, or 500 hours.

The proposed certification program would require manufacturers to

determine an appropriate methodology for accumulating hours of

operation to ``age'' an engine in a manner which duplicates the same

type of wear and other deterioration mechanisms expected under typical

consumer use which could affect emission performance. EPA expects bench

testing would be used to conduct this aging operation because this can

save time and perhaps money, but actual in-use operation (e.g.,

trimming grass) would also be encouraged. Emission tests would be

conducted when the engine is new and when it has finished accumulating

the equivalent of its useful life. The engine would have to pass

standards both when it is new and at the end of its designated useful

life to qualify for certification. Additionally, the new engine and

fully aged engine emission test levels would be compared to determine

the expected deterioration in emission performance for other engines of

this design; such engines could be tested as they come off the end of a

production line, in which case their new engine emission levels would

be adjusted by the deterioration factor determined from the

certification engine to predict the emission performance or the engine

at the end of its useful life.

Selection of engines for testing as they come off the production

line would be conducted according to the provisions of the proposed

Production Line Testing (PLT) program. This program is explained in

more detail in a following section but, briefly, its intent is to allow

a sampling of production line engines to be tested for emission

performance to assure that the design intent as certified prior to

production has been successfully transferred by the manufacturer to

mass production. The volume of PLT testing required by the manufacturer

would depend on how close the test results from the initial engines

tested are to the standards; if these test engines indicate the design

is particularly low emitting, few engines would need to be tested,

while those designs with emission levels very close to the standards

would need additional tests to make sure the design is being

[[Page 40945]]

produced with acceptable emission performance.

While the proposed compliance program would not require the

manufacturer to conduct any in-use testing to verify continued

satisfactory emission performance in the hands of typical consumers, an

optional program for such in-use testing is being proposed. EPA

believes it is important for manufacturers to conduct in-use testing to

assure the success of their designs and to factor back into their

design and/or production process any information suggesting emission

problems in the field. While not proposing to mandate such a program,

the proposal would encourage such testing by allowing a manufacturer to

avoid the cost of the PLT program for a portion of its product line by

instead supplying data from in-use engines. Under this voluntary in-use

testing program, up to twenty percent of the engine families certified

in a year could be designated for in-use testing by the manufacturer.

For these families, no PLT testing would be required for two model

years including that model year. Instead, the manufacturer would select

a minimum of three engines off the assembly line or from another source

of new engines and emission test them when aged to at least 75 percent

of their useful life under typical in-use operating conditions for this

engine. The information relating to this in-use testing program would

be shared with EPA. If any information derived from this program

indicates a possible substantial in-use emission performance problem,

EPA anticipates the manufacturer would seek to determine the nature of

the emission performance problem and what corrective actions might be

appropriate. EPA would offer its assistance in analysis of the reasons

for unexpectedly high in-use emission performance and what actions

might be appropriate for reducing these high emissions.

As proposed in the January 1998 NPRM, EPA could choose to conduct

its own in-use compliance program whether or not a manufacturer chose

to conduct such a voluntary in-use testing program. If EPA were to

determine that an in-use noncompliance investigation was appropriate,

the Agency expects it would conduct its own in-use testing program,

separate from any voluntary manufacturer testing program, to determine

whether a specific class or category of engines is complying with

applicable standards in use.

All of the general provisions of this proposed compliance program

have been adopted as part of California's compliance program for these

classes of small engines.\1\ Importantly, the testing and data

requirements, engine family descriptors, compliance statements and

similar testing and information requirements of these proposed federal

Phase 2 handheld regulations are, to the best of EPA's knowledge, the

same general compliance program requirements adopted by the California

ARB. This will be advantageous to manufacturers marketing the same

product designs in California as in the other states, as they would

need to prepare only one set of certification application information,

supplying one copy to the California ARB for certification in the State

of California and one copy to EPA for federal certification. This

similar treatment under the regulations would also extend to the

proposed PLT program and would also likely extend to the proposed

optional in-use testing program, such that any test data and related

information developed for the California ARB should also satisfy the

federal regulatory requirements being proposed today.

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

\1\ While the voluntary in-use test program has not been

codified in the California ARB Tier 2 rules for these engines, EPA

has discussed the program with the California ARB. EPA expects that

the California ARB would consider allowing manufacturers to

participate in the voluntary in-use test program and receive the

same decreased PLT testing as contained in this proposal.

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

In addition to the regulatory provisions outlined above, this

proposal includes special provisions for small volume engine

manufacturers, small volume engine families produced by other engine

manufacturers, small volume equipment manufacturers who rely on other

manufacturers to supply them with these small SI handheld engines, and

small volume equipment models. These special small volume handheld

provisions are intended to lessen the demonstration requirements and in

some cases delay the effective dates of the standards so as to smooth

the transition to these Phase 2 requirements. This is especially

important for small volume applications because the eligible

manufacturers involved may not have the resources to ensure that

engines complying with the proposed Phase 2 standards will be available

within the time frames otherwise envisioned under these regulations.

Since these proposed flexibility provisions are limited to small volume

applications, the risk to air quality should be negligible. However,

without these provisions, the economic impacts to small volume

manufacturers could be increased and the possibility of reduced product

offering would be greater, especially for those products intended to

serve niche markets which satisfy special needs. The proposed small

volume flexibilities are explained more fully in section II.D. of

today's SNPRM and are detailed in the proposed regulations.

II. Content of the Supplemental Proposed Rule

The following sections provide additional detail on the provisions

of the supplemental proposed rule outlined above.

A. Emission Standards and Related Provisions

1. Class Structure

This SNPRM retains the same basic class structure for small SI

engines as implemented in the Phase 1 regulations and proposed in the

January 1998 NPRM with the addition of the proposed designations of

Class I-A and Class I-B engines. The Phase 1 rules established separate

classes based on engine size in recognition of the greater difficulty

in controlling emissions from smaller displacement engines compared to

larger displacement engines. The Phase 1 program also separated engine

classes into those intended for use in equipment typically carried by

the operator during its use such as chain saws or string trimmers

(referred to as handheld equipment) and those engines normally used in

equipment which is not carried by the operator such as lawnmowers and

generators (referred to as nonhandheld equipment). These usage

distinctions seemed appropriate because the small engine industry is

for the most part split between these two categories, with very few

manufacturers making both handheld engines and nonhandheld engines. In

addition, the nature of these two industry segments is quite different.

For example, handheld engine manufacturers produce engines primarily

for use in equipment they also manufacture. In contrast, nonhandheld

engine manufacturers typically supply engines to separate nonhandheld

equipment manufacturers and do not make their own equipment.

As noted above, EPA is proposing standards for two new classes of

nonhandheld engines in this SNPRM. Under the existing Phase 1 program,

Class I includes all nonhandheld engines with displacements below 225

cc. EPA received several comments on the January 1998 NPRM supporting

the adoption of standards for additional nonhandheld categories below

225 cc. EMA requested the creation of a new class of small displacement

nonhandheld engines in order to fill a void in the equipment market

left by

[[Page 40946]]

products that would no longer be able to utilize 2-stroke engines if

the proposed Phase 2 Class I standards were adopted. They noted that

production of some 4-stroke side valve (SV) engines under 76 cc had

already been discontinued with the advent of Phase 1 standards due to

practicality, and that with the more stringent standards proposed for

Phase 2, even greater numbers of these engines would be eliminated from

the market. EMA also noted that the California ARB had proposed an

HC+NOX standard of 72 g/kW-hr for engines below 60 cc,

recognizing that engines below 60 cc are designed for functionally

different types of equipment than those above 60 cc. Honda commented

that the Phase 1 standards and the proposed Phase 2 standards for Class

I are not appropriate for the smallest engines in the class because of

the increased difficulty in reducing emissions with small displacement

engines. Honda recommended the addition of a small displacement

nonhandheld engine class with the emission standard harmonized with the

California ARB's standard for 0-60 cc engines. Suzuki recommended the

addition of a small displacement nonhandheld class of 100 cc and less,

arguing that overhead valve (OHV) engines in this size already have

difficulty meeting the Phase 1 HC+NOX standards because of

large combustion chamber surface-to-volume ratios. They commented that

the addition of a new class of small displacement nonhandheld engines

would allow the use of lightweight 4-strokes in applications that

require mobility but do not qualify as multi-positional under the

handheld classification. Suzuki recommended that the HC+NOX

standard should be 40 g/kW-hr, with the same durability classes and in-

use programs as proposed for Class I engines. Tecumseh noted that they

foresee a need for 4-stroke engines in the 50-100 cc range, which would

not be able to meet the proposed Phase 2 Class I standard. They

commented that an additional class below 225 cc was needed and they

also suggested a 40 g/kW-hr HC+NOX standard for 50-100 cc

engines.

Based on the fact that it is more difficult for smaller

displacement engines to meet the same emission standards as larger

displacement engines, EPA believes that a standard which is technically

feasible and economically viable for the larger displacement Class I 4-

stroke engines (which have displacements typically above 125 cc and are

primarily used in lawnmowers), could be too costly for manufacturers to

be achievable for smaller displacement engines that manufacturers would

need to use in new equipment applications requiring the use of much

smaller displacement nonhandheld engines. Therefore, it appears that

the span of engine displacements within Class I is too large to allow

for a technologically appropriate engine standard for both the larger

and smaller engines in that class. Although this has not significantly

affected manufacturers' ability to produce engines for applications

under the Phase 1 rules, EPA believes this may not be the case in the

future based on the comments noted above. If EPA were to retain the

broader Class I category, products like those noted by manufacturers in

their comments above would need to be dropped or could not be

introduced. Thus, to allow for the marketing of a wide range of

nonhandheld products, including applications that could be powered by

the smallest displacement engines, EPA is proposing to subdivide the

Class I engine category by adding two new nonhandheld engine classes

and redesignating the span of displacements covered by Class I. Under

today's proposal, Class I-A would include nonhandheld engines below 66

cc, Class I-B would include nonhandheld engines equal to or greater

than 66 cc but less than 100 cc, and Class I would cover engines equal

to or greater than 100 cc but less than 225 cc. The proposed

displacement range for Class I-A would harmonize the requirements with

those adopted by the California ARB. Based on the comments submitted by

manufacturers, EPA believes the proposed displacement range for Class

I-B is appropriate and should not compromise the emissions benefits of

the recently finalized Phase 2 program for Class I engines since more

than 99 percent of the currently certified Class I engines (based on

estimated production levels submitted by manufacturers to EPA) have

displacements greater than 100 cc. EPA requests comments on EPA's

proposal for Class I-A and I-B engines and new information regarding

manufacturer's plans to develop and market such engines.

If the proposed Class I-A and I-B standards are adopted, EPA would

not expect that manufacturers would shift significant production from

Class I to the smaller displacement engines. In addition, EPA would not

expect that manufacturers would certify 2-stroke engines to the

proposed Class I-A and I-B standards and use such engines in popular

Class I equipment applications such as walk-behind mowers. If such a

change in the market were to occur, the benefits of the recently

finalized Phase 2 program for Class I engines which anticipates a

turnover to clean 4-stroke OHV technology would be seriously

compromised. EPA requests comments on the potential for 2-stroke

engines to meet the proposed Class I-A and I-B standards and the

potential for such engines to be used in existing nonhandheld

applications such as mowers.

As noted above, EPA is proposing an option that would allow

manufacturers to certify engines above 19 kW and less than one liter in

displacement to the small SI engine program beginning with the 2001

model year. Such engines would need to be certified to the Phase 2

requirements for the appropriate class of nonhandheld engines, which is

expected to be the Class II requirements (i.e., engines above 225 cc in

displacement), for a useful life period of 1,000 hours. EPA requests

comment on the requirements of this proposed option.

2. Emission Standards

As noted earlier, EPA is proposing more stringent HC+NOX

emission standards for all three classes of handheld engines than were

originally proposed in the January 1998 NPRM. The Clean Air Act at

section 213(a)(3) requires the Agency to adopt standards that result in

the greatest emission reductions achievable through the application of

technology which the Administrator determines will be available, giving

appropriate consideration to cost, lead time, noise, energy and safety

factors. As a result of information now available, much of it in the

form of comments received during and after the comment period on the

January 1998 NPRM, and due to the rapid technological advances the

industry is making in an effort to design engines which are more

environmentally friendly, EPA believes that standards more stringent

than those originally proposed are achievable during the next decade.

Extensive discussions over several months with several manufacturers of

handheld engines and equipment have provided EPA with information to

decide on the standards and phase in schedules being proposed today.

(Records of these discussions have been included in the docket for this

rule.) Specific advances for 2-stroke engines include stratified

scavenged engines and novel approaches to improve fuel metering, both

of which should allow 2-stroke engines to have substantially lower

emissions and remain viable

[[Page 40947]]

powerplants for handheld equipment. In addition, there have been recent

technical advances for handheld engines including the feasibility of

catalysts and the expanded application of the mini 4-stroke design.

While not all technologies under consideration have been fully

proven on a production engine operated under typical in-use conditions,

EPA is confident that these and other technologies will be proven in

the near future providing the industry with several alternatives for

emission control. Certification or manufacturer prototype information

as listed in Chapter 3 of the Supplemental Draft RIA, demonstrates that

currently available technology can achieve lower emission levels than

the standards set by the California ARB, especially if one considers

the use of a low-efficiency catalyst. For low engine out emissions,

prototypes of the LE Engine technology developed by John Deere and the

stratified scavenging design developed by Komatsu Zenoah have shown the

ability for 2-stroke engines to achieve very low emission levels in the

range of 36 g/kW-hr to 66.8 g/kW-hr with the John Deere technology

2 (assuming a emissions deterioration factor of 1.1 over the

useful life of the engine) and 67 g/kW-hr with the Komatsu Zenoah

technology (based on California ARB certification information for the

2000 model year). A low efficiency catalyst could lower these emission

levels by 20 g/kW-hr and result in emission levels of 16 g/kW-hr to 47

g/kW-hr HC+NOX. In addition, mini 4-stroke engines in Class

IV have been certified to a range of new engine values from 15.7 g/kW-

hr to 37.6 g/kW-hr. With an assumed emissions deterioration factor of

1.5 over the useful life of the engine, the mini 4-stroke engines would

yield emissions at a full useful life of 23.6 g/kW-hr to 56.4 g/kW-hr.

Use of a catalyst that achieves a 20 g/kW-hr reduction on the highest

emitting 4-stroke engine would yield an emissions level of 36.4 g/kW-hr

HC+NOX. These stringent emission levels show that very low

emission standards for handheld engines are feasible especially given

the inherently low deterioration of 2-stroke emissions, and the ability

to use a low efficiency catalyst or thermal reactor on some engine

families.3 EPA requests comment on the ability of the John

Deere LE technology, the Komatsu Zenoah stratified scavenging design,

or mini 4-stroke technologies to accommodate a catalyst. Specific areas

on which EPA is requesting comment include the ability to provide

sufficient engine and muffler cooling with each of the technologies,

catalyst conversion efficiencies, and engine or equipment design

changes needed to accommodate a catalyst specifically in response to

the U.S. Department of Agriculture (USDA) Forest Service requirements

for equipment used on Federal land.

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

\2\ The reader is directed to items IV-G-30, IV-G-32, and IV-B-

05 of Docket A-96-55 for further information on the John Deere

technology.

\3\ In addition to the technologies described in today's notice

other potential emission control technologies have been examined by

EPA. Two of these technologies, a spark ignition technology by

Pyrotek and a vaporizing carburetor technology by Boswell, are

described in further detail in Chapter 3 of the Draft Supplemental

RIA.

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

The emissions information cited above is from engines designed for

use in Class III or Class IV applications. In most cases, EPA believes

similar designs should be able to be designed for Class V applications

as well. However, because most Class V engines are used in higher power

commercial applications, the ability to utilize a ``low'' efficiency

catalyst (and the related muffler skin and exhaust plane temperatures

that result from the throughput of exhaust emissions through the

catalyst) may be inhibited due to the USDA Forest Service requirements

for equipment used on Federal land. In addition, the high power

equipment in Class V requires additional cooling compared to the amount

of cooling typically required in Class III and IV engines. Cooling may

be achieved by directing more of the fuel/oil mixture through the

crankcase. For the John Deere LE technology, this will result in higher

level of emissions than for Class IV engines, since more fuel/oil will

be scavenged. These factors may affect the ability of some designs to

be applied to the largest of Class V applications or for such designs

to meet a 50 g/kW-hr HC+NOX standard. EPA therefore believes

that a HC+NOX standard of 72 g/kW-hr is most appropriate for

Class V engines. EPA requests comment on the ability of 4-stroke

engines, redesigned 2-stroke engines, or other technologies, such as

electronic fuel injection or the application of catalysts, to achieve a

50 g/kW-hr HC+NOX standard.

Based on the information noted above, EPA is proposing emission

standards that require handheld engines in Class III and Class IV, on

average, to meet an HC+NOX standard of 50 g/kW-hr and

handheld engines in Class V, on average, to meet an HC+NOX

standard of 72 g/kW-hr by the end of the applicable phase-in period.

For a full discussion of the technologies EPA believes could be

employed to achieve the proposed handheld engine standards, the reader

is directed to Chapters 3 and 4 of the Supplemental Draft RIA.

A number of issues have been raised by various parties regarding

the technologies noted above which could affect the potential for

manufacturers to use these technologies to achieve the proposed

standards. A list of the most important issues is noted below. While

EPA believes that a number of important issues have been highlighted

and would need to be addressed before successful introduction of these

technologies, EPA also believes that given the amount of leadtime

before manufacturers would be required to certify their entire product

range to the proposed HC+NOX standards, the variety of

technology options available, and the work manufacturers have already

performed in anticipation of the California ARB Tier 2 regulations,

that the reproposed set of standards are achievable, especially given

the provisions of the proposed ABT program which allow for early

credits generation and the exchange of credits across engine classes

and the proposed flexibilities for small volume engine families and

small volume engine manufacturers. Specifically, manufacturers are

anticipated to sell in the initial years of the program engine families

with emission levels substantially below the phase in standards. Many

could accumulate a large number of banked credits by, for example,

offering their designs certified to the California ARB standards for

sale in the other 49 states. EPA requests comments on these assumptions

and on the issues listed below, including the potential for addressing

these concerns and any resulting impact on manufacturers' ability to

meet the standards contained in this SNPRM which, as noted earlier,

allow for the use of the ABT program.

With regard to the John Deere LE technology, a number of concerns

have been raised including the ability of the design to provide

adequate lubrication to the crankcase, the ease of use and operation of

the fuel system in real world conditions, the potential for increased

PM emissions, the need for redesign of equipment to incorporate the

technology, durability due to the potential for carbon buildup in the

transfer ports (as described in the Supplemental RIA, Chapter 2,

section 3.2.5), and the applicability to Class V engines, especially

professional chainsaws, which have unique operating characteristics

(e.g., cold weather operation) and cooling requirements. However, John

Deere has made substantial progress toward resolving such potential

problems as

[[Page 40948]]

adequate performance across the range of operating conditions and

speeds. Indeed, EPA expects John Deere to market in California handheld

equipment (Class IV trimmers and chainsaws) using this technology

beginning with the 2000 model year. Comments are requested on the

likelihood that cost-effective solutions can be made available over the

next two to three years across the full range of handheld engines and

applications.

In addition to these technically related concerns, a number of

engine manufacturers have raised concerns about the level of the

licensing fees that John Deere has stated that it would charge for use

of the patented equipment designs. The fees noted by John Deere in

their literature to other handheld engine manufacturers noted a minimum

licensing fee of $7.50 per engine with fees ranging as high as 5% of

the wholesale price of the equipment for an application costing above

$300 with a sales volume less than 50,000 units per year, which is a

typical cost for Class V commercial applications. These manufacturers

have suggested that the fees are higher than typically paid for

patented technologies and noted that the fees suggested by John Deere

may, in some cases, be as high as the profit margin on the equipment

currently being sold. 4 EPA specifically requests comments

on the licensing fees suggested by John Deere, the impact such fees

would have on competition given the cost for other technology options,

and the level of licensing fee necessary to allow this licensed

technology to be a cost effective option for other manufacturers.

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

\4\ ``Meetings with Husqvarna/Frigidaire Home Products on Small

Engine Phase 2 Handheld Regulations,'' EPA memo from Phil Carlson to

Docket A-96-55, June 29, 1999.

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

For the stratified scavenging engine technology, a number of

concerns have been raised about the technology. These issues include

the ability to design engines that achieve the amount of power

necessary for all applications, the feasibility of providing additional

cooling which may be required by the design, as well as the ability for

all applications to provide sufficient cooling for a low efficiency

catalyst. In fact, Komatsu has already certified a model year 2000

Class IV engine with both EPA and the California ARB at levels meeting

the California ARB's Phase 2 standard. EPA expects Komatsu to market

their stratified scavenging engine technology nationwide in certain

handheld equipment (Class IV trimmers) using this technology beginning

with the 2000 model year.

With regard to the mini 4-stroke technology, a number of concerns

have been raised primarily regarding the application to Class V

engines. These issues primarily relate to the limited ability to apply

such technology because of the power, weight, and acceleration

requirements of Class V handheld equipment applications. It can be

noted that both Ryobi and Honda have introduced 4-stroke engines for

Class IV handheld applications weighing about seven pounds which are

comparable to the weight of 2-stroke engines used in similar handheld

applications. Although these 4-stroke engines were once thought to be

limited to trimmer type applications only, EPA is aware of developments

of the use of 4-stroke engines to higher speed applications. Therefore,

EPA believes that 4-stroke engines could be used for the majority of

Class IV applications. Request comments on this assumption. As noted

later in section III.B.2 of today's document, EPA has assumed that 4-

stroke technology would likely only be applicable to the smallest of

Class V engine designs.

However, to the extent that 4-stroke engines might replace some 2-

stroke engines in certain applications, EPA is interested in receiving

additional information to better compare their expected performance.

EPA is specifically requesting information on the following areas: the

durability of 4-stroke engines and how this might impact the certified

useful life of such engines, the amount and cost of maintenance

required to maintain performance, and the likelihood such maintenance

would be performed (including a comparison to maintenance requirements

and in-use maintenance experience for 2-stroke engines) and how the

relative cost of the handheld piece of equipment might affect these

considerations (e.g., is it more likely that maintenance will be

performed on the engine of a more expensive piece of equipment than on

the engine installed in a less expensive piece of similar equipment,

even if the engines are certified to the same useful life?). Other

information relevant to a comparison of 4-stroke engines versus 2-

stroke engines such as weight and performance differences is also

requested.

For the application of catalysts to handheld equipment, the

concerns raised include user safety due to potential excessive heat

generated by the catalyst, which may influence engine operation and

durability, and the ability to provide additional cooling of the

exhaust gas and catalyst area which may be necessary for operator

safety or for manufacturers to meet the USDA Forestry Service

requirements that apply to equipment used on Federal land. EPA is aware

that manufacturers have been researching and developing catalyst

technology for handheld engine applications and have already been

working to address the issues noted above through innovative catalyst

designs, use of low efficiency catalysts and more engine improvements,

catalyst shielding, and catalyst placement. In addition, one handheld

engine manufacturer, Husqvarna, is currently using low-efficiency

catalysts on several of their 1999 model year Class IV engine families

used primarily in commercial trimmer/edger applications. A second

manufacturer, Tanaka, has publicized their PureFire technology which

includes engine improvements and a catalyst. EPA requests comment on

the status of catalyst technology development for handheld engine

applications and the likelihood that catalysts will be able to be

applied to the full range of handheld engine applications to meet the

proposed standards and appropriate safety requirements.

As noted earlier, the proposed standards would be phased in through

a set of declining average in-use standards by model year. For Classes

III and IV, the standards would be phased in between the 2002 and 2006

model years. For Class V, the proposed Phase 2 standards would be

phased in between the 2004 and 2008 model years. (Table 1, presented

earlier, contains the actual emission standards by model year of the

proposed Phase 2 standards for handheld engines.) EPA believes the

proposed leadtime before the standards are scheduled to take effect is

appropriate based on the fact that the proposed HC+NOX

standards for Class III and Class IV are more stringent than the

California ARB's HC+NOX standards for these engines (i.e.,

72 g/kW-hr for engines 0-65cc with the exception of exempted

applications), on which industry had been focusing and developing

technologies over the past few years, and because many of the Class V

engine families are used in certain farm and construction equipment

applications which are exempted from meeting the California ARB

standards as discussed below. In addition, EPA had been discussing

standards similar in stringency to the California ARB's standards with

the handheld industry in the time since the January 1998 NPRM through

December 1998. EPA believes that industry needs sufficient time in the

near term to finish developing products for the California market that

meet the California ARB

[[Page 40949]]

emission standards which take effect on January 1, 2000. However, not

all engines will necessarily be redesigned to meet the California ARB

standards due to the farm and construction equipment exemption noted

above, and because some manufacturers have told EPA that they expect to

provide a limited lineup of engines for the California market.

Furthermore, EPA believes the proposed schedule of standards will allow

manufacturers to sell their engines designed to meet the California ARB

Tier 2 standards nationwide for a number of years, recouping the

investments made for such designs, while redesigning their product

offerings to meet the proposed HC+NOX standards on average.

Although the standards contained in today's SNPRM envision that

manufacturers will phase in engines meeting a 50 g/kW-hr

HC+NOX level in Class III and Class IV and a 72 g/kW-hr

HC+NOX level in Class V, manufacturers of handheld engines

would be required to certify all of their engine families in a given

engine class (unless they qualify for some type of small volume

provision as described later) for a specific useful life period in the

first year of the applicable phase-in. (As noted earlier, EPA's Phase 1

program only requires compliance for new engines.) Manufacturers need

enough time to perform the useful life tests on each of the engine

families, with the exception of those already certified for California

(since California also requires full useful life compliance) which the

manufacturer is planning to sell outside of California, as well as to

research, develop and adopt low emitting technology on engine families

such that each manufacturer meets the average emission standards

through the final year of the phase-in schedule.

EPA is proposing a two year delay in the effective date for the

Class V engines. This delay is based on an analysis of EPA's Phase 1

certification database shows that a significant proportion of Class V

engine production is likely to be exempted from California ARB

regulation because of the type of equipment in which the engines are

used. Manufacturers of these products, which have a long list of

certified engine families, have not had to address these engines for

California, and therefore will need additional time to comply with

EPA's proposed Phase 2 standards. In addition, this delay takes into

consideration leadtime concerns raised by the two major engine

manufacturers in this class who manufacture professional high quality

equipment in light of their extensive product development process. EPA

requests comment on the appropriateness of the proposed two year delay

for Class V engines.

For all categories of handheld engines, the HC+NOX

standards being proposed today represent significant increases in

stringency and will require virtually all of the currently certified

Phase 1 engines to be redesigned. Under the proposed HC+NOX

standards, EPA expects emissions from handheld engines on average will

be reduced by approximately 78 percent compared to Phase 1 engines.

Under this proposal, the nation should continue to benefit from

improved emission performance for handheld engines at least through

2011 as these standards take effect and fleet turnover to cleaner

engines occurs.

As noted earlier, the standards being proposed today are more

stringent than the California ARB's Phase 2 standard. (California's

Phase 2 standard for small SI engines is 72 g/kW-hr HC+NOX,

except for engines used in exempted farm and construction

applications). EPA requests comments on the costs, feasibility, and

other effects of complying nationwide with a 72 g/kW-hr

HC+NOX standard for all three classes of handheld engines

versus the standards being reproposed today.5 Specific areas

on which EPA is requesting comments include the engine designs and

technologies that would be used to comply with a 72 g/kW-hr

HC+NOX standard, the cost of adopting such technologies

(both relative to engines currently certified under the Phase1 program

and as an extension of production of California compliant engines), and

the potential for such Class III and Class IV engines to be modified to

meet a 50 g/kW-hr HC+NOX standard. Recently, a number of

handheld engine manufacturers indicated to EPA that they would prefer

the following alternative set of HC+NOX standards: 72 g/kW-

hr for Classes III and IV phased in between 2002 and 2007, and 87 g/kW-

hr for Class V phased in between 2004 and 2007. These manufacturers do

not presently employ the kinds of technology EPA expects would be used

to meet EPA's reproposed standards, and they specifically raised

questions regarding the applicability of light-weight 4-stroke

technology and the developmental state of John Deere's LE technology.

In addition to the information requested above, EPA requests comment on

the alternative standard set nominated by this segment of the handheld

industry. EPA is particularly interested in receiving information about

the costs associated with this alternative set of standards. As part of

the final rulemaking, EPA plans to consider this cost information and

use it, as appropriate, in an analysis of the potential costs and

emission reductions of these alternative standards for comparison with

the additional emission reductions (and presumably higher costs) of the

proposed standards. This information will be useful as the Agency

determines the appropriate level of standards consistent with Clean Air

Act section 213(a)(3).

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

\5\ Commenters are asked to consider energy, noise, and safety

impacts in their comments.

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

EPA is not proposing tighter CO standards for handheld engines in

this SNPRM. This proposal would maintain the same CO emission standards

contained in the January 1998 NPRM. At this time, it does not appear

that additional reductions in CO emissions from these engines will be

needed to allow most areas of the country to attain the CO ambient air

quality standard. Absent this air quality need, EPA does not believe

that requiring manufacturers to achieve additional reductions in CO

emissions by a more stringent standard is necessary. It should be noted

that many of the emission control techniques likely to be adopted to

meet the proposed Phase 2 HC+NOX standards on 2-stroke

engines, including for example the use of improved fuel metering and

combustion chamber improvements, have shown lower CO emissions than

Phase 1 engines. Although EPA is not proposing tighter CO standards,

EPA expects some CO emission reduction will occur as a result of the

technologies likely to be adopted to meet the proposed Phase 2

HC+NOX standards. EPA is not able at this time, however, to

quantify the expected level of CO reductions to a sufficiently precise

degree that the Agency believes it can confidently propose a more

stringent standard than that contained in the January 1998 NPRM.

Neither EPA's Phase 1 rule for small SI nonroad engines nor the

recent Phase 2 rule for nonhandheld engines included particulate matter

(PM) standards and today's proposal continues the same approach. EPA is

not proposing PM standards for Phase 2 handheld engines. EPA believes

that the types of technologies expected to be used to meet the proposed

Phase 2 gaseous emission standards will result in reduced PM levels

from handheld engines. EPA requests information on PM emissions from

handheld engines and the need for PM standards for small SI nonroad

engines in general. Relevant information might include PM emission

rates from small SI engines, loading contributions to ambient PM

concentrations from these engines, user

[[Page 40950]]

health effects from direct exposure to PM contained in engine exhaust

from small SI engines, and contribution from small SI engine PM

emissions to visibility impairment.

For Class I-A engines (i.e, nonhandheld engines with displacement

less than 66 cc), because these new nonhandheld equipment applications

are expected to use engines with much the same displacement and design

as their handheld Class IV counterparts, EPA is proposing to apply the

Class IV standards of 50 g/kW-hr for HC+NOX and 610 g/kW-hr

for CO. Although the California ARB's standards are less stringent than

the standards contained in today's SNPRM, the addition of this class

harmonizes the use of these engine sizes within this rulemaking between

EPA and the California ARB. Because the Class I-A engines will be

designs that are not currently certified as nonhandheld engines, EPA is

proposing that the standards for Class I-A engines take effect

immediately upon the effective date of finalization of these proposed

standards, which EPA expects would occur during the 2000 model year.

With regard to the test procedure manufacturers use for certification

testing of Class I-A engines, EPA is proposing to adopt the handheld

engine test procedure, typically referred to as cycle ``C''. EPA

requests comment on the proposed requirements for Class I-A engines.

For Class I-B engines (i.e., nonhandheld engines with displacement

from 66 cc to less than 100 cc), 4-stroke engines have certain

disadvantages which make it more difficult for them to meet the

recently adopted Phase 2 HC+NOX standard for nonhandheld

engines compared to their larger size counterparts (i.e., nonhandheld

engines with displacement above 100 cc in Class I and Class II). EPA

recognized this difference when it adopted the Phase 2

HC+NOX emission standards for engines less than 225 cc

(i.e., Class I where the standard is 16.1 g/kW-hr) and engines greater

than 225 cc (i.e., Class II where the standard is 12.1 g/kW-hr). The

current set of engines certified to EPA's Phase 1 standards includes

three Class I engines (1 OHV engine and 2 SV engines) below 100 cc that

are certified at new engine levels close to the Phase 1

HC+NOX standard (i.e., 16.1 g/kW-hr) ranging from 13.3 to

15.9 g/kW-hr. Assuming an in-use HC+NOX deterioration factor

of 1.5, the Phase 2 emission values of the engines would be 19.9 and

23.9 g/kW-hr, respectively, which is above the Phase 2 standard of 16.1

g/kW-hr. In the January 1998 NPRM, EPA made the assumption that

averaging of emission credits would allow these smaller size engines to

utilize credits from an engine manufacturer's larger size engines.

Comments on the NPRM suggested that this was not the case for all

engine manufacturers. Comments from one of these manufacturers

suggested that EPA establish a standard of 40 g/kW-hr because they

produced a side valve engine under 100 cc which required this value to

be able to certify. Due to the very small production estimates of

engines in this size range (i.e., 0.1% of Class I), EPA is proposing

standards for Class I-B engines of 40 g/kW-hr for HC+NOX and

610 g/kW-hr for CO. As proposed for Class I-A engines, EPA is proposing

that the standards for Class I-B engines take effect immediately upon

the effective date of finalization of these proposed standards, which

EPA expects will occur during the 2000 model year. For the test

procedure manufacturers use for certification testing, EPA is proposing

to adopt the nonhandheld engine test procedures, typically referred to

as cycle ``A'' and cycle ``B'.

Based on comments from manufacturers, EPA is establishing the Class

I-B category to allow for the production of engines to meet niche

markets. The Agency would not expect a migration into this category of

current 4-stroke Class I engines, almost all of which are above 125 cc,

because of the minimum size apparently necessary to meet the power

demands of typical current applications such as walk behind lawnmowers.

However, EPA is concerned that the relatively higher performance of 2-

stroke engines could allow 2-stroke engines in the high end of the

Class I-B category (e.g., between 90 cc and 100 cc) to meet the 40 g/

kW-hr standard and create interest in using them in such current

applications as small walk behind lawnmowers. EPA would not want to

proliferate the use of such higher emitting engines in current

applications and does not intend to allow migration of 2-stroke engines

into nonhandheld applications. EPA requests comment on these

assumptions and on ways to prevent this proliferation from occurring.

EPA also requests comment on the level of the proposed Class I-B

standards and the feasibility of achieving lower emission standards

with OHV, SV, and 2-stroke engines.

3. NMHC+NOX Standard for Class I-B Natural Gas-Fueled

Engines

In the recent final rule for small SI Phase 2 nonhandheld engines,

EPA adopted separate standards for small spark ignition engines fueled

by natural gas which manufacturers could certify to in lieu of the

otherwise applicable HC+NOX standards. Because EPA believes

it is possible that there could be Class I-B applications designed to

run on natural gas, EPA is proposing similar separate standards for

Class I-B spark ignition engines fueled by natural gas which could be

certified to in lieu of the HC+NOX standards. EPA believes

this option is necessary because the methane portion for gasoline

fueled engines is around 5 to 10 percent of total hydrocarbons, whereas

for engines fueled with natural gas, the methane portion can be around

70 percent. Because the methane from these engines has a very low ozone

forming potential compared to the other hydrocarbons in the engine's

exhaust, EPA believes it is appropriate to provide an alternative set

of emission standards for engines fueled with natural gas. Otherwise,

requiring such engines to meet the same HC standard as gasoline-fueled

applications would result in a more stringent standard for natural gas-

fueled engines. The proposed NMHC+NOX standard of 37 g/kW-hr

for Class I-B natural gas-fueled applications would provide equivalent

stringency to the HC+NOX standards for gasoline-fueled

engines being proposed today. EPA is proposing standards for Class I-B

only, as EPA does not expect that natural gas-fueled handheld engines

or Class I-A engines might be built. EPA requests comment on the need

to establish standards for Class I-A engines operated on natural gas.

Aside from having the option to certify to NMHC+NOX

standards, all other aspects of this proposal would pertain equally to

engines fueled with natural gas as with gasoline-fueled engines.

4. Useful Life Categories

In the January 1998 NPRM, EPA proposed two useful life categories

of 50 and 300 hours for handheld engines. EPA received several comments

supporting the addition of a mid-range useful life category for

handheld engines, with one manufacturer supporting a level of 125

hours. While EPA believes that 50 hours is appropriate for most of the

products targeted at the home consumer, some engines targeted for home

consumer use (including some new engines which are expected to enter

the market in the next few years) are expected to have designs which

tend to be more durable than the 50 hour level yet are not as durable

as the commercial grade of 300-hour equipment. As a result, EPA is

proposing to add a midrange to the useful life categories for handheld

engines of 125 hours as recommended by one manufacturer. Therefore,

under

[[Page 40951]]

today's proposal, a manufacturer would choose between three useful life

categories for handheld engines of 50, 125, and 300 hours. A

manufacturer would be responsible for demonstrating compliance with the

proposed standards described above in section II.A.2. at whichever

useful life level it designated for its engine families.

For the newly proposed category of Class I-A engines, EPA is

proposing the handheld engine useful life categories of 50, 125 and 300

hours. EPA believes the engine designs in Class I-A will be similar to

handheld engines in terms of durability of design. It should be noted

that the proposed useful life designations for Class I-A engines are

the same as those established by the California ARB in its Tier 2 rule

for engines of this size range. For Class I-B engines, EPA is proposing

the useful life categories of 125, 250 or 500 hours recently finalized

for nonhandheld engines. EPA believes the engines designs in Class I-B

will be similar to Class I nonhandheld engines in terms of durability

of design. The proposed useful life designations for Class I-B engines

are the same as those established by the California ARB in its Tier 2

rule for engines of this size range.

5. Selection of Useful Life Category

In the January 1998 NPRM, EPA proposed that the engine

manufacturers would be responsible for assuring that the correct useful

life was used for certification demonstration and labeling purposes.

Specific criteria were proposed which the manufacturers would have had

to evaluate and use in documenting their determinations of useful life

category selection. Comments received suggested such a requirement was

overly rigid and unnecessary. Given the comments received, EPA is still

very concerned that manufacturers select the most appropriate useful

life category for each engine to assure it is properly evaluated during

certification. In addition, because EPA is proposing to include all

handheld engines and Class I-A and Class I-B engines in the ABT program

which allows the exchange of emission credits across engine families in

different useful life categories, the proper selection of the useful

life period is important to ensure that the credit program is fair and

environmentally sound. However, so as not to add potentially

unnecessary burden on the industry, today's SNPRM proposes a less rigid

methodology for determining useful life categories that EPA recently

finalized for Phase 2 nonhandheld engines. Rather than mandating a

fixed set of criteria, this proposal rests the responsibility with the

industry to make their best, most conscientious selection. For

manufacturers of handheld engines, virtually all engines are placed in

specific equipment also manufactured by the engine manufacturer or, in

those cases where engines are supplied to another equipment

manufacturer, into equipment well known by the engine manufacturer.

Class III, IV and V engine manufacturers know the design features and

performance characteristics of both their engines and the equipment in

which they are installed, and understand the expected in-use operation

of this equipment and thus the expected useful life of the engine.

Additionally, based on design features these manufacturers build into

their engines, they have a good idea of the expected useful life in

such applications. Similarly, EPA expects that manufacturers of Class

I-A and Class I-B engines will have a good idea of the types of

equipment their engines are expected to be used in and, from their

marketing information, a reasonably accurate projection of the relative

volumes in such applications. Given that these engines will be used in

new applications, manufacturers should have an even clearer

understanding of these projections. Relying on this information,

manufacturers should be able to make good selections of appropriate

useful life categories for their engines. While this proposal leaves

that responsibility to the manufacturer, EPA expects it would

periodically review the manufacturers' decisions to ensure this

regulation is being properly implemented and to determine whether

modifications to the rules were appropriate. This proposed approach

would result in the same regulatory requirement as the State of

California, eliminating any extra burden in this regard due to federal

rules.

B. Averaging, Banking, and Trading

In today's SNPRM, EPA is proposing to make the comprehensive

certification averaging, banking, and trading (ABT) program recently

adopted for nonhandheld Phase 2 engines available for Phase 2 handheld

engines, Class I-A, and Class I-B engines. Averaging means the exchange

of emission credits among engine families within a given engine

manufacturer's product line. Averaging allows a manufacturer to certify

one or more engine families to Family Emissions Limits (FELs) above the

applicable emission standard. However, the increased emissions would

have to be offset by one or more engine families certified to FELs

below the same emission standard, such that the average emissions in a

given model year from all of the manufacturer's families (weighted by

various parameters including engine power, useful life, and number of

engines produced) are at or below the level of the emission standard.

Banking means the retention of emission credits by the engine

manufacturer generating the credits for use in future model year

averaging or trading. Trading means the exchange of emission credits

between engine manufacturers which then can be used for averaging

purposes, banked for future use, or traded to another engine

manufacturer.

The following section describes the proposed ABT program for

handheld engines, Class I-A engines, and Class I-B engines. The basic

framework of the ABT program is the same as that recently finalized for

nonhandheld engines. The proposed program would be the first ABT

program for handheld engines, since the Phase 1 rule did not include an

ABT program. The January 1998 NPRM included an ABT program, however,

the proposed program was limited to nonhandheld engines only. Given the

level of the standards contained in the January 1998 NPRM for handheld

engines, EPA did not believe an ABT program was necessary for handheld

engines. However, because EPA is now proposing significantly more

stringent Phase 2 standards for handheld engines, EPA believes an ABT

program is an important element in making the stringent Phase 2

emissions standards proposed today achievable with regard to

technological feasibility, lead time, and cost. The proposed ABT

program is intended to enhance the flexibility offered to engine

manufacturers that will be needed in transitioning their product lines

to meet the stringent HC+NOX standards being proposed. The

proposed ABT program would also encourage the early introduction of

cleaner engines certified under the Phase 2 requirements, thus securing

earlier emission benefits. EPA requests comments on the proposed ABT

program as well as alternative programs that would provide incentives

for manufacturers to achieve emission reductions earlier than required

by the proposed standards.

EPA believes that the new ABT program is consistent with the

statutory requirements of section 213 of the Clean Air Act. Although

the language of section 213 is silent on the issue of averaging, it

allows EPA considerable discretion in determining what regulations are

most appropriate for implementing section 213. The statute does not

specify that a specific standard or technology must be implemented, and

it requires EPA to consider costs, lead time, and other factors in

making

[[Page 40952]]

its determination of ``the greatest degree of emissions reduction

achievable through the application of technology which the

Administrator determines will be available.'' Section 213(a)(3) also

indicates that EPA's regulations may apply to nonroad engine classes in

the aggregate, and need not apply to each nonroad engine individually.

As noted above, the proposed ABT program would apply to all classes

of handheld engines as well as Class I-A and Class I-B engines. The ABT

program would be available for HC+NOX emissions but will not

be available for CO emissions. The ABT program would also apply to

natural gas-fueled engines. All credits for natural gas-fueled engines

would be determined against the standards to which the engine certified

(either the HC+NOX standard or the optional

NMHC+NOX standards noted earlier). Under the proposal,

manufacturers would be allowed to freely exchange NMHC+NOX

credits with HC+NOX credits.

The ABT program contained in the January 1998 NPRM proposed some

restrictions on cross-class averaging for nonhandheld engines. However,

the recent final rule eliminated most of those restrictions. Given the

level of the standards recently finalized for nonhandheld engines and

the level of the standards contained in today's proposal, EPA is far

less concerned that credits from one class could result in delays in

technology improvement for other classes, and does not believe that any

cross-class restrictions are necessary beyond those retained in the

final nonhandheld Phase 2 rulemaking. Therefore, today's SNPRM proposes

no additional restrictions on credit exchanges across any of the

classes of small SI engines. Under the proposed program, manufacturers

would be allowed to exchange credits from handheld engines to

nonhandheld engines. EPA specifically requests comment on the cross-

class exchange of credits between handheld and nonhandheld engines.

Under an ABT program, a manufacturer establishes a family emission

limit (FEL) for an engine family that takes the place of the emission

standard for all compliance determinations. As part of the ABT program,

EPA is proposing upper limits on the FEL values that may be declared by

manufacturers under the Phase 2 standards. For Classes III, IV and V,

EPA is proposing FEL upper limits based on the Phase 1 standards,

adjusted to account for expected average deterioration over the useful

life period of these engines. The proposed HC+NOx FEL upper

limits are 300 g/kW-hr for Class III engines, 246 g/kW-hr for Class IV

engines, and 166 g/kW-hr for Class V engines. For the newly proposed

categories of Class I-A and Class I-B engines, EPA is proposing

HC+NOx FEL upper limits of 94 g/kW-hr and 50 g/kW-hr,

respectively. The Class I-A level is based on the maximum certification

level of current Phase 1 engines similar in size to those expected to

be certified as Class I-A engines (a 26 cc Class IV engine certified to

a new engine level of 37.6 g/kW-hr HC+NOx), adjusted to

account for an estimated maximum deterioration factor of 2.5 over the

useful life of the engine. The Class I-B level is based on the maximum

new engine emissions level expected from Class I-B engines (estimated

to be 20 g/kW-hr HC+NOx) adjusted to account for an

estimated maximum deterioration factor of 2.5 over the useful life of

the engine.

EPA is proposing that all credits should be calculated based on the

difference between the manufacturer-established FEL and the Phase 2

HC+NOx standard for the applicable model year using the

following equation.

Credits = (Standard--FEL) x Production x Power x Useful life

x Load Factor

At the time of certification, manufacturers would be required to

supply information to EPA on the terms used in the above noted

equation. ``Production'' represents the manufacturer's U.S. production

of engines for the given engine family, excluding exported engines and

engines that will be sold in California. ``Power'' represents the

maximum modal power of the certification test engine over the

certification test cycle. ``Useful Life'' is the regulatory useful life

established by the manufacturer for the given engine family. ``Load

Factor'' is a constant that is dependent on the test cycle over which

the engine is certified.

Under the proposed ABT program, credits would have an unlimited

credit life for the duration of the Phase 2 program and would not be

discounted in any manner.

Under the proposed ABT program, manufacturers of handheld engines

would be allowed to use portions of the ABT program prior to

implementation of the Phase 2 standards to provide an incentive to

accelerate introduction of cleaner technologies into the marketplace.

The Agency believes that making bankable credits available prior to the

effective date of the new standards would reward those manufacturers

who take on the responsibility of complying with the Phase 2

requirements sooner than required and would also result in early

environmental benefits.

Under the proposed early banking provisions for handheld engines,

manufacturers would be allowed to begin using the averaging and banking

portions of the ABT program beginning with the 2000 model year for

engines certified to the Phase 2 requirements and produced after the

effective date of this action. Manufacturers would be allowed to

generate early credits from those engine families with FELs below the

initial Phase 2 HC+NOx standards for the appropriate engine

class (i.e., 226 g/kW-hr for Class III engines, 187 g/kW-hr for Class

IV engines, and 131 g/kW-hr for Class V engines). This proposed

approach for early credits from handheld engines is different than the

approach recently finalized for nonhandheld engines. Under the recently

finalized Phase 2 rule for nonhandheld engines, early credits are only

available for engines with FELs below the final standards, not the

initial phase in standards. EPA believes a different approach is

appropriate for handheld engines because the proposed Phase 2 handheld

engine standards represent such dramatic reductions from the Phase 1

standards that will require the complete redesign of nearly every

handheld engine currently produced. In contrast for nonhandheld

engines, there are already a significant number of engines being

produced that EPA believes would already meet the recently finalized

Phase 2 standards. Because of the increased effort engine manufacturers

will need to expend to meet the proposed Phase 2 handheld standards,

EPA believes it is appropriate to allow manufacturers to generate early

credits from engines certified with FELs below the initial Phase 2

standards rather than the final Phase 2 standards. If the final Phase 2

handheld engine standards were used for the determination of early

credits, the ability of engine manufacturers to generate early credits

would be so severely constrained as to make this option not useful;

neither the manufacturer nor the environment would benefit from the

such an early credit program design. Because the proposed Phase 2

standards for Class I-A and Class I-B engines are scheduled to take

effect with the 2000 model year, there is no need to provide

manufacturers with the ability to earn early credits from such engines.

All engines for which a manufacturer generates early credits would

have to comply with all of the proposed requirements for Phase 2

engines (e.g., the Production Line Testing program

[[Page 40953]]

requirements). Manufacturers of handheld engines would not be allowed

to trade their early engine credits to other manufacturers until the

first effective model year of the Phase 2 standards for the applicable

engine class. EPA requests comments on the design of the early credits

provisions contained in today's proposal.

As discussed in section II.D. of today's document, EPA is proposing

several compliance flexibility provisions for engine manufacturers and

equipment manufacturers that allow the limited use of Phase 1 engines

in the Phase 2 time frame. Phase 1 engines sold by engine manufacturers

under the flexibility provisions would be excluded from the ABT

program. In other words, engine manufacturers would not have to use

credits to certify Phase 1 engines used for the flexibility provisions

even though they would likely exceed the proposed Phase 2 standards.

As noted elsewhere in today's document, EPA is proposing a number

of provisions that address post-certification compliance aspects of the

proposed standards. In one specific case, EPA would allow manufacturers

to use credits from the certification ABT program to address excess

emissions situations determined after the time of certification. As

noted in the discussion on compliance, EPA does not believe that the

typical type of enforcement action that could be taken when a

substantial nonconformity is identified (i.e., an engine family recall

order) would generally be workable for small SI engines given the

nature of the market. Instead, for the purposes of implementing the PLT

program, EPA is proposing provisions to allow manufacturers to use

engine certification ABT credits to offset limited emission performance

shortfalls for past production of engines determined through the PLT

program as described in section II.C. of today's SNPRM. Under the

proposed provisions, manufacturers would be allowed to use small SI

engine certification ABT credits available to them to offset such

emission performance shortfalls.

Under today's proposal, EPA would not allow manufacturers to

automatically use ABT credits to remedy a past production

nonconformance situation in the Selective Enforcement Audit (SEA)

program. As described in today's SNPRM, EPA expects to primarily rely

on the PLT program to monitor the emissions performance of production

engines. However, EPA expects that SEAs may be conducted in certain

cases. Therefore, as discussed in section II.C., if EPA were to

determine that an engine family is not complying with the standards as

the result of an SEA, EPA would work with the manufacturer on a case-

by-case basis to determine an appropriate method for dealing with such

a nonconformity. The option(s) agreed upon by EPA and the engine

manufacturer might, or might not, include the use of ABT credits to

make up for any ``lost'' emission benefits uncovered by the SEA.

All of these aspects of the proposed handheld ABT program are

consonant with the final ABT program recently adopted for nonhandheld

Phase 2 engines.

C. Compliance Program

The compliance program being proposed today is comprised of three

parts: a pre-production certification program during which the

manufacturer would evaluate the expected emission performance of the

engine design including the durability of that emission performance; an

assembly line test program which would sample products coming off the

assembly line to assure the design as certified continues to have

acceptable emission performance when put into mass production; and a

voluntary in-use test program during which participating manufacturers

would evaluate the in-use emission performance of their product under

typical operating conditions. EPA would also have the option to run an

SEA program and its own in-use testing for small SI engines.

Under the proposed compliance programs for small handheld SI

engines, a manufacturer would divide its product offering based upon

specific design criteria which have a potential for significantly

different emission performance; these subdivisions are called engine

families. Each engine family would be required to meet the standard

applicable for the class in which that engine resides unless the

manufacturer chooses to participate in the ABT program also being

proposed today. (See section II.B. of today's SNPRM for discussion of

the proposed ABT program.) The other provisions of the compliance

program are explained in more detail below. In all cases, to the best

of EPA's knowledge, the requirements of this proposed federal

compliance program would be sufficiently similar to the requirements of

the California ARB program for these engines such that for engine

families sold in both the State of California and federally, the

engines selected for testing, the test procedures under which they are

tested and the data and other information required to be supplied by

regulations can be the same under both programs. Thus, EPA expects that

a manufacturer would be able to compile one application for

certification satisfying the information needs of both programs, saving

the manufacturer time and expense. Similarly, EPA and the California

ARB expect to share information from their compliance programs such

that any production line testing or in-use testing conducted for one

agency would satisfy the similar needs of the other agency, again

minimizing the burden on the manufacturers.

1. Certification

This section addresses the proposed certification program for

engine manufacturers covered by today's proposal. The certification

process as required in the Act is an annual process and requires that

manufacturers demonstrate that regulated engines will meet appropriate

standards throughout their useful lives. The Act prohibits the sale,

importation or introduction into commerce of regulated engines when not

covered by a certificate.

Under the January 1998 proposal, manufacturers of handheld engines

would have been required to establish deterioration factors for each

engine family based on an analysis of technically appropriate data.

This data could have included results from the proposed field/bench

adjustment program, the proposed handheld engine in-use testing

program, as well as other appropriate testing data. The proposed

certification requirements for handheld engines were different than

those proposed for nonhandheld engines.

Based on comments received on the January 1998 NPRM and EPA's

further evaluation of the originally proposed certification program,

EPA is revising the proposed certification program for Phase 2 handheld

engines significantly. EPA received a significant number of comments

regarding the complexity of the proposed certification program, the

prohibitive expense of field aging engines, and the advantages of

harmonizing EPA's final certification program with that of the

California ARB. EPA now believes the complexity of the originally

proposed program would make it difficult to manage and organize the

certification program for both industry and EPA. EPA also believes that

harmonizing its programs with the California ARB would allow the

industry to more efficiently comply with the reproposed emission

standards and requirements. Additionally, EPA is concerned the field/

bench adjustment program may not be statistically reliable enough to

establish appropriate

[[Page 40954]]

deterioration factors. (In an effort to control the cost of this

program, only a minimum amount of data was proposed to be required;

this small amount of data would hurt the statistical reliability of any

resulting decision.)

In light of these comments and concerns, EPA is reproposing a

significantly less complex certification program that would harmonize

the handheld Phase 2 program with the requirements of the California

ARB's Regulations for 1995 and Later Small Off-Road Engines, amended

January 29, 1999. In the reproposed program, the requirements for

manufacturers of handheld engines would be the same as those recently

finalized for nonhandheld engines. Under today's proposal,

manufacturers of handheld engines would be required to demonstrate that

their regulated engines comply with appropriate emission standards

throughout the engines' useful lives. To account for emission

deterioration over time, manufacturers would need to establish

deterioration factors for each regulated pollutant for each engine

family. This proposal allows manufacturers to establish deterioration

factors by using bench aging procedures which appropriately predict the

in-use emission deterioration expected over the useful life of an

engine or an in-use evaluation which directly accounts for this

deterioration. As is the case with many EPA mobile source regulations,

the multiplicative deterioration factors could not be less than one.

Additionally, where appropriate and with suitable justification,

deterioration factors could be carried over from one model year to

another and from one engine family to another.

Today's proposal also provides flexibility for small volume engine

manufacturers and small volume engine families. Under the proposed

provisions, handheld engine manufacturers would be allowed the option

of using assigned deterioration factors established by the Agency. The

deterioration factors, either assigned or generated, would be used to

determine whether an engine family complies with the applicable

emission standards in the certification program, the production line

testing program, and the Selective Enforcement Auditing program.

As in Phase 1, manufacturers would be allowed to submit

certification applications to the Agency electronically, either on a

computer disk or through electronic mail, making the certification

application process efficient for both manufacturers and the Agency.

Also, EPA and the California ARB expect to have a common application

format allowing manufacturers to more easily apply for certification.

In today's SNPRM, EPA is also proposing a method by which

manufacturers can separately certify configurations for use at high

altitude. Manufacturers are currently required by the Phase 1 rule to

certify engines for use at any altitude, but the rule does not

specifically address separate high altitude and low altitude

configuration testing. The existence of, and the need for the high

altitude modifications has been a topic of recent discussions between

EPA and manufacturers. To allow an engine to perform properly and meet

emission standards while being operated at high altitudes, many

manufacturers have developed special high altitude carburetor jets or

high altitude kits. However, if an engine with such a kit installed is

removed from high altitude, the kit would have to be removed and the

engine returned to its original configuration for the engine to

continue to perform properly and meet emission standards.

Today's proposal would allow manufacturers of both handheld and

nonhandheld engines to certify an engine for separate standard and high

altitude configurations. All engines would be required to meet, under

all altitude conditions, the emission standards proposed today. The

proposed method would be available for both Phase 1 and Phase 2

handheld and nonhandheld engines. Without such a certification option,

installation of an altitude kit and other associated modifications

might be considered tampering by EPA. No test data on engines with high

altitude modifications performed would be required as a condition of

certification, as this would add significantly to the manufacturer's

certification compliance testing cost. Furthermore, no testing seems

necessary since the altitude kits and associated modifications are

intended to compensate for the change in air density when moving to

high altitude by returning the engine to approximately the same

operating point as evaluated during required certification testing.

Similarly, no special labeling would be required for engines which have

such altitude kits certified or for those in-use engines which have had

altitude modifications performed. Consumers have a natural incentive to

have the high altitude kit installed and adjustments performed when

using an engine at altitude as this greatly improves performance; for

the same reason EPA expects the modifications to be removed when

returning the engine to low altitude. However, EPA believes some

additional assurance is needed that the high altitude modifications are

designed to provide good emission control and that the instructions for

making these modifications are clear and readily available and thus

likely to be performed correctly.

To provide this assurance, this proposal would require a

manufacturer to list these altitude kits with their appropriate part

numbers along with all the other certified parts in the certification

application. In the application, the manufacturer would have to declare

the altitude ranges at which the appropriate kits would be installed on

or removed from an engine for proper emission and engine performance.

The manufacturer would also be required to include a statement in the

owner's manual for the engine or engine/equipment combination (and

other maintenance-related literature intended for the consumer) that

also declared the altitude ranges at which the appropriate kits must be

installed or removed. Finally, the manufacturer, using appropriate

engineering judgement which, at the manufacturer's option, could also

include test data, would be required to determine that an engine with

the altitude kit installed would meet each emission standard throughout

its useful life. The rationale for this assessment would need to be

documented and provided to the Agency as part of the certification

application.

2. Production Line Testing--Cumulative Summation Procedure

This section addresses the proposed production line testing (PLT)

program for engines covered by today's SNPRM. The proposed PLT program

contained is the same as that adopted recently for nonhandheld engines

and would require manufacturers to conduct manufacturer-run testing

programs using the Cumulative Summation Procedure (CumSum).\6\ The

CumSum program, as proposed today, would require manufacturers to

conduct testing on each of their engine families (unless they were

relieved of this requirement under provisions granting flexibility).

The maximum sample size that would be required for each engine family

is 30 engines or 1 percent of a family's projected production,

whichever is smaller. However, the actual number of

[[Page 40955]]

tests ultimately required would be determined by the results of the

testing. With the proposed program, the EPA PLT program and the

corresponding California ARB program would be harmonized, requiring

manufacturers to use the same CumSum procedure for testing production

engines for both agencies. Manufacturers would be able to submit PLT

reports to EPA electronically, either on a computer disk or through

electronic mail, which should save both the industry and EPA time and

money.

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\6\ The CumSum procedure has been promulgated for marine engines

in EPA's spark-ignition marine rule at 40 CFR part 91 (61 FR 52088,

October 4, 1996). In this section, ``PLT'' refers to the

manufacturer-run CumSum procedure. ``PLT'' does not include

Selective Enforcement Auditing (SEA), which is addressed separately

in section II.C.4. of this preamble.

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

As mentioned in the discussion of the proposed ABT program, above,

manufacturers could, for a limited amount of production, use ABT

credits to offset the estimated excess emissions of previously produced

noncomplying engine designs as determined in the PLT program. (The

amount of excess emissions would be determined based on the difference

between the new FEL established by the manufacturer as a result of the

PLT program and the original FEL established prior to the PLT program.)

Under today's proposal, a manufacturer could raise the FEL for one

engine family per model year. If a PLT program failure required a

manufacturer to raise the FEL for more than one engine family per model

year, the manufacturer could do so only if the applicable engine family

represented no more than ten percent of the manufacturer's production

for that model year. For any additional engine families that were found

to be in noncompliance as a result of the PLT program, the engine

manufacturer would need to conduct projects approved by EPA that were

designed to offset the excess emissions from those engines.

With regard to future production of engines identified to be in

noncompliance as a result of PLT testing, the manufacturer would be

expected to correct the noncompliance problem causing the emission

noncompliance either by changing the production process, changing the

design (which would require recertification) or raising the FEL to

compensate for the higher emissions (also requiring recertification).

In the event a manufacturer raised an FEL as a result of a PLT failure,

it could do so for future production as well as past production as

described above which would require a calculation of credits the

manufacturer would need to obtain for the past production engines. EPA

expects few instances in which the manufacturer would need to correct a

PLT failure through raising the FEL since that would imply the

manufacturer incorrectly set the initial FEL for that family. Frequent

use of this remedy would suggest the manufacturer was incapable of

correctly setting the FELs for its product, in which case EPA would

have to reconsider allowing a manufacturer to participate in the ABT

program at its option. It should also be noted that compliance with the

applicable standard (or the applicable FEL) will be required of every

covered engine. Thus, every engine that failed a PLT test would be

considered in noncompliance with the standards and must be brought into

compliance. EPA's rules allowing the use of the average of tests to

determine compliance with the PLT program is intended only as a tool to

decide when it is appropriate to suspend or revoke the certificate of

conformity for that engine family, and is not meant to imply that not

all engines have to comply with the standards or applicable FEL.

As discussed in the flexibilities section, EPA is proposing that

small volume manufacturers and small volume engine families need not be

included in the PLT program at the manufacturer's option.

3. Voluntary In-Use Testing

This section addresses the proposed voluntary in-use testing

program. The January 1998 proposal would have required manufacturers of

handheld engines to conduct in-use testing on a maximum of 25 percent

of their engine families each model year. The proposal would also have

allowed these handheld engine manufacturers to fulfill the in-use

testing requirements by testing bench-aged engines, provided the

manufacturer has successfully completed the field/bench adjustment

program. Finally, under the January 1998 proposal, handheld engine

manufacturers would have been allowed to participate in an in-use

averaging, banking, and trading program.

The foundation of the in-use compliance program for manufacturers

of handheld engines in the January 1998 proposal was the Field/Bench

Adjustment Program. Based on a thorough evaluation of the proposed

program, EPA does not believe the Field/Bench Adjustment Program would

be statistically reliable enough on which to build an in-use testing

compliance program due to the relatively small amount of data which

would have been required. Additionally, in developing this SNPRM, EPA

has attempted to harmonize this proposal as closely as possible with

the California ARB's Regulations for 1995 and Later Small Off-Road

Engines, amended January 29, 1999, allowing the industry to more

efficiently comply with the standards and requirements. Based on these

factors, as well as industry comments regarding the prohibitive expense

of conducting field aged in-use tests, EPA is not including the in-use

program contained in the January 1998 NPRM as part of today's

reproposal.

However, EPA still desires meaningful in-use data so that it can

more appropriately assess the actual emissions inventory of this

industry. Therefore, EPA is proposing a voluntary in-use testing

program. The proposed voluntary in-use testing program for engines

covered by today's SNPRM is the same as the voluntary in-use testing

program recently finalized by the Agency for nonhandheld engines. The

proposed voluntary in-use testing program would give engine

manufacturers the option of using a portion of their PLT resources to

generate field aged emissions data. At the start of each model year,

manufacturers could elect to place up to 20 percent of their engine

families in this voluntary program. For those families in this program,

manufacturers would not be required to conduct PLT for two model years,

the current year and the subsequent year. (The California ARB has

indicated that they would also exempt families in such an in-use

testing program from their PLT requirements.) Instead, manufacturers

would place a minimum of three randomly selected production engines in

existing consumer-owned, independently-owned, or manufacturer-owned

fleets. Manufacturers would install the engines in equipment that

represents at least 50 percent of the production for an engine family

and age the engine/equipment combination in actual field conditions to

at least 75 percent of each engine's useful life. Once an engine in

this program had been sufficiently field aged, the manufacturer would

conduct an emissions test on that engine. Manufacturers would have

three calendar years from the date they notified the Agency of their

intent to include a family in the program to complete testing.

While the compliance program proposed today would not require a

manufacturer to conduct any in-use testing to verify continued

satisfactory emission performance in the hands of typical consumers,

EPA believes it is worthwhile to have an optional program for such in-

use testing. EPA believes it is important for manufacturers to conduct

in-use testing to assure the success of their designs and to factor

back into their design and/or production process any information

suggesting emission problems in the field. If any

[[Page 40956]]

information derived from this program indicates a substantial in-use

emission performance problem, EPA anticipates the manufacturer would

seek to determine the nature of the emission performance problem and

what corrective actions might be appropriate. EPA would offer its

assistance in analysis of the reasons for unexpectedly high in-use

emission performance and what actions might be appropriate for reducing

such high emissions. Whether or not a manufacturer chose to conduct a

voluntary in-use testing program, EPA could always choose to conduct

its own in-use compliance program. If EPA were to determine that an in-

use noncompliance investigation was appropriate, the Agency expects it

would conduct its own in-use testing program, separate from this

voluntary manufacturer testing program, to determine whether a specific

class or category of engines is complying with applicable in-use

standards.

4. Selective Enforcement Auditing

As noted in the January 1998 proposal, the SEA program is not the

Agency's preferred production line testing program for small engines.

The CumSum procedures, described above, are being proposed as the

production line program that manufacturers would conduct. The SEA

program is included in today's SNPRM as a ``backstop'' to the CumSum

program and would be used in cases where EPA believes there is evidence

of improper testing or of a nonconformity that is not being addressed

by the CumSum program. The SEA program, as proposed, would also apply

to engine families optionally certified to the small volume

manufacturer provisions and the small volume engine family provisions,

in cases where manufacturers elect not to conduct PLT testing for such

families. However, as for other families, EPA does not expect families

certified under the small volume provisions would be routinely tested

through an SEA program.

Under today's SNPRM and in contrast to the PLT program,

manufacturers who fail an SEA would not have the automatic option of

using ABT credits to remedy noncomplying engines already introduced

into commerce. The proposed PLT program is designed to allow a

manufacturer to continually evaluate its entire production and quickly

respond to the results throughout the model year. EPA believes that

allowing a manufacturer to use credits, for a limited amount of

engines, to remedy past production emission failures is consistent with

the continual evaluation provided by the PLT program. The SEA program,

in contrast, is designed to be a one time, unannounced inspection of a

manufacturer's production line with definitive passing or failing

results. EPA believes that in this type of a compliance program, where

at most only a few engine families might be tested each year,

manufacturers must place more emphasis on the transition from

certification to the production line and must set initial FELs

accurately. To encourage accurate FEL settings at the time of

certification, the proposed SEA program would not allow manufacturers

to automatically remedy SEA failures by retroactively adjusting FELs.

EPA is proposing that remedies for an SEA failure would be best

determined on a case-by-case basis which might or might not include the

use of ABT credits depending upon EPA's assessment of the specific

case.

D. Flexibilities

In the January 1998 NPRM, EPA proposed a number of flexibilities to

ease the transition from the Phase 1 to the Phase 2 program, to ensure

that the Phase 2 standards are cost-effective and achievable, and to

reduce the compliance burden while maintaining the environmental

benefits of the rule. Several comments were received on the

flexibilities proposed, some supporting the proposals and others

offering recommended changes. In addition, the need for modifications

to the proposed set of flexibilities evolved out of the investigations

which led to other changes to the proposal including the more stringent

handheld engine standards, the addition of Class I-A and Class I-B

engine classes, and the expanded ABT program provisions being proposed.

The following section summarizes the revised flexibilities proposed

with today's SNPRM. EPA requests comments on the proposed

flexibilities.

1. Carry-Over Certification

Consistent with other mobile source emission certification

programs, EPA is proposing to allow a manufacturer to use test data and

other relevant information from a previous model year to satisfy the

same requirements for the existing model year certification program as

long as the data and other information are still valid. Such ``carry-

over'' of data and information is common in mobile source programs

where the engine family being certified in the current model year is

identical to the engine family previously certified.

2. Flexibilities for Small Volume Engine Manufacturers and Small Volume

Engine Families

EPA proposed a number of compliance flexibilities for small volume

engine manufacturers and small volume engine families in the January

1998 NPRM. With today's SNPRM, EPA is proposing a slightly revised set

of flexibilities for handheld engines that would be available to both

small volume engine families and small volume engine manufacturers. The

three proposed flexibilities that would be available to manufacturers

of small volume engine families and small volume engine manufacturers

are as follows: (1) The eligible family or manufacturer could certify

to Phase 1 standards and regulations until the third year after the end

of the proposed Phase 2 schedule (i.e., the 2009 model year for Classes

III and IV and the 2011 model year for Class V engines); such engines

would be excluded from the ABT program until they are certified to the

Phase 2 standard, (2) the eligible family or manufacturer could certify

using assigned deterioration factors, and (3) the eligible family or

manufacturer could elect to not participate in the PLT program,

however, the SEA program would still be applicable.

With regard to Class I-A and Class I-B, EPA is proposing only one

of the flexibilities for small volume engine families and small volume

engine manufacturers noted above. EPA is proposing to allow eligible

Class I-A and Class I-B small volume engine families or manufacturers

to elect to not participate in the PLT program, however, the SEA

program would still be applicable. As noted earlier, the proposed Class

I-A and Class I-B designations are new, and therefore there are no

engine families currently certified as Class I-A or Class I-B engines.

Because the engines that will be designated as Class I-A or Class I-B

engines will be new designs or existing designs that are expected to be

able to meet the proposed standards, EPA does not believe there is a

need to offer delayed implementation of the proposed standards or allow

manufacturers to use assigned deterioration factors. Therefore, EPA is

not proposing either the delayed implementation flexibility or use of

assigned deterioration factors flexibility for Class I-A or Class I-B.

EPA originally proposed allowing small volume engine manufacturers

to continue producing Phase 1 engines until the last year of the phase

in of the Phase 2 standard applicable to the engine's class. (For

handheld engines,

[[Page 40957]]

the final year of the phase in would have been 2005 under the January

1998 NPRM.) However, since the proposed standards contained in today's

SNPRM are significantly more stringent than the standards upon which

the original proposed flexibility was based, the number of engine

families expected to be modified and, especially, the degree of

modification necessary has increased. This is expected to add

significantly to the technical and resource burden on the engine

manufacturers. As anticipated in the January 1998 proposal, EPA still

expects the major engine manufacturers would choose to modify their

small volume engine families last as these represent niche markets.

Additionally, these niche applications may represent some of the more

difficult engine applications due to their unique requirements. The

experience gained in designing, producing and getting in-use feedback

on their larger engine family designs should be helpful in minimizing

the cost and assuring the performance of the small volume engines.

Similarly, the design challenges for the small volume engine

manufacturer because of the more stringent proposed Phase 2 standards

are expected to increase, suggesting more time to accomplish the

transition to Phase 2 standards would be warranted. EPA expects

manufacturers would take advantage of the extra time being proposed

today to smooth the transition to Phase 2 standards by bringing the

small volume engines into compliance throughout this time period. Due

to the fact that circumstances vary greatly from one manufacturer to

another, EPA believes it would be inappropriate to mandate a percent

phase-in schedule or some other mandatory rate of phase-in for these

small volume engine families and small volume engine manufacturers.

Therefore, EPA is proposing only a final compliance requirement that is

effective three years after the end of the proposed Phase 2 phase-in

schedule. EPA believes that a three year delay is appropriate based on

discussions with manufacturers and given the number of engine families

expected to be eligible for the proposed flexibilities. EPA has also

considered the air quality impact of this proposed flexibility and

believes that, under the reproposed provisions, less than two percent

of the total small engine production would likely take advantage of

this option to delay compliance with the Phase 2 standards with only a

negligible impact on the emission benefits expected from the program.

3. Small Volume Engine Manufacturer Definition

As described earlier, EPA proposed a number of flexibilities for

engine manufacturers defined as small volume engine manufacturers in

the January 1998 NPRM (see section II.D.2.). EPA continues to believe

flexibilities aimed at the small volume handheld engine manufacturer

are appropriate and is retaining the proposed definition of small

volume handheld engine manufacturers in this SNPRM. To qualify as a

small volume engine manufacturer, a handheld engine manufacturer would

need to produce no more than 25,000 handheld engines annually. In

addition, for manufacturers of Class I-A and Class I-B nonhandheld

engine families, where EPA is also proposing limited small volume

engine manufacturer flexibility, a manufacturer of such engines would

need to produce no more than 10,000 nonhandheld engines annually.

4. Small Volume Engine Family Definition

In the January 1998 NPRM, EPA proposed that manufacturers of small

volume engine families also be provided the same flexibilities as small

volume engine manufacturers (see section II.D.2.). To qualify as a

small volume engine family, EPA proposed that a handheld engine family

would need to have an annual production level of no more than 2,500

engines. Without such flexibilities, EPA believes the cost and other

difficulties of modifying these small volume engine families to comply

with the Phase 2 standards may be difficult enough that the

manufacturer might either be unable to complete the modification of the

engine design in time or may choose for economic reasons to discontinue

production of the small volume engine family. The impact of such a

scenario would of course fall on the engine manufacturer through

reduced engine sales, but would also fall perhaps even more

significantly on small volume equipment applications, the most typical

use for these small volume engine families. Due to the unique character

of these small volume equipment applications, it is quite possible that

some equipment manufacturers might not be able to find a suitable

replacement engine. In such a case, that equipment manufacturer would

also be significantly impacted through lost sales, and consumers would

be harmed through the loss in availability of the equipment.

In response to the January 1998 NPRM, the Portable Power Equipment

Manufacturers Association (PPEMA) requested a ``slight upward

adjustment'' of the proposed 2,500 unit cap for handheld engines. Based

on PPEMA's comments, EPA has re-examined the production limits for

small volume engine families and believes that the interests of

preserving the availability of small volume engine families would be

better served by revising the annual production cap to 5,000 units for

handheld engine families. (The recent final rule for nonhandheld

engines also adopted a production cap of 5,000 units for nonhandheld

engines.) EPA believes this proposed change to the definition would

allow a larger number of niche equipment applications to be served and

the risk of loss in engine availability should be reduced. At the same

time, EPA believes the potential for adverse emission impacts remains

very small. Based on the higher cutoffs, EPA estimates that 98 percent

of handheld engines would still be covered by the full compliance

program and subject to the earliest practical implementation of the

proposed rule.

Class I-A and Class I-B engine families would also be subject to a

cap of 5,000 engines (the same level recently adopted for nonhandheld

engines) in order to qualify as a small engine family and be eligible

for the proposed small volume engine family flexibility described

earlier.

5. Flexibilities for Equipment Manufacturers and Small Volume Equipment

Models

In the January 1998 NPRM, EPA proposed three flexibilities aimed at

assuring the continued supply under the Phase 2 regulations of engines

for unique, typically small volume equipment applications. First, EPA

proposed that small volume equipment manufacturers could continue using

Phase 1 compliant engines through the third year after the last

applicable phase-in date of the final Phase 2 standards for that engine

class if the equipment manufacturer was unable to find a suitable Phase

2 engine before then. Second, EPA proposed to allow individual small

volume equipment models to continue using Phase 1 compliant engines

throughout the time period the Phase 2 regulation is in effect if no

suitable Phase 2 engine was available and the equipment was in

production at the time these Phase 2 rules were adopted. If the

equipment is ``significantly modified'' then this exemption would end,

since design accommodations could be made during such a modification to

accept an engine meeting Phase 2 standards. Third, EPA proposed a

hardship provision that would allow any equipment

[[Page 40958]]

manufacturer, regardless of size, for any of its applications,

regardless of size, to continue using a Phase 1 engine for up to one

more year beyond the last phase-in of the final standard for that

engine class if the requirement to otherwise use a Phase 2 compliant

engine would cause substantial financial hardship. For today's SNPRM,

EPA is retaining the proposed flexibilities, except that the criteria

for determining whether someone is a small volume equipment

manufacturer is being revised (see section II.D.6. below).

Because the applications expected to use Class I-A or Class I-B

engines will be new engines and equipment designs or designs that use

engines that already exist under the Phase 1 program (and are expected

to meet the proposed Phase 2 standards), EPA does not believe there is

a need to provide flexibilities for small volume equipment

manufacturers and small volume equipment models in the newly proposed

engine classes which would allow delayed introduction of engines

certified to the proposed Phase 2 standards. Therefore, no such

flexibilities are being proposed for Class I-A or Class I-B.

6. Small Volume Equipment Manufacturer Definition

As part of the January 1998 NPRM, EPA proposed that small volume

equipment manufacturers would be defined as those whose annual

production for sale in the U.S. across all models was 5,000 or fewer

pieces of equipment utilizing handheld engines.

EPA has reexamined the production cutoff level for handheld

equipment manufacturers. EPA believes there would be advantages to

increasing the production cutoff included in the definition for small

volume handheld equipment manufacturers. (EPA's recently finalized rule

for nonhandheld engines expanded the cutoff level for the definition of

small volume nonhandheld equipment manufacturer to 5,000 units.) Such a

change would expand the flexibilities to slightly larger manufacturers

who are still, compared to the rest of the industry, among the

smallest. Therefore, EPA is proposing a revised definition for small

volume handheld equipment manufacturer that is based on an annual

production cutoff of 25,000 or fewer units. EPA estimates that this

limit would cover approximately two percent of the annual sales in the

handheld category. Providing the proposed flexibilities described in

the previous section should allow significant relief to these smallest

equipment manufacturers while at the same time assuring the vast

majority of equipment uses the lowest emitting engines available.

7. Small Volume Equipment Model Definition

EPA is retaining the small volume equipment model definition

proposed in the January 1998 NPRM for today's SNPRM. As proposed, the

small volume equipment model definition would cover handheld models of

2,500 or less annual production. Providing the proposed flexibilities

described in the section on flexibilities for small volume equipment

models should allow significant relief to equipment manufacturers while

at the same time assuring the vast majority of equipment uses the

lowest emitting engines available.

E. General Provisions and Recommendations

In the January 1998 NPRM, EPA discussed a number of general

provisions that would impact Phase 2 engines. EPA received comments on

several of these issues, as well as recommendations on other general

issues. A number of these issues, including the handheld engine

definition, use of engines in recreational equipment, engine labeling,

and emissions warranty affect some or all of the engines covered by

today's SNPRM. These general provisions and other recommendations are

discussed in this section of the preamble.

1. Definition of Handheld Engine

With today's SNPRM, EPA is retaining the same definition for

handheld engine as was in effect for Phase 1 and is not proposing a new

definition for handheld engine, except as discussed below. It should be

noted that in response to comments from Honda and others, EPA recently

proposed modifications to criteria for determining whether an engine

could be classified as handheld that, if finalized, would be applicable

for the remainder of Phase 1 and also apply for the Phase 2 program (64

FR 5251, February 3, 1999). Under the proposed modification, a

manufacturer would be permitted to exceed the weight limits (14 kg for

generators or pumps, or 20 kg for one-person augers) in cases where the

manufacturer could demonstrate that the extra weight was the result of

using a 4-stroke engine or other technology cleaner than the otherwise

allowed two stroke engine. Today's reproposed program would incorporate

the Agency's decision reached in the rulemaking addressing the proposed

modifications to the handheld definition.

2. Engines Used in Recreational Vehicles and Applicability of the Small

SI Regulations to Model Airplanes

Today's SNPRM does not propose any revisions to the provisions

relating to engines used in recreational vehicles established in the

Phase 1 program, except as discussed below. It should be noted that EPA

recently issued a proposal that addresses the applicability of the

small SI regulations to engines used in model airplane applications (64

FR 5251). Under this recent proposal, EPA has proposed to consider

engines that serve ``only to propel a flying vehicle * * * through

air'' to be recreational engines provided they also meet the other

existing criteria that apply to that term. As ``recreational'' engines

they would be effectively excluded from the small SI program. Today's

reproposed program would incorporate the Agency's decision reached in

the rulemaking addressing the proposed modifications to the

recreational vehicle definition.

3. Engine Labeling

Under the January 1998 NPRM, EPA proposed that manufacturers would

be required to state the useful life hours on the engine label. For

nonhandheld engines only, EPA proposed an alternative to this engine

labeling requirement. Under the alternative proposal, nonhandheld

engine manufacturers could use a designator of useful life hours (e.g.,

A, B, or C) and then include words on the label which would direct the

consumer to the owner's manual for an explanation of the meaning of the

useful life designator.

As indicated in the January 1998 NPRM, EPA believes that requiring

manufacturers to include on the engine label the number of hours of

emission compliance for which the engine is properly certified would

provide an important tool to consumers in making their purchase

decisions between competing engines. In addition, EPA anticipates

manufacturers will use the useful life hours of the engine as a

marketing tool. EPA originally included the alternative option noted

above based on the concern expressed by nonhandheld engine

manufacturers that consumers could be confused by the meaning of the

useful life period if the specific number of hours was included on the

label. However, as indicated in the preamble to the January 1998 NPRM,

EPA was concerned that an alternative designation, such as ``A, B, or

C'' may not provide the same useful information to the consumer as

including the useful life hours directly

[[Page 40959]]

on the label. EPA is also aware of labeling options being considered by

California that would allow removing the actual hours of operation from

the engine label and including additional information on the product,

perhaps not permanently affixed to the engine, which would satisfy the

need to properly inform consumers. Allowing such labeling would also

serve the goal of harmonization which was supported by PPEMA in their

comments on the January 1998 NPRM.

With today's SNPRM, EPA is proposing to extend the alternative

labeling option contained in the January 1998 NPRM, as noted above, to

handheld engines. The Agency sees no reason why consumers would react

differently to labeling information whether it is affixed to a handheld

engine or a nonhandheld engine. Additionally, this SNPRM proposes to

allow other labeling options provided the Administrator determines that

such options satisfy the information intent of the label. This proposed

option is intended to allow for the nationwide use of the California

labeling system. In evaluating the adequacy of an alternative label,

EPA would consider the extent to which the manufacturer's alternative

engine label combined with other readily accessible consumer

information adequately informs the consumer of the emission performance

of the engine. The reproposed labeling requirements would be the same

as those recently adopted in the final Phase 2 nonhandheld rulemaking.

It should be noted that EPA expects to work in partnership with the

industry in developing consumer outreach material to better inform

consumers of the emission improvements available through purchase of

equipment using Phase 2 engines. EPA expects such outreach material

will better serve the informational needs of consumers than just

relying on any of the proposed labeling options.

4. Emission Warranty

Under the current regulations, the base emission performance

warranty extends for a period of two years of engine use from the date

of sale. However, since the January 1998 NPRM was issued, manufacturers

of handheld engines have indicated to EPA that there are applications,

particularly for commercial equipment, in which the useful life hours

of the entire piece of equipment can be surpassed in one year of

typical in-use operation. Therefore, EPA is proposing an option whereby

manufacturers of handheld engines could request approval from EPA to

adopt an emission warranty period of one year if they can demonstrate

such a shorter warranty period would be appropriate for that engine/

equipment combination. In addition, EPA is dropping the proposed

warranty provisions from the January 1998 NPRM which would have

required a different Phase 2 warranty statement compared to the Phase 1

warranty statement. Therefore, the Phase 2 provisions specifying what

manufacturers must warrant, would remain unchanged from the existing

Phase 1 program, and would match those contained in the recently

adopted final Phase 2 nonhandheld rulemaking.

III. Projected Impacts

A. Environmental Benefit Assessment

National Ambient Air Quality Standards (NAAQS) have been set for a

number of criteria pollutants, including ozone (O3), which

adversely affect human health, vegetation, materials and visibility.

Concentrations of ozone are impacted by HC and NOX

emissions. EPA believes that the standards proposed in this rule would

reduce emissions of HC and NOX and help most areas of the

nation in their progress towards attainment and maintenance of the

NAAQS for ozone. The following section provides a summary of the roles

of HC and NOX in ozone formation. The following section also

addresses the estimated emissions impact of this rule, and the health

and welfare effects of ozone, CO, and hazardous air pollutants.

1. Roles of HC and NOX in Ozone Formation

Both HC and NOX contribute to the formation of

tropospheric ozone through a complex series of reactions. EPA's primary

reason for controlling emissions from small SI handheld engines is the

role of their HC emissions in forming ozone. Of the major air

pollutants for which NAAQS have been designated under the CAA, the most

widespread problem continues to be ozone, which is the most prevalent

photochemical oxidant and an important component of smog. Ozone is a

product of the atmospheric chemical reactions involving oxides of

nitrogen and volatile organic compounds. These reactions occur as

atmospheric oxygen and sunlight interact with hydrocarbons and oxides

of nitrogen from both mobile and stationary sources.

A critical part of this problem is the formation of ozone both in

and downwind of large urban areas. Under certain weather conditions,

the combination of NOX and HC has resulted in urban and

rural areas exceeding the national ambient ozone standard by as much as

a factor of three. Thus it is important to control HC over wider

regional areas if these areas are to come into and maintain compliance

with the ozone NAAQS.

2. Health and Welfare Effects of Tropospheric Ozone

Ozone is a powerful oxidant causing lung damage and reduced

respiratory function after relatively short periods of exposure

(approximately one hour). The oxidizing effect of ozone can irritate

the nose, mouth, and throat causing coughing, choking, and eye

irritation. In addition, ozone can also impair lung function and

subsequently reduce the respiratory system's resistance to disease,

including bronchial infections such as pneumonia.

Elevated ozone levels can also cause aggravation of pre-existing

respiratory conditions such as asthma. 7 Ozone can cause a

reduction in performance during exercise even in healthy persons. In

addition, ozone can also cause alterations in pulmonary and extra

pulmonary (nervous system, blood, liver, endocrine) function. Elevated

ozone levels have also been shown to affect vegetation, including

reduced agricultural and commercial forest yields, reduced growth and

decreased survivability of tree seedlings, increased tree and plant

susceptibility to disease, pests, and other environmental stresses, and

potential long-term effects on forests and ecosystems.

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\7\ United States Environmental Protection Agency, Review of the

National Ambient Air Quality Standards for Ozone--Assessment of

Scientific and Technical Information: OAQPS Staff Paper, EPA-450/2-

92-001, June 1989, pp. VI-11 to 13.

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High levels of ozone have been recorded even in relatively remote

areas, since ozone and its precursors can travel hundreds of miles and

persist for several days in the lower atmosphere. Ozone damage to

plants, including both natural forest ecosystems and crops, occurs at

ozone levels between 0.06 and 0.12 ppm. 8 Repeated exposure

to ozone levels above 0.04 ppm can cause reductions in the yields of

some crops above ten percent. 9 The value of crops lost to

ozone damage, while difficult to estimate precisely, has been estimated

to be on the order of $2 billion per year in the United States.

10 The effect of ozone on complex ecosystems such as forests

is even more difficult to quantify. However, there is evidence that

some forest types are negatively affected by

[[Page 40960]]

ambient levels of ozone. 11 Specifically, in the San

Bernardino Mountains of southern California, ozone is believed to be

the agent responsible for the slow decline and death of ponderosa pine

trees in these forests since 1962. 12

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\8\ U.S. EPA, Review of NAAQS for Ozone, p. X-10.

\9\ U.S. EPA, Review of NAAQS for Ozone, p. X-10.

\10\ U.S. EPA, Review of NAAQS for Ozone, p. X-22.

\11\ U.S. EPA, Review of NAAQS for Ozone, p. X-27.

\12\ U.S. EPA, Review of NAAQS for Ozone, p. X-29.

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Finally, by trapping energy radiated from the earth, tropospheric

ozone may contribute to heating of the earth's surface via the

``greenhouse effect,'' thereby contributing to global warming,

13 although tropospheric ozone is also known to reduce

levels of UVB radiation reaching the earth's surface, the increase of

which is expected to result from depletion of stratospheric ozone.

14

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\13\ NRC, Rethinking the Ozone Problem, p. 22.

\14\ The New York Times, September 15, 1992, p. C4.

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3. Estimated Emissions Impact of the Supplemental Proposed Regulations

The emission standards contained in today's proposal are expected

to reduce average in-use exhaust HC+NOX emissions from small

SI handheld engines by approximately 78 percent beyond Phase 1

standards for handheld engines by the year 2027, by which time a

complete fleet turnover is expected. This translates into an annual

nationwide reduction of roughly 264,000 tons of exhaust

HC+NOX in the year 2027 over that expected from Phase 1.

Reductions in CO levels beyond Phase 1 levels, due to improved

technology, are also to be expected but have not been estimated because

EPA does not believe it can accurately quantify the expected benefit.

Along with the control of all hydrocarbons, the proposed standards

should be effective in reducing emissions of hydrocarbons considered to

be hazardous air pollutants (HAPs), including benzene and 1,3-

butadiene. However, the magnitude of reduction would depend on whether

the control technology reduces the individual HAPs in the same

proportion as total hydrocarbons.

These emission reduction estimates are based on in-use population

projections using growth estimates, engine attrition (scrappage),

activity indicators and new and in-use engine emission factors. Data on

activity indicators were based on the Phase 1 nonroad small SI

regulation. Estimates of engine populations were based on population

data available from the PSR databases 15, data provided by

small SI engine and equipment manufacturers to EPA, and on a study done

for the California Air Resources Board by Booz Allen & Hamilton.

Population projections into the future are based on a linear growth

assumption. Attrition rates (based on the probability that an engine

remains in service into a specific calendar year) for all engines

included in this analysis are developed on the assumption that the

equipment attrition function may be represented by a cumulative Normal

distribution function. The in-use emission factors are based on a

multiplicative deterioration factor which is a function of the

cumulative hours of equipment usage.

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\15\ Power Systems Research, Engine Data and Parts Link data

bases, St. Paul, Minnesota, 1992.

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Table 4 presents the emission inventories for the handheld engines

covered by this proposed rule which were developed using EPA's NONROAD

Model. The total annual nationwide HC and NOX emissions from

small SI handheld engines included in this proposal were estimated for

both the baseline scenario (i.e., with Phase 1 controls applied) and

the controlled scenario (i.e., the proposed Phase 2 controls). Because

there are so few engines expected to be certified under the proposed

Class I-A and Class I-B standards, EPA has not included any emissions

from such engines in the inventory or benefit projections. The reader

is directed to Chapter 6 of the Supplemental Draft RIA for a complete

description of the inventory modeling analysis.

Table 4.--Projected Annual Exhaust HC+NOX Emissions from Handheld Equipment (Tons/Year)

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

Tons Reduced

With Phase 1 With the due to the Percentage

Year Controls Proposed Proposed Reduction

only Phase 2 Phase 2 (percent)

Program Program

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

2000.................................................... 207,257 207,257 ............ ............

2005.................................................... 227,039 126,602 100,437 44.2

2010.................................................... 250,390 60,992 189,398 75.6

2015.................................................... 274,072 61,583 212,489 77.5

2020.................................................... 297,967 66,276 231,691 77.8

2025.................................................... 321,400 71,436 249,964 77.8

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4. Health and Welfare Effects of CO Emissions

CO is a colorless, odorless gas which can be emitted or otherwise

enters into ambient air as a result of both natural processes and human

activity. Although CO exists as a trace element in the troposphere,

much of human exposure resulting in elevated levels of

carboxyhemoglobin (COHb) in the blood is due to incomplete fossil fuel

combustion, as occurs in small SI engines.

The concentration and direct health effect of CO exposure are

especially important for small SI handheld engines because the operator

of a handheld application is close to the equipment as it functions. In

some applications, the operator must be adjacent to the exhaust outlet

and is in the direct path of the exhaust as it leaves the engine.

The toxicity of CO effects on blood and tissues, and how these

effects manifest themselves as organ function changes, have also been

topics of substantial research efforts. Such studies provided

information for establishing the National Ambient Air Quality Standard

for CO. The current primary and secondary NAAQS for CO are 9 parts per

million for the one-hour average and 35 parts per million for the

eight-hour average.

5. Health and Welfare Effects of Hazardous Air Pollutant Emissions

The focus of today's proposal is reduction of HC emissions as part

of the solution to the ozone nonattainment problem. However, direct

health effects

[[Page 40961]]

are also a reason for concern due to direct human exposure to emissions

from small SI handheld engines during the operation of handheld

equipment. Of specific concern is the emission of hazardous air

pollutants (HAPs). In some applications, the operator must be adjacent

to the exhaust outlet and is in the direct path of the exhaust as it

leaves the engine. Today's regulatory proposal should be effective in

reducing HAPs such as benzene and 1,3-butadiene, in so far as these are

components of the HC emissions being reduced by the Phase 2 standards.

Benzene is a clear, colorless, aromatic hydrocarbon which is both

volatile and flammable. Benzene is present in both exhaust and

evaporative emissions. Health effects caused by benzene emissions

differ based on concentration and duration of exposure. The

International Agency for Research on Cancer (IARC), classified benzene

as a Group I carcinogen, namely an agent carcinogenic to humans.

Occupational studies continue to provide the bulk of evidence of

benzene's carcinogenicity. Workers are exposed at much higher levels

than is the general public. Human epidemiologic studies of workers in

highly exposed occupations have demonstrated that exposure to benzene

can cause acute nonlymphocytic leukemia and other blood disorders, that

is, preleukemia and aplastic anemia. Additionally, changes in blood and

bone marrow consistent with hematotoxicity are recognized in humans and

experimental animals. Benzene has also been linked with genetic changes

in humans and animals.

1,3-butadiene is a colorless, flammable gas at room temperature.

This suspected human carcinogen is insoluble in water and its two

conjugated double bonds make it highly reactive. 1,3-butadiene is

formed in internal combustion engine exhaust by the incomplete

combustion of the fuel and is assumed not present in evaporative and

refueling emissions. The Health Risk Assessment of 1,3-Butadiene (EPA/

600/P-98/001A, February 1998), concludes that 1,3-butadiene is a known

human carcinogen, based on three types of evidence: (1) Excess leukemia

in workers occupationally exposed to 1,3-butadiene (by inhalation), (2)

occurrence of a variety of tumors in mice and rats by inhalation, and

(3) evidence in animals and humans that 1,3-butadiene is metabolized

into genotoxic metabolites. Other health effects due to very high

levels of exposure include heart, blood and lung diseases.

Because air toxic levels generally decrease in proportion to

overall emissions once emission control technology is applied, the

amount of benzene and 1,3-butadiene produced by new small SI engines

should diminish once the proposed program becomes effective.

Consequently, exposure to HAPs from new handheld engines would be

reduced, as would associated health and environmental effects. Although

there is little data on direct health effects of small SI engines, one

Swedish study concluded that benzene emissions from chainsaw engines

were rather high.16

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\16\ ``Occupational Exposure to Chain Saw Exhausts in Logging

Operations,'' American Industrial Hygiene Association, J48, 1987.

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B. Cost and Cost-Effectiveness

EPA has calculated the cost-effectiveness of this proposed rule by

estimating costs and emission benefits for these engines. EP

This text is long and has been trimmed here. Open the source document for the complete record.