Control of Emissions of Air Pollution From New Marine Compression-Ignition Engines at or Above 37 kW

SUMMARY: In this action, we are establishing an emission control

program for new marine diesel engines rated at or above 37 kilowatts.

The affected engines are used for propulsion and auxiliary purposes in

a wide variety of marine applications. The standards for these engines

will require substantial reductions in oxides of nitrogen and

particulate matter emissions to correspond with the next round of

emission standards for comparable land-based engines. The standards

will lead to significant reduction in oxides of nitrogen and

particulate matter emissions from this source. When combined with other

mobile source emission control programs, the program described in this

action will help provide long-term improvements in air quality in many

port cities and other coastal areas. Overall, these emission standards

provide much-needed assistance to states facing ozone and particulate

air quality problems, which can cause a range of adverse health effects

for their residents, especially in terms of respiratory impairment and

related illnesses.

The persons potentially affected by this action are those who

manufacture new marine diesel engines or marine vessels or other

equipment using such engines. Additional requirements apply to

companies that rebuild or maintain these engines.

DATES: This final rule is effective January 28, 2000 except the

amendments to 40 CFR parts 89 and 92 will become effective February 28,

2000, unless EPA receives adverse comment on or before January 28, 2000

regarding the amendments to 40 CFR parts 89 and 92. If we receive such

comment, we will publish a timely withdrawal in the Federal Register

informing the public that the amendments to 40 CFR parts 89 and 92 will

not take effect.

The incorporation by reference of certain publications listed in

the regulations in 40 CFR part 94 is approved by the Director of the

Federal Register as of January 28, 2000.

ADDRESSES: Materials relevant to this rulemaking, including the Final

Regulatory Impact Analysis, are contained in Public Docket A-97-50.

Additional materials can be found in Public Docket A-92-28 (Control of

Air Pollution; Emission Standards for New Gasoline Spark-Ignition and

Diesel Compression-Ignition Marine Engines). For the changes to 40 CFR

part 92, additional materials can be found in Public Docket A-94-31

(Emission Standards for Locomotives and Locomotive Engines). These

dockets are located at Room M-1500, Waterside Mall (ground floor), U.S.

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

20460. You may inspect the docket from 8:00 a.m. until 5:30 p.m.,

Monday through Friday. We may charge a reasonable fee for copying

docket materials.

For further information on electronic availability of this action,

see SUPPLEMENTARY INFORMATION below.

FOR FURTHER INFORMATION CONTACT: Alan Stout, Office of Mobile Sources,

(734) 214-4805, [email protected].

For a copy of the Information Collection Request, contact Sandy

Farmer at EPA by phone at (202) 260-2740, by email at

[email protected], or download it off the Internet at http:/

/www.epa.gov/icr and refer to EPA ICR No. 1897.02.

SUPPLEMENTARY INFORMATION:

Regulated Entities

You may be regulated by this action if you manufacture or introduce

into commerce new marine diesel engines or if you make vessels or other

equipment using these engines. Other requirements may apply to you if

you rebuild or maintain marine engines. Regulated categories and

entities include:

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Examples of NAICS

Category regulated entities Code SIC Code

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Industry.................... Manufacturers of new 333618 3519

marine diesel

engines.

Industry.................... Manufacturers of 3366 3731

marine vessels. 3732

Industry.................... Engine repair and 811310 7699

maintenance.

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

guide for readers regarding entities likely to be regulated by this

action. To determine whether particular activities may be regulated by

this action, carefully examine the regulations, especially the

applicability criteria in Sec. 94.1. Direct any questions regarding the

applicability of this action to the person listed in FOR FURTHER

INFORMATION CONTACT.

Obtaining Electronic Copies of the Regulatory Documents

The preamble, regulatory language and Final 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

rulemaking 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/oms/ (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. Statutory Authority

II. Scope of Application

A. Definition of New

B. Importing and Exporting Marine Engines

C. Marine Engine Definitions

D. Remanufactured Engines

E. Recreational Engines

F. Engine Dressing Exemption

G. Foreign-Trade Exemption

H. National Security Exemption

I. Competition Exemptions

J. Other Exemptions

III. Engine Categories

IV. Emission Standards and Related Provisions

A. Standards and Dates

1. MARPOL Annex VI

2. Tier 2

B. Total Hydrocarbons

[[Page 73301]]

C. Crankcase Emissions

D. Smoke Requirements

E. Alternative Fuels

F. Test Procedures

1. Duty Cycles

2. In-Use Testing

3. Test Fuel

4. Adjustable Parameters

5. Determination of Maximum Test Speed

G. Not-to-Exceed Standards and Related Requirements

H. Voluntary Low-Emitting Engine Program

I. Durability

1. Useful Life

2. Warranty Periods

3. Deterioration Factors

4. Rebuilt Engines

5. Replacement Engines

J. Certification

1. Engine Family Definition

2. Emission Data Engine Selection

K. Production-Line Testing

L. Miscellaneous Compliance Issues

M. Averaging, Banking, and Trading Program

N. Special Provisions for Post-Manufacture Marinizers

V. Technological Feasibility

VI. Areas for Future Action

A. Tier 3 Emission Standards

B. Emission Standards for Remanufactured Engines

C. NTE Requirements for Auxiliary Engines

D. Application of Provisions to Marine Diesel Engines Less than

37 kW

E. Category 3 Engines

VII. Projected Impacts

A. Environmental Impacts

B. Noise, Energy, and Safety

C. Economic Impacts

D. Cost-effectiveness

VIII. Direct Final Changes

IX. Public Participation

X. Administrative Requirements

XI. Judicial Review

List of Tables

Table 1 Engine Category Definitions

Table 2 MARPOL Annex VI Emission Limits

Table 3 Final Tier 2 Emission Standards and Dates

Table 4 Voluntary Emission Standards

Table 5 Useful Life and Warranty Periods

Table 6 Category 1 Commercial Propulsion and Auxiliary Emissions

Inventory

Table 7 Category 2 Emissions Inventory

Table 8 [Reserved]

Table 9 Emission Reductions From Engines Subject to Tier 2

Standards

Table 10 Projected Cost Impacts by Power Rating

Table 11 Cost-Effectiveness of the Marine Tier 2 Standards for HC

and NOX

Table 12 Aggregate Cost-Effectiveness for the Marine Tier 2

Standards for HC and NOX

I. Introduction

A. Background

The Clean Air Act as amended in 1990 mandated that we establish

emission regulations for a variety of previously unregulated nonroad

mobile sources of emissions, including marine engines. We most recently

proposed emission standards and an associated compliance program for

commercial marine diesel engines on December 11, 1998 (63 FR

68508).1 At a public hearing on January 19 and in the rest

of the comment period we heard from 35 commenters. The program we are

finalizing here follows from the approach described in the proposal,

though we made numerous adjustments in response to the comments and

other information received since the proposal. The proposal included an

extensive discussion of the air quality problems we are addressing and

the regulatory history of this rulemaking (see Sections I, II, and XI

of the proposal). A summary description of the final rule follows in

this document. Further discussion of issues and the anticipated impacts

of the final rule are in the Final Regulatory Impact Analysis (Final

RIA) and the Summary and Analysis of Comments. These documents and all

the comments we received are contained in Docket A-97-50.

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\1\ The December 1998 proposal superseded earlier proposed

emission standards for marine diesel engines (59 FR 55929, November

9, 1994, and 61 FR 4600, February 7, 1996). References in this

document to ``the proposal'' or ``the proposed rule'' refer only to

the December 1998 proposal.

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The International Maritime Organization (IMO) is the Secretariat

for the International Convention on the Prevention of Pollution from

Ships 1973, as modified by the Protocol of 1978 relating thereto

(better known as MARPOL 73/78). Annex VI to that Convention, adopted on

September 27, 1997 (but not yet in force) contains, among other

provisions, requirements to limit NOX emissions from marine

diesel engines, but sets no limits for other engine pollutants (i.e.,

HC, CO, PM). Other provisions of Annex VI include requirements for

ozone-depleting substances, sulfur content of fuel, incineration, VOCs

from refueling, and fuel quality. The United States has signed Annex

VI, but the Annex has not yet been forwarded to the Senate for its

advice and consent.

B. Statutory Authority

We conducted a study of emissions from nonroad engines, vehicles,

and equipment in 1991, as directed by the Clean Air Act, section 213(a)

(42 U.S.C. 7547(a)). Based on the results of that study, we determined

that emissions of NOX, VOCs (including HC), and CO from

nonroad engines and equipment contribute significantly to ozone and CO

concentrations in more than one nonattainment area (see 59 FR 31306,

June 17, 1994). Given this determination, section 213(a)(3) of the Act

requires us to establish (and from time to time revise) emission

standards for those classes or categories of new nonroad engines,

vehicles, and equipment that in our judgment cause or contribute to

such air pollution. We have determined that commercial and recreational

marine diesel engines rated over 37 kW cause or contribute to such air

pollution (See also the preamble to the proposed rule).

Where we determine that other emissions from new nonroad engines,

vehicles, or equipment significantly contribute to air pollution that

may reasonably be anticipated to endanger public health or welfare,

section 213(a)(4) authorizes EPA to establish (and from time to time

revise) emission standards from those classes or categories of new

nonroad engines, vehicles, and equipment that cause or contribute to

such air pollution. We have determined that commercial and recreational

marine diesel engines rated over 37 kW cause or contribute to such air

pollution (See also the preamble to the proposed rule).

II. Scope of Application

Clean Air Act section 213(a)(3) broadly sets the scope of

application of this final rule, instructing us to promulgate

regulations containing standards applicable to emissions from those

classes or categories of new nonroad engines and new nonroad vehicles

that are found to cause or contribute to ozone or carbon monoxide

concentrations in more than one nonattainment area. As explained below

and in the text of the regulations, the rulemaking generally covers all

new diesel engines installed in a marine vessel, and all new marine

vessels that use those engines. This includes both propulsion and

auxiliary engines.

A. Definition of New

We are extending the definition of ``new'' contained in 40 CFR 89.2

to marine diesel engines at or above 37 kW. Under that definition, an

engine is considered new until its legal or equitable title has been

transferred, or the engine has been placed into service. Because the

definition of new in 40 CFR 89.2 applies to both engines and equipment,

its extension to the marine sector extends as well to vessels. Starting

with the implementation dates of the new emission standards, we will

consider vessels new until their equitable or legal title has been

transferred to an ultimate purchaser. In addition, we will consider a

vessel new if it undergoes modifications such that the modified vessel

derives at least half

[[Page 73302]]

of its value from new materials or components. This prevents someone

from re-using the hull or other parts from a used vessel to avoid

emission standards.

To further clarify the definition of ``new,'' 40 CFR 89.2 specifies

that a nonroad engine, vehicle, or equipment is placed into service

when it is used for its functional purpose. For the purpose of applying

this criteria to marine diesel engines and new vessels, we have

concluded that a marine diesel engine is used for its functional

purpose when it is installed on a marine vessel. This clarification is

needed because some marine diesel engines are made by modifying a

highway or nonroad engine that has already been installed on a vehicle

or other equipment. In other words, the engine has been transferred to

an ultimate purchaser after it is used for its functional purpose as a

land-based nonroad engine (for example, on a truck or a backhoe) and is

therefore no longer new, but it is later removed for marinization and

installation on a marine vessel. While the 40 CFR 89 requirements for

land-based nonroad diesel engines do not contain such a requirement, we

believe it is reasonable to treat these engines as new marine engines

when they are installed on a vessel. While the practice of marinizing

used highway or nonroad engines may be infrequent, it could become more

common if these engines are not subject to the standards finalized in

this document.

As described in the proposal, we are not applying emission

standards to remanufactured engines. In Section VI we discuss the

potential for considering this issue in the future.

B. Importing and Exporting Marine Engines

Engines imported for use in the United States are covered by this

final rule whether they are imported as loose engines or are already

installed on a vessel constructed elsewhere. We will require all

imported engines to have a certificate of conformity from us before

anyone may enter them into commerce in the United States, subject to

limited exemptions. Accordingly, we are applying the approach contained

in other highway and nonroad engine programs, according to which any

engine or vessel that is imported into the United States without a

valid certificate of conformity and that was built after the effective

date of the applicable standards, will be considered new at the time it

is imported into the United States. As a new engine, it will have to

comply with the relevant emission limits in effect at the time it was

manufactured. Thus, for example, a marine vessel manufactured in a

foreign country in 2007 that is imported into the United States in 2010

would be considered new, and its engine would have to comply with the

emission limits in effect for model year 2007. This provision is

important to prevent manufacturers from avoiding the emission

requirements by building vessels abroad, transferring their title, and

then importing them as used vessels.

Engines that are to be exported to countries with emission

standards different than ours are exempt from the requirements of this

final rule. Marine engines that are exported but are subsequently re-

imported into the United States must, however, meet the new emission

standards that apply based on the manufacturing date of the engine.

This would be the case when a foreign company purchases marine engines

manufactured in the United States for installation on a vessel that

will be subsequently exported to the United States. It would also be

the case when a foreign company purchases marine engines manufactured

in the United States for dressing and subsequent re-exportation to the

United States. Engines that are intended for export but that will be

re-imported into the United States are subject to the emission

standards at the time the engine is manufactured, unless the vessel

manufacturer or marinizer intends to re-certify the engines to comply

with emission standards before they enter the United States.

Consequently, foreign purchasers who do not wish to recertify the

engines will need to make sure they purchase complying engines for

those marine vessels or engines they intend to subsequently offer for

sale in the United States. Engines intended for export and sale in a

foreign country should be easily distinguishable from complying engines

because complying engines are required to be labeled as such. Any

person who introduces into commerce in the United States a noncomplying

engine that is intended for export and use in a foreign country will be

subject to civil penalties.

To determine when an engine or vessel will be considered

``imported'' for the purposes of determining compliance with emission

standards, we will follow the approach contained in the Harmonized

Tariff Schedule of the United States (HTSUS). According to HTSUS,

vessels used in international trade or commerce or vessels brought into

the territory of the United States by nonresidents for their own use in

pleasure cruising are admitted without formal customs consumption entry

or payment of duty.2 This approach is consistent with the

Treasury Department's ruling, which concluded that vessels coming into

the United States temporarily as carriers of passengers or merchandise

are not subject to customs entry or duty, but if brought into the

United States permanently, they are to be considered and treated as

imported merchandise. See American Customs Brokerage Co., Inc., a/c

Astral Corp. v. United States, 375 F. Supp. 1360, 1366 (Cust. Ct.

1974). This means that engines installed on vessels flagged in another

country that come into the United States temporarily will not be

subject to the emission standards, because they are not imported and

are therefore not new engines under Clean Air Act Section 216(3) and

213(d).

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\2\ HTSUS (1994), Additional U.S. Note 1. In particular, cruise

ships, ferry boats, cargo ships, barges and ``similar vessels for

the transportation of persons or goods'' are duty free. HTSUS (1994)

8901.

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C. Marine Engine Definitions

In the final land-based nonroad engine rule, we determined that a

portable auxiliary engine used onboard a marine vessel should not be

considered a marine engine (October 23, 1998, 63 FR 56967). Instead, a

portable auxiliary engine is considered to be a land-based engine

subject to the requirements of 40 CFR Part 89. To distinguish a marine

auxiliary engine installed on a marine vessel from a land-based

portable auxiliary engine used on a marine vessel, we specified in that

rulemaking that an auxiliary engine is installed on a marine vessel if

its fuel, cooling, or exhaust systems are an integral part of the

vessel. These auxiliary engines are therefore not fundamentally

different than land-based engines and we regulate them under 40 CFR

Part 89.

With very few exceptions, this final marine engine rule applies

equally to propulsion and auxiliary engines. Consistent with the

definitions in 40 CFR Part 89, a propulsion engine is one that is

intended to move a vessel through the water or assists in guiding the

direction of the vessel (including, for example, bow thrusters).

Auxiliary engines are all other marine engines. Propulsion and

auxiliary engines have different duty cycles and different load factors

for calculating emission credits. Auxiliary engines will not be subject

to not-to-exceed requirements until we finalize them for land-based

nonroad engines. Also, auxiliary engines are not eligible to qualify as

recreational engines.

[[Page 73303]]

Marine drilling platforms are another example of an application

where the question arises of whether an engine is a marine engine

(subject to 40 CFR Part 94) or a land-based nonroad diesel engine

(subject to 40 CFR 89). Drill ships are clearly marine vessels, so

engines installed in drill ships are marine engines. In contrast,

permanently anchored drilling platforms would not qualify as marine

vessels, so none of the engines associated with one of these facilities

would be a marine engine. A third class of drilling equipment is less

clear. Semi-submersible drilling rigs are moored to the ocean bottom,

but have some propulsion capability. We consider these to be marine

vessels, so any engine that is ``installed'' on such a rig would be a

marine engine. As described above, we would consider portable engines

on a drilling rig to be land-based nonroad engines, since they are not

installed on the vessel.

D. Remanufactured Engines

As described in the proposed rule, we are not setting emission

standards for engines originally manufactured before the Tier 2

standards take effect. Section VI describes our ongoing concern with

remanufactured engines.

E. Recreational Engines

We continue to believe, as we discussed in the proposal, that it is

appropriate to distinguish between commercial and recreational marine

engines for the purpose of establishing requirements for engine and

vessel manufacturers. This is because the performance characteristics

for these two kinds of engines can be substantially different, due to

the different characteristics of the vessels on which they are

installed. Commercial marine vessels tend to be displacement hull

vessels, designed and built for a unique application. Power ratings for

engines used on these vessels are analogous to land-based applications,

and these engines are warranted for 2,000 to 5,000 hours of use a year.

Recreational vessels, on the other hand, tend to be planing vessels,

and engines used on these vessels are designed to achieve higher power

output with less engine weight. This increase in power reduces the

lifetime of the engine; recreational marine engines are therefore

warranted for fewer hours of operation than their commercial

counterparts.

We will be pursuing emission limits for recreational marine engines

in a separate rulemaking. This makes it necessary to clearly define

recreational marine engine, so engine manufacturers and users will be

able to know which set of standards apply to their engine.

In this final rule, we are finalizing a definition of recreational

marine engine as a propulsion engine that is intended by the

manufacturer to be installed on a recreational vessel. To ensure that

users will not install a recreational engine on a commercial vessel his

engine, we are requiring the following label language (in our proposed

rulemaking for recreational marine engines, we will also address any

changes that would be appropriate or necessary for this label):

THIS ENGINE IS CATEGORIZED AS A RECREATIONAL ENGINE UNDER 40 CFR PART

94, AND IS NOT SUBJECT TO THE EMISSION STANDARDS OF THAT PART.

INSTALLATION OF THIS ENGINE IN ANY NONRECREATIONAL VESSEL IS A

VIOLATION OF FEDERAL LAW SUBJECT TO CIVIL PENALTY.

It should be noted that there is no prohibition against installing

a certified commercial marine engine on a recreational vessel. In fact,

we encourage recreational vessel manufacturers to use certified engines

whenever possible due to the beneficial impact on the environment.

There is also no prohibition on installing an old marine engine in an

old vessel.

We are revising our definition of recreational marine engine, in

response to comments, to bring it more in line with the Coast Guard

approach contained in 46 U.S.C. 2101. Specifically, we are defining a

recreational vessel as a vessel that is intended by the vessel

manufacturer to be operated primarily for pleasure or leased, rented or

chartered to another for the latter's pleasure. However, we continue to

believe that it is necessary to put some boundaries on this definition,

since certain vessels that are used for pleasure may have operating

characteristics that are, in fact, similar to commercial marine

vessels. For example, engines installed on excursion boats should be

grouped with commercial marine engines because they are used much more

intensely (more hours, higher load) than engines on a similar vessel

operated exclusively for one's own pleasure. Therefore, we are drawing

on the Coast Guard's definition of passenger vessel to further

delineate what will be considered to be a recreational vessel.

Specifically, vessels of less than 100 gross tons that carry more than

six passengers will not be considered recreational vessels, and vessel

of 100 gross tons or more that carry one or more passengers will not be

considered recreational vessels. For the purpose of defining a

recreational vessel, a passenger will have the same meaning as that in

given by 46 U.S.C. 2101(21), which is generally a person that pays to

be on the vessel. Finally, a vessel that is used solely for competition

will not be considered a recreational vessel.

A vessel will be a considered a recreational vessel if the boat

builder intends that the customer will operate the boat consistent with

the recreational-vessel definition. Relying on the boat builder's

intent is necessary since manufacturers need to establish a vessel's

classification before it is sold, whereas the Coast Guard definitions

apply at the time of use. The final definition therefore relies on the

intent of the boat builder to establish that the vessel will be used

consistent with the above criteria. If a boat builder manufactures a

vessel for a customer who intends to use the vessel for recreational

purposes, we will always consider that a recreational vessel regardless

of how the owner (or a subsequent owners) actually uses it. To be able

to verify that boat buyers don't abuse this provision, we would need to

have some way of verifying the validity of the vessel manufacturer's

original intent, for example, with written assurance from the buyer. We

are not finalizing such a requirement in this final rule, but intend to

address it when we propose emission standards for recreational marine

engines.

F. Engine Dressing Exemption

Some companies produce marine engines by marinizing new, land-based

engines and modifying them for installation on a marine vessel. This

can be done in a way that does not affect emissions. For example, the

modifications may consist of adding mounting hardware and a generator

or reduction gears for propulsion. It can also involve installing a new

marine cooling system that meets original manufacturer specifications

and duplicates the cooling characteristics of the land-based engine,

but with a different cooling medium (i.e., water). This is similar to

the process of buying certified land-based engines to make a generator

or other equipment. This simplified approach of producing an engine can

be described as dressing an engine for a particular application.

Because the modified land-based engines are subsequently used on a

marine vessel, however, these modified engines will be considered

marine diesel engines, which then fall under the requirements in this

final rule.

The final rule exempts engines from the marine certification

requirements if

[[Page 73304]]

the marinizing company meets the following conditions.

(i) The engine being dressed, (the ``base'' engine) must be a

heavy-duty highway, land-based nonroad, or locomotive engine, certified

pursuant to 40 CFR Part 86, 40 CFR Part 89, or 40 CFR Part 92. The base

engine must be certified to the standards that apply at the time the

base engine manufacturer completes assembly of the engine. We don't

allow stockpiling of uncertified engines.

(ii) The dressing process must not involve any changes that can

reasonably be expected to increase engine emissions. This includes a

requirement that engine cooling and aftercooling systems stay within

the ranges specified by the original engine manufacturer.

(iii) The original emissions-related label must remain on the

engine.

(iv) The dressing company must report annually to us the models

that are exempt under this provision.

(v) The engine model must not be primarily for marine application.

The goal of our engine dressing provisions is to eliminate the

burden of certification and other compliance requirements where we have

confidence that engines already certified to comparable standards from

other programs will meet marine engine emission standards. Moreover,

the certificate holder for the base engine continues to be liable,

under the terms of the original certification, for the emissions

performance of the dressed engine. We will nevertheless require, as we

proposed, that a company certify dressed engines under 40 CFR Part 94

if the majority of engines produced are for marine application. This

prevents a company taking advantage of the engine dressing exemption to

produce marine diesel engines under, for example, a land-based nonroad

diesel certificate, even though the engine might be used almost

exclusively for marine application. Companies that produce engines

qualifying for the engine dressing exemption will be exempt from the

certification requirements and prohibited acts of 40 CFR Part 94.

Minimal reporting and labeling requirements apply to these engines, as

described below.

Companies that produce marine versions of their base engines may

qualify for the engine dressing exemption if they meet the established

criteria. Base engine manufacturers utilizing the dressing exemption

must submit marine-specific emission data on their dressed marine

engines. In addition, we may request marine-specific data from the

original engine manufacturer if another company is dressing their

engines for marine application. We would use this data for oversight to

determine the validity of the exemption. Except for this testing

responsibility, the discussion of engine dressing applies equally

whether an original engine manufacturer or a post-manufacture marinizer

produces the marine engine.

Heavy-duty highway engines are certified to a much different test

cycle, which has in the past prevented us from accepting a highway

engine certificate for nonroad applications for certification. Now that

we are proposing to revise the standards and test procedures for these

engines to control steady-state emissions, we can be more confident

that they will adequately control emissions in a marine application.

Thus, any certified heavy-duty highway, nonroad, or locomotive engine

will be eligible for the dressing exemption.

Engine manufacturers might use averaging, banking, or trading to

produce land-based engines that are certified with emission levels

exceeding the comparable marine emission standard. These engines could

not meet the proposed engine dressing criteria. Unlike an original

engine manufacturer, a post-manufacture marinizer has no control over

this. We have therefore simplified the criteria to say that any engine

must be certified to land-based standards that apply to that engine at

the time the dressing company buys the engine. This is true regardless

of whether the original engine was certified using emission credits

under the ABT program. Similarly, our NTE provisions do not apply to

dressed engines, unless NTE provisions are in place for the certified

base engine.

Engines that qualify as dressed engines are exempt from the marine

emission standards. We therefore will not treat these as regulated

marine engines. If we find that a company with an engine dressing

exemption does not, in fact, meet the criteria spelled out in the

regulations, the engines are not exempt and we may pursue enforcement

for selling uncertified marine engines and/or tampering with certified

engines.

We are including in the final rule a requirement that dressing

companies put a label on each exempted engine stating the name of the

dressing company and the fact that the engine was marinized without

affecting emission controls. This will make clear that the engine is

acceptable for use in a marine vessel. In addition, dressing companies

will need to give us minimal notification that they are modifying

certified engines. This can be done once annually for a company's whole

range of dressed marine engines.

In addition to the labeling requirement, we encourage engine

manufacturers to inform companies dressing their engines of these

requirements. This will not only aid us in educating affected

companies, it may help protect engine manufacturers from exposure to

liability if their engines are ever found in a marine vessel without

proper documentation.

G. Foreign-Trade Exemption

Oceangoing vessels with Category 3 propulsion engines typically

have additional Category 1 and Category 2 engines onboard. We are

adopting a provision that will allow owners of qualifying vessels to

obtain an exemption from the national emission requirements for

Category 1 and Category 2 engines that are installed on any U.S.-

flagged vessel engaged in foreign trade or other overseas operation. We

expect that ship owners will buy MARPOL-compliant engines because ships

that travel to foreign ports will eventually need to demonstrate

compliance with the Annex VI NOX limits to get an

International Air Pollution Prevention Certificate for their vessels.

While the proposed regulation text inadvertently limited this to

auxiliary engines, the exemption applies equally to propulsion engines

that meet the criteria. This provision will allow all engines on

qualifying vessels to meet solely the international requirements. This

exemption will go into effect at the same time as the implementation of

the domestic emission standards for these engines.

A vessel owner can obtain this exemption if it can be demonstrated

to the Administrator's satisfaction that the vessel: (a) Will spend

less than 25 percent of its total engine operation time within 320

nautical kilometers (200 nautical miles) of U.S. territory; or (b) will

not operate between two United States ports, as evidenced by the vessel

having solely a registry endorsement from the Coast Guard. The second

qualifying criterion was described in the preamble to the proposed

rule, but was inadvertantly omitted from the proposed regulation text.

For installation of new or replacement engines on used vessels, the

vessel's service record can be used to show where the vessel will be

operated. For a new vessel, however, this determination must be made

before it is placed into service, so it will not be possible to use the

vessel's service record to make the determination described in (a).

Instead, application to the Administrator for this exemption

[[Page 73305]]

can rely on the vessel owner's business plans for the vessel, as well

as on records from other vessels under the owner's control, any

features of the vessel that will tend to limit its use within the

specified area, or such other information as the Administrator shall

request. Similarly, the determination described in (b) will rely on a

good faith statement by the owner that the vessel is intended to hold

only a registry endorsement. It should be noted, however, that if we

learn that a vessel owner subsequently receives a coastwise or other

registration that would allow the vessel to operate between two U.S.

ports, we may review the validity of the exemption. This would also

have a bearing on future requests for an exemption.

Category 1 and 2 engines that are exempt under this provision must

be labeled to indicate that they have been certified only to the MARPOL

Annex VI NOX curve limits and that they are for use solely

on vessels that meet the above criteria.

H. National Security Exemption

With regard to the national security exemption, we are applying an

approach similar to that in our existing land-based nonroad and

gasoline marine programs (40 CFR 89.908 and 40 CFR 91.1008). Under this

exemption, only marine engines used in vessels that exhibit substantial

features ordinarily associated with military combat, such as armor,

permanently affixed weaponry, specialized electronic warfare systems,

unique stealth performance requirements, and/or unique combat

maneuverability requirements and which will be owned and/or used by an

agency of the federal government with the responsibility for national

defense, will be exempt from the regulations in this subpart for

reasons of national security. No request for an exemption is necessary

for these engines.

There may be situations in which an exemption from the emission

controls is necessary for other vessels used for national security.

Manufacturers may in these cases request a special national security

exemption. A manufacturer will need to justify this request and get an

agency of the federal government charged with responsibility for

national defense to endorse it. We understand that the Navy, and all

other branches of the government, will do their best to comply with the

emission standards finalized in this final rule.

I. Competition Exemption

We are addressing competition engines, also referred to as racing

engines, in two ways. First, engines produced by the manufacturer

specifically for competition are exempt from the requirements of the

rule. The Clean Air Act does not consider these to be nonroad engines,

so none of the requirements of 40 CFR 94 apply, except for a

requirement to label the engines. Manufacturers need only get our

approval to sell engines under this exemption. Second, someone can

modify a certified engine for competition purposes. Normally we would

prohibit making such changes to certified engines under the anti-

tampering provisions. The final rule, however, exempts these engines

from the anti-tampering provisions for engines that are used ``solely

for competition.''

Engines or vessels used for amateur or occasional competition do

not meet the competition exemption criteria. Our review of a request

from a manufacturer should prevent abuse of this provision for engines

that are originally produced for competition. There is, however, no

approval step for someone who modifies engines for competition, so we

will more clearly spell out criteria indicating whether the engine will

be used solely for competition. Specifically, owners meeting all the

following criteria will qualify for the competition exemption:

--The engine and vessel are designed and built to be used solely for

competition. For example, we would not expect engines used solely for

competition to have a lifetime until rebuild greater than about 10

hours.

--The vessel is registered with a nationally recognized organization

that sanctions professional competitive events.

In addition, once an engine is modified for competition, the engine is

no longer certified to the requirements of 40 CFR 94 and must therefore

not be used in an application where we would require a certified

engine.

J. Other Exemptions

We are extending other nonroad exemptions to marine diesel engines.

These include the testing exemption, the manufacturer-owned exemption,

the display exemption, and the export exemption. Remember that these

exemptions are not necessarily automatic, and that the engine or vessel

manufacturer, or ultimate engine owner, may need to apply for them. As

part of the approval, we may require labels on exempted engines.

III. Engine Categories

The engines that are the subject of this action are very diverse in

terms of physical size, engine technology, control hardware, and costs

associated with reducing emissions. These differences make it difficult

to design one set of emission requirements for all marine diesel

engines. For example, numerical emission limits that may be reasonable

and feasible for a 37 kW engine used on an 5.5-meter (18-foot) boat may

not be reasonable or feasible for a 1,500 kW engine installed on a tug

or a 20,000 kW engine installed on an ocean-going container ship.

Similarly, numerical emission limits appropriate for very large engines

may be not be appropriately stringent for smaller engines, requiring

little or no emission reduction.

Consequently, it is necessary to divide marine diesel engines into

categories for the purposes of applying emission limits and duty

cycles. We are adopting the categorization scheme summarized in Table

1. This relies predominantly on per-cylinder displacement to

distinguish between categories of engines. This has the advantage that

per-cylinder displacement is an engine characteristic that is not

easily changed and is constant for a given engine model or series of

engine models.

Table 1.--Engine Category Definitions

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

Category Displacement per cylinder

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

1................................. disp. 37 kW).

2................................. 5 disp. 30 liters.

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

We define Category 1 engines as those marine diesel engines that

are rated above 37 kW and have a per-cylinder displacement of less than

5 liters. This definition groups together the class of marine engines

that are serially produced and generally derived from land-based

nonroad configurations or use the same emission control technologies.

These engines are typically used as propulsion engines on relatively

small commercial vessels (fishing vessels, tugboats, crewboats, etc.)

They are also used as auxiliary engines on vessels of all sizes and

applications. Category 2 engines are those marine diesel engines with

per-cylinder displacement at or above 5 liters and up to 30 liters.

These are the largest engines that are widely used as propulsion

engines in harbor and coastal vessels in U.S. waters. These engines

also provide auxiliary power on very large vessels. Many of these

engines are of similar size and configuration as locomotive engines or

use comparable emission control technologies. We define Category 3

[[Page 73306]]

engines as those marine diesel engines with a displacement at or above

30 liters per cylinder. These are very large high-power engines that

are used almost exclusively for propulsion on vessels engaged in

international trade.

We further divide Category 1 engines into several subgroups. These

subgroups are similar to the land-based nonroad diesel engine

subgroups, except that the subgroups are based on per-cylinder

displacement rather than on engine power.

The final rule also divides Category 2 into subgroups, with

gradually increasing emission standards for larger engines. Engines

between 5 and 15 L/cyl are generally derived from locomotive engines

and have corresponding emission standards. The current range of marine

engine models over 15 L/cyl have design constraints that limit their

ability to control emissions. Since engines under 15 L/cyl may not

currently be capable of providing adequate propulsion power for all

vessels in this size range, we believe the best approach is to

accommodate the technology constraints of these engines by setting

emission standards less stringent than for locomotive-derived engines.

These standards reflect the reduced capability of controlling emissions

from engines designed to operate on heavy fuel (and the need to reduce

emissions from a higher baseline level).

Engines models between 15 and 20 L/cyl in particular are in a

somewhat transitional category. These engines are sometimes used in

harbor and inland river applications alongside locomotive-derived

engines. Higher-power models are used in coastal and open-sea

operations alongside engines with much larger per-cylinder

displacement. The final rule separates engines between 15 and 20 L/cyl

into two subgroups, those with a rated power less than 3300 kW and

those with a rated power 3300 kW or greater. Locomotive engine

manufacturers are developing new locomotive engines between 15 and 20

L/cyl (up to about 4500 kW), but it is not clear if these engines will

be made available for marine application. In the Tier 2 time frame, we

therefore believe it is appropriate to set emission standards based on

what is achievable for the engines currently available. If it appears

that these larger locomotive engines will become available as marine

engines in the future, we would need to reconsider this approach to

take into account the emission-control capabilities of these engines.

There are several marine engine models available worldwide with

per-cylinder displacement between 20 and 30 liters. Very few of these

engines are currently installed in vessels that are flagged and used in

the United States. In the final rule we expand Category 2 to include

engines up to 30 L/cyl. We subdivide the category with graduated

emission standards for 20 to 25 L/cyl and 25 to 30 L/cyl engines

reflecting the emission control capability of those engines. This

should prevent high-emission engines from displacing smaller engines in

common applications.

IV. Emission Standards and Related Provisions

This section describes the emission standards for commercial marine

diesel engines at or above 37 kW. It also describes provisions that

will ensure that engines comply with the emission limits across all

engine speed and load combinations, throughout their useful life. We

discuss in this section requirements related to test procedures, fuel

specifications, certification, and compliance.

A. Standards and Dates

1. MARPOL Annex VI

MARPOL Annex VI specifies that any diesel engine over 130 kW

installed on a vessel constructed on or after January 1, 2000 and to

any engine that undergoes a major conversion after that date must

comply with the Annex VI NOX limits.3 These

NOX requirements, listed in Table 2, are intended to apply

to all vessels in a country's fleet. However, according to Regulation

13(1)(b)(ii) of the Annex, a country has the option of setting

alternative NOX control measures for engines on vessels that

are not operated internationally. This final rule is intended to be an

alternative NOX control measure under the Annex for engines

on US-flagged vessels that are not operated internationally.

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

\3\ The Annex VI emission limits are not enforceable until the

annex goes into effect: 12 months after it is ratified by 15

countries representing at least 50 percent of the gross tonnage of

the world's merchant shipping.

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

In this final rule, we are not adopting the MARPOL Annex VI

NOX emission limits under U.S. law. However, we are

encouraging engine manufacturers to make Annex VI compliant engines

available and ship owners to purchase and install them on all vessels

constructed on or after January 1, 2000. Because this voluntary

emission control program is the first set of standards for marine

diesel engines at or above 37 kW in the U.S., we sometimes refer to

them as Tier 1 standards. We are also not finalizing emission limits

for Category 3 engines in this rule, and the voluntary MARPOL Annex VI

NOX limits will be the sole emission control applicable to

those engines.

To encourage vessel owners to purchase MARPOL Annex VI compliant

engines prior to the date the Annex goes into force for the United

States, we have developed a voluntary certification program that will

allow engine manufacturers to obtain a Statement of Voluntary

Compliance to the MARPOL Annex VI NOX limits. Owners of

vessels that are not operated internationally but that will be subject

to the MARPOL survey requirements after Annex VI goes into effect for

the United States should be aware that they may be required to

demonstrate compliance with the Annex VI NOX limits when

they apply for their International Air Pollution Prevention (IAPP)

certificate. Owners of vessels that are operated internationally may

also be required to demonstrate compliance with the MARPOL limits after

the Annex goes into effect, both because they will be required to have

an IAPP and because they may be subject to port state controls. For all

of these reasons, we expect ship owners to begin purchasing compliant

engines for installation on ships constructed on or after January 1,

2000, and to bring engines into compliance when they undergo a major

conversion after that date. Ship owners who fail to comply with the

MARPOL VI NOX requirements may face compliance and liability

problems after U.S. ratification or the Annex goes into force

internationally. Bringing engines into compliance at that time may

involve retrofitting or replacing noncomplying engines. Ship owners may

also be required to remove their vessels from service while these

issues are resolved.

Table 2.--MARPOL Annex VI Emission Limits

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

Engine Speed, rpm NOX (g/kW-hr)

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

n n (-0.2)

n 2000......................... 9.8

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

This voluntary approach to the MARPOL Annex VI emission limits

depends on the assumption that manufacturers will produce MARPOL-

compliant engines before the emission limits go into effect

internationally. Engine manufacturers can use the voluntary

certification program mentioned above to obtain a Statement of

Voluntary Compliance to the MARPOL NOX limits. If, however,

manufacturers continue to sell engines

[[Page 73307]]

with emissions above MARPOL levels or if the Annex is not ratified by

the United States or does not go into effect internationally, we will

revisit the need to adopt these emission limits under the Clean Air

Act.

Finally, note that after the standards finalized in this final rule

go into effect, engines meeting these national standards will also meet

the less stringent MARPOL Annex VI NOX limits and separate

emission testing will not be required. However, engines intended for

use on foreign-trade vessels or for sale in foreign countries will

still be required to comply with the administrative, recordkeeping, and

survey requirements that will be mandated when MARPOL Annex VI goes

into force for the United States.

2. Tier 2

The Clean Air Act provides guidance for setting emission standards

for nonroad engines in section 213(a)(3), instructing us to set

standards that

achieve the greatest degree of emission reduction achievable through

the application of technology the Administrator determines will be

available for the engines or vehicles to which such standards apply,

giving appropriate consideration to the cost of applying such

technology within the period of time available to manufacturers and to

noise, energy, and safety factors associated with the application of

such technology.

As described in the Final Regulatory Impact Assessment,

manufacturers of marine diesel engines typically start with a partially

or fully completed land-based nonroad diesel engine or, in some cases,

a highway diesel engine, and adapt it for use in the marine

environment. The emission standards that apply to land-based nonroad

diesel engines therefore serve as the primary basis for the standards

that apply to marine diesel engines. The land-based nonroad diesel

engine standards in turn were designed to expand the use of highway

engine technologies. The marine diesel new emission standards, and the

underlying technology assumptions, are similarly derived from highway

engine emission standards and technologies.

Table 3 contains the emission standards for commercial marine

diesel engines at or above 37 kW. We are setting a standard of 7.2 g/

kW-hr NOX+HC for most Category 1 engines. For engines under

0.9 liters per cylinder, a 7.5 g/kW-hr applies to correspond with the

standard for land-based nonroad engines. The PM standards vary by

engine size, as shown in Table 3; these values generally match the

limits that apply to the counterpart land-based engines. The CO

emission standard is 5 g/kW-hr for all engines. New Category 1 engines

under 0.9 liters per cylinder produced starting in 2005 must comply

with these standards. For Category 1 engines over 2.5 liters per

cylinder, the starting date is 2007. For the rest of Category 1, these

standards apply to new engines produced beginning in 2004.

For Category 2 engines between 5 and 15 liters per cylinder, the

NOX+HC and PM standards are 7.8 g/kW-hr and 0.27 g/kW-hr,

respectively. Bigger Category 2 engines are subject to graduated

NOX+HC standards and a PM standard of 0.5 g/kW-hr, as shown

in Table 3. These standards apply to new engines produced beginning in

2007.

These dates refer to the point at which the manufacturer concludes

the final assembly of the engine. This also applies to remanufactured

and imported engines that qualify as new marine engines. In addition,

an engine can become new without being manufactured, remanufactured, or

imported, if it is an engine that has been placed into service in non-

marine application before being installed on a vessel. In this case,

these dates refer to the point at which the engine is installed on a

vessel.

Table 3.--Final Tier 2 Emissions Standards and Dates

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

Starting NOX+THC PM (g/kW- CO (g/kW-

Category Displacement (liters/cylinder) Date (g/kW-hr) hr) hr)

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

1............................ power 37 kW disp. disp. disp. disp. disp. disp. disp. 3300 kW.

20.0 disp. disp. X from diesel engines. The combination

of these two factors makes the methane fraction a mathematically

insignificant portion of the HC+NOX emission standard.

C. Crankcase Emissions

We are requiring that all naturally aspirated marine diesel engines

have closed crankcases, where blowby gases are routed into the engine

intake air stream. For turbocharged engines, manufacturers may have a

closed crankcase or route blowby gases directly to the atmosphere. If

manufacturers do not have a closed crankcase, they must make it

possible to readily route blowby gases into the exhaust stream or

otherwise measure them for an in-use test. This approach is similar to

the approach we adopted for locomotives. The purpose of this

requirement is to provide manufacturers the incentive to reduce

crankcase emissions to the maximum extent possible, or eliminate them

altogether.

[[Page 73308]]

D. Smoke Requirements

We are not setting smoke requirements for marine diesel engines.

Manufacturers have stated that many of these engines, though currently

unregulated, are manufactured with smoke limiting controls at the

request of the engine purchasers. Users seek low smoke emissions, both

because they dislike the associated residue on decks and because they

can be subject to penalties in ports that have smoke emission

requirements. In many cases, marine engine exhaust gases are mixed with

water prior to being released. This practice reduces the significance

of smoke emissions, since smoke becomes significantly less visible when

mixed with water. Moreover, we believe that the new PM standards will

have the effect of further limiting smoke emissions.

E. Alternative Fuels

The new emission standards apply to marine diesel engines, without

regard to the type of fuel they use. This is consistent with nonroad

diesel engine regulations of 40 CFR Part 89. It is also generally

consistent with the locomotive regulations; however, the locomotive

regulations apply even more broadly because they also include spark-

ignited engines. We are aware that there are currently very few

alternative-fueled marine engines, but we believe that it is important

to make clear to manufacturers what standards will apply if they

produce these engines.

Heavy fuel (or residual fuel) is fundamentally different than the

distillate fuel used for testing and most in-use operation. We

therefore treat it as an alternative fuel. If manufacturers produce

their engines with sufficient hardware to be capable of operating on

heavy fuel, they should submit test data with their application for

certification showing that they meet the emission standards using both

distillate and heavy fuel. The Clean Air Act prohibits removing or

rendering inoperative elements of design in regulated engines. If

operators add fuel heating and filtering equipment and other hardware

to make a certified engine capable of operating on heavy fuel, we would

likely consider that to be making the emission control system

inoperative. We are requiring a statement on the engine label for

engines that can be modified to operate on heavy fuel to discourage

operators from making this modification.

To properly address the range of possible alternative-fuel engines,

it was necessary to modify the form of the HC standard. In the

regulation of highway vehicles and engines, we determined that it is

not appropriate to apply total hydrocarbon standards to engines fueled

with natural gas, which is primarily methane (59 FR 48472, September

21, 1994). Rather, nonmethane hydrocarbon (NMHC) standards should apply

to natural gas engines. We are therefore setting NMHC+NOX

standards for diesel-cycle marine engines that operate on natural gas.

The same numerical standards apply to both types of engines. For

example, an emission standard of 7.2 g/kW-hr THC+THC that applies to

diesel-fueled engines becomes 7.2 g/kW-hr NMHC+NOX for

natural gas engines. Similarly, reported emissions from alcohol-fueled

engines are on a basis of total HC-equivalent (THCE). THC-equivalent

emissions are calculated from the oxygenated organic components and

non-oxygenated organic components of the exhaust, summed together based

on the amount of organic carbon present in the exhaust. Refer to the

April 11, 1989 final rule for more information regarding the

determination of HC-equivalence (54 FR 14426). These approaches will

minimize variations in stringency for different fuel types.

F. Test Procedures

In this final rule we rely on previously established test

procedures for land-based diesel engines. Specifically, we require that

Category 1 marine engines be tested using the land-based nonroad

procedures of 40 CFR Part 89, and that Category 2 marine engines be

tested using the locomotive test procedures of 40 CFR Part 92. There

are two reasons for using this approach. First, most manufacturers of

marine diesel engines also manufacture land-based engines and will be

equipped to test engines using these test procedures. Second, marine

diesel engines are fundamentally similar to their land-based

counterparts, and it is therefore appropriate to measure their

emissions in the same way. In addition, the test procedures found in 40

CFR Parts 89 and 92 include flexibility for testing alternative-fuel

engines. Some changes are nevertheless necessary. Manufacturers should

be aware that the test procedures in MARPOL Annex VI are not equivalent

to the test procedures described here and in Sec. 94.103 and

Sec. 94.104. We are including the modifications to these test

procedures as described below.

1. Duty Cycles

Testing an engine for emissions typically consists of exercising it

over a prescribed duty cycle of speeds and loads, typically using an

engine dynamometer. The duty cycle used to measure emissions for

determining compliance with emission standards during the certification

process is intended to represent operation in the field. The nature of

that duty cycle is critical in evaluating the likely emissions

performance of engines designed to those standards. To address

operational differences between engines, we are specifying different

duty cycles for different types of marine diesel propulsion engines.

These are summarized here and described further in the Final RIA.

Propulsion engines that operate on a fixed-pitch propeller curve must

be certified using the International Standards Organization (ISO) E3

duty cycle. This is a four-mode steady-state cycle developed to

represent in-use operation of commercial marine diesel engines. The

four modes lie on an average propeller curve based on in-use

measurements.

Fixed-speed marine propulsion engines with variable-pitch or

electrically coupled propellers will be certified on the ISO E2 duty

cycle. This duty cycle is also a four-mode steady-state cycle. It uses

the same power and weighting factors as the E3 cycle, but the engine is

operated in each mode at rated speed.

Constant-speed auxiliary engines must be certified to the ISO D2

duty cycle. Variable-speed auxiliary engines must be certified to the

ISO C1 duty cycle. These duty cycles are consistent with the

requirements for land-based nonroad diesel engines.

There is another class of propulsion engines that run at variable-

speed and use a variable-pitched propeller. These engines are designed

to operate near the power curve for the engine to maximize fuel

efficiency. In general, these engines will operate at a constant speed

near peak torque except when maneuvering in port, where they operate

along the lug curve. Because of the expense of the system, variable-

speed engines are rarely used with variable-pitched propellers. ISO

does not have a test duty cycle specifically designed for these

engines. While we proposed to use the E2 duty cycle for these engines,

we have since learned the the in-use operation, especially in port

areas, is best represented by the C1 duty cycle. This is consistent

with MARPOL Annex VI.

For larger marine engines, conventional emission testing on a

dynamometer becomes more difficult because of the size of the engine.

Often engine mock ups are used for the development of these engines

where a single block is used for many years and only the power assembly

is changed out. For Category 2 engines, certification

[[Page 73309]]

tests may be performed on these engine mock-ups, provided that their

configuration is the same as that of the production engines. To obtain

approval for single-cylinder testing the manufacturer must rely on the

provision for special test procedures (40 CFR 94.207). This requires a

demonstration ``that it is equivalent to the specified procedures.'' We

will address the concern that single-cylinder testing may not be

appropriate in some cases by evaluation of the individual situations

under Sec. 94.27.

2. In-Use Testing

Before manufacturers produce engines, they certify that their

engines will meet all the standards that apply, including the standards

based on testing with the specified duty cycles and based on the

broader Not-to-Exceed standards, throughout the useful life of the

engines. We are interested in testing in-use engines to confirm that

they are emitting within these standards. For any in-use testing for

purposes of section 207(c), we would depend on receiving the permission

of the owner to conduct the testing on that vessel. We could do this

testing one of two ways. First, we could remove the engine from the

vessel and test it on a laboratory dynamometer, much like the

manufacturer's certification testing. This would be the most direct way

to determine if an engine continues to meet the certification standards

after the engine has been installed on a vessel. However, the cost of

removing and testing engines this way would be extremely high and a

ship operator may be unwilling to allow us to remove the engine from

service for emission testing.

Onboard testing is a second type of in-use emission measurement.

Being able to conduct emission testing onboard the vessel can make in-

use testing more accessible since onboard testing eliminates the need

for engine removal and minimizes the disruption of normal vessel

operations. The goal is for us to accurately assess the emission

performance of these engines when they are in service. We may use

onboard emission testing to identify and hold manufacturers responsible

for noncompliance with the emission standards (including the Not-to-

Exceed limits). The Clean Air Act authorizes us to pursue an emission-

related recall if we determine that a substantial number of engines,

when properly maintained and used, do not conform to the regulations

throughout their useful life. Noncompliance relates to meeting the

emissions levels under the associated test procedures, as defined in

the regulations. For example, the test procedure for the NTE emission

standard calls for nominally steady-state operation within a specified

zone of engine operation. In-use testing results may provide credible

and probative information relevant to making a determination of

compliance. We also recognize that the level of accuracy and precision

of in-use testing is one of the key factors to take into account when

making any such evaluation or determination of compliance. We believe

such systems and procedures would provide a significant benefit to both

the agency and the industry.

For marine diesel engines that expel exhaust gases underwater or

mix exhaust gases with water, we require that manufacturers equip the

engines with an exhaust sample port, where a probe can be inserted for

in-use emission tests. It is important that the location of this port

allows a well mixed and representative sample of the exhaust. The

purpose of this provision is to simplify in-use testing.

3. Test Fuel

The test procedure, including the test fuel, must adequately

represent in-use operation to ensure achievement of emission reductions

in use. To facilitate the testing process, we generally define a range

of specifications for a test fuel that is intended to represent in-use

fuels. Marine diesel engines need to comply with emission standards on

any fuel falling within the range of the test fuel specifications, with

one modification described below. This section describes the test fuel

we are specifying for Category 1 and Category 2 engines (see also 40

CFR 94.108). This test fuel is for all testing associated with the

standards in this final rule, including certification, production-line,

in-use, and NTE testing.

We are applying the recently finalized test fuel specifications for

land-based nonroad diesel engines to marine diesel engine testing, with

a modification to the sulfur specification as described below. We

believe that largely adopting the nonroad fuel will simplify

development and certification burdens for marine engines that are

developed from land-based counterparts. The test fuel for marine diesel

engine testing has a sulfur specification range of 0.03 to 0.80 weight-

percent (wt%), which covers the range of sulfur levels observed for

most in-use fuels. Manufacturers are generally responsible for ensuring

compliance with the emission standards using any fuel within this

range. Thus, they will be able to harmonize their marine test fuel with

U.S. highway (4 Using ASTM specification D

2069 as a guide, we considered choosing an upper limit of 1.5 wt%

sulfur. However, we are setting an upper limit on sulfur content of 0.8

wt%, because the available data show that most in-use marine fuels have

sulfur levels lower than this. Moreover, it is not clear that PM

emission could accurately be measured using the specified testing

procedures, or if the correction factor would be accurate, if fuels

with a sulfur content higher than 0.8 wt% are used.5

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

\4\ ``In-Use Marine Diesel Fuel,'' Final Report by ICF

Consulting Group for EPA, August 1999 (Docket A-97-50, document IV-

A-4).

\5\ ``Exhaust Gas Emission Measurements: A Contribution to a

Realistic Approach,'' D. Bastenhof, dieselMAC, May, 1995.

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

We determined that the new PM standards are feasible based largely

on the feasibility of the corresponding standards for land-based

nonroad and locomotive applications, which have a 0.4 wt% sulfur upper

limit for the test fuel. Since PM emissions are somewhat fuel sulfur-

dependent, we do not believe it is appropriate to require compliance

with the PM standards using fuel with a sulfur content above 0.4 wt%.

We are therefore allowing a correction of PM emissions for testing with

a fuel sulfur content greater than 0.4 wt%. Thus, the measured PM

emissions for any test performed using fuel with a sulfur content of

greater than 0.4 wt% may be corrected to the level that would have been

measured if the fuel had a sulfur content of 0.4 wt%. This does not

apply to systems using aftertreatment technologies, since the

correction equation is not valid for those engines. This correction

method is the same as that used for land-based nonroad engine testing

to Tier 1 emission standards. Moreover, in the nonroad rulemaking, for

engines rated over 37 kW certified to Tier 2 standards, we agreed to

use only fuel with sulfur levels up to 0.2 wt% for our testing. Because

Category 1 marine engines are mostly derived from land-based nonroad

engines, we believe it is appropriate to extend this provision to

Category 1 marine engines for the period during which they rely on

land-based engines operating at Tier 2 emission

[[Page 73310]]

levels. In the future effort to set marine Tier 3 emission levels, we

will revisit the appropriate range of fuel properties for in-use

testing in the context of the emission standards we set at that time.

4. Adjustable Parameters

Marine diesel engines are often designed with adjustable components

to allow the engine to be adjusted for maximum efficiency when used in

a particular application. This practice simplifies marine diesel engine

production, since the same basic engine can be used in many

applications. We recognize the need for this practice, but are also

concerned about varying emission levels across the range of adjustment.

We are therefore generally requiring that engines meet the emission

standards when operated anywhere within the adjustable range (see 40

CFR 94.205). In most cases, this means engine manufacturers will be

required to design their engines to prevent adjustments outside the

specified range to ensure that engines are always operated within the

specified range of adjustment. However, consistent with the approach

used in the locomotive rule, we may allow manufacturers to specify in

their applications for certification a narrower range of adjustment for

these components across which the engine is certified to comply with

the applicable emission standards, and demonstrate compliance across

that range. For these engines, this allowance means that a manufacturer

would specify a range of fuel injection timing, for example, over which

the engine complies with the emission standards. This range could be

designed to account for differences in fuel quality. Operators are then

prohibited by the anti-tampering provisions from adjusting engines

outside of this range.

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[[Page 73312]]

5. Determination of Maximum Test Speed

The determination of maximum test speed, where speed is the angular

velocity of an engine's crankshaft (usually expressed in revolutions

per minute, or rpm) is an important aspect of the duty cycles and

``not-to-exceed'' (NTE) zones described in this document (see also 40

CFR 94.107). We define the maximum test speed of an engine as the

single point on an engine's maximum-power versus speed curve that lies

farthest away from the zero-power, zero-speed point on a normalized

maximum-power versus speed plot. In other words, consider straight

lines drawn between the origin (speed = 0, load = 0) and each point on

an engine's maximum-power versus speed curve (see Figure 1). Maximum

test speed is defined as that point where the length of this line

reaches its maximum value. Examples of results from this calculation

are illustrated by circles superimposed on four maximum-power versus

speed curves in Figure 1.

G. Not-to-Exceed Standards and Related Requirements

Our goal is for engines to control emissions over the broad range

of in-use speed and load combinations that can occur on a vessel,

achieving real-world emission reductions, rather than just controlling

emissions under certain laboratory conditions. An important tool for

achieving this goal is an in-use program with an objective standard and

an easily implemented test procedure. Historically, we have taken the

approach of setting a numerical standard on a specified test procedure

and relying on the prohibition of defeat devices to ensure in-use

control over a broad range of operation not included in the test

procedure.6

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\6\ EPA letter from Jane Armstrong and Bruce Buckheit, October

15, 1998.

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

No single test procedure can cover all real world applications,

operations, or conditions. Yet to ensure that emission standards

provide the intended benefits in use, we must have a reasonable

expectation that emissions under real world conditions reflect those

measured on the test procedure. The defeat device prohibition is

designed to ensure that emissions controls are employed during real

world operation and not just under laboratory or test procedure

conditions. However, the defeat device prohibition is not a quantified

standard and does not have an associated test procedure, so it does not

have the clear objectivity and ready enforceability of a numerical

standard and test procedure. As a result, the current focus on a

standardized test procedure makes it harder to ensure that engines will

operate with the same level of control in the real world as in the test

cell.

Because the E3 duty cycle uses only four modes on an average

propeller curve to characterize marine diesel engine operation, we are

concerned that an engine designed to the duty cycle would not

necessarily perform the same way over the range of speed and load

combinations seen on a vessel. The E3 duty cycle is based on an average

propeller curve, but a propulsion marine engine may never be fitted

with an ``average propeller.'' For instance, a light vessel with a

planing hull may operate at lower torques than average while the same

engine operated on a heavy vessel with a deep displacement hull may

operate at higher torques than average. This can largely be a function

of how well the propeller is matched to the engine and vessel. A

planing hull vessel can operate at high torques at low speed prior to

planing.

To ensure that emissions from propulsion engines are controlled

over the full range of speed and load combinations seen on vessels, we

are establishing a zone under the engine's power curve where the engine

may not exceed a specified emission standard, for any of the regulated

pollutants, under the kind of operation that could reasonably be

expected to be seen in the real world. In addition, the whole range of

real ambient conditions is included in this ``not-to-exceed'' (NTE)

zone testing. The NTE zone, limit, and ambient conditions are described

below.

At the time of certification, manufacturers would have to submit a

statement that its engines will comply with these requirements under

all conditions that may reasonably be expected to occur in normal

vehicle operation and use. The manufacturer must provide a detailed

description of all testing, engineering analysis, and other information

that forms the basis for the statement. This certification statement

must be based on testing and/or research reasonably necessary to

support such a statement and on good engineering judgment. This

supporting information would have to be submitted to us at

certification if we request it; manufacturers would not necessarily be

required to submit NTE test data for compliance during certification.

We believe there are significant advantages to taking this sort of

approach. The test procedure is very flexible so it can represent many

in-use speed and load combinations and ambient conditions. Therefore,

the NTE approach takes all of the benefits of a numerical standard and

test procedure and expands it to cover a broad range of conditions.

Also, laboratory testing makes it harder to perform in-use testing

since either the engines would have to be removed from the vessel or

care would have to be taken that laboratory-type conditions can be

achieved on the vessel. With the NTE approach, in-use testing and

compliance become much easier since emissions may be sampled during

normal vessel use. Because this approach is objective, it makes

enforcement easier and provides more certainty to the industry of what

is expected in use versus over a fixed laboratory test procedure.

Even with the NTE requirements, we believe it is still important to

retain standards based on the steady-state duty cycles. This is the

standard that we expect the certified engines to meet on average in

use. The NTE testing is more focused on maximum emissions for segments

of operation and should not require additional technology beyond what

is used to meet the new emission standards. We believe that basing the

emissions standards on a distinct cycle and using the NTE zone to

ensure in-use control creates a comprehensive program. In addition, the

steady-state duty cycles give a basis for calculating credits for use

in the averaging, banking, and trading program.

The NTE zone for marine diesel engines certified with the E3 duty

cycle is illustrated in Figure 2 and is defined by the power curve of

the engine up to rated speed. This zone is based on the range of

conditions that a marine diesel propulsion engine typically experiences

in use. For variable-speed engines with variable-pitch propellers

certified to the C1 duty cycle, this zone is extended to include all

torque points between the E3 power curve (between 63 percent and 100

percent speed) and the lug curve. These NTE zones are divided into two

subzones above and below 45% of power at maximum test speed.

[[Page 73313]]

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[[Page 73314]]

We are requiring a similar approach for engines certified using the

constant-speed E2 duty cycle. In this case, the ``not-to-exceed'' zone

is at the speed for which the engine is designed to operate for loads

ranging from 25 to 100 percent of maximum load at that speed. Because a

constant speed can actually operate over a small range of engine speeds

in-use, the NTE zone includes this small range of speeds. This zone is

also split into subzones above and below 45% of maximum power. More

detail on the development of the boundaries and conditions associated

with the NTE zones may be found in Chapter 3 of the Final RIA.

We are requiring emissions caps for the NTE zones that represent a

multiplier times the weighted test result used for certification for

all of the regulated pollutants (HC+NOX, CO, and PM). This

is consistent with the concept of a weighted modal emission test such

as the steady-state tests included in this rule. The standard itself is

intended to represent the average emissions under steady-state

conditions. Since it is an average, some points can be higher, some

lower, and the manufacturer will design to maximize performance and

still meet the engine standard. The NTE limit is on top of this. It is

designed to make sure that no part of the engine operation and that no

application goes too far from the average level of control.

For propulsion engines certified to the E3, C1, and E2 duty cycles,

we believe that a not-to-exceed limit of 1.2 times the emissions

standard (or FEL) is appropriate for the subzone at or above 45% of

maximum test power. Below 45% of maximum test power, the cap is 1.5.

Data presented in Chapter 3 of the Final RIA show that these limits are

feasible for marine diesel engines, yet challenging because of

variations in emissions at high versus low speeds and loads for some

engines. This data show that the 1.2 cap is easily achievable at higher

power, but may be more challenging at low powers. We set the cap at 1.5

below 45% of maximum test power for this reason. These subzones and

caps apply equally to the Tier 2 emission standards for each regulated

pollutant. Manufacturers may alternatively choose to comply with a cap

of 1.25 over the whole zone, as we originally proposed. In any future

tier of standards, we will review the appropriateness of tailoring the

NTE approach to the unique characteristics of the individual exhaust

constituents.

When testing the engine within the NTE zone, only nominally steady-

state operation will be considered. It is unlikely that transient

operation is necessary under the NTE provisions to ensure that

emissions reductions are achieved for commercial marine diesel engines.

We designed the NTE zones to contain the operation near an assumed

propeller curve that the steady-state cycles are intended to represent.

We believe that the large majority of commercial marine operation in

the NTE zone is steady-state. For planing vessels, we believe the

transient operation as a vessel comes to plane generally is along the

torque curve and would not be within the NTE zone. However, we don't

have enough data to reliably say where under the torque curve marine

engines operate during transient operation. Also, we do not believe the

NTE zone should include areas where an engine may operate during

transients but not in steady-state modes. We therefore don't believe

that adding transient operation to the NTE requirements is necessary at

this time. This would change if we saw evidence that in-use emissions

increase due to insufficient emission control under transient

operation.

The NTE standards apply under any ambient air conditions. Within

the following air temperature and humidity ranges, no corrections will

be allowed to account for the effects of temperature or humidity on

emissions: 13-30 deg.C for ambient air temperature and 7.1-10.7 grams

water per kilogram of dry air for humidity. For engines drawing intake

air from an enclosed engine room, however, the high end of the air

temperature range is 35 deg.C (measured as intake air temperature).

Ambient water temperature must be in the range of 5-27 deg.C during NTE

testing. In addition, the engines must comply with the standards for

the full range of test fuel specifications. These ranges for ambient

conditions are discussed in more detail in Chapter 3 of the Final RIA.

The defeat device provisions established for highway and nonroad

engines apply to marine diesel engines in addition to the NTE

requirements. A design in which an engine met the standard at the

steady-state test points but was intentionally designed to approach the

NTE limit everywhere else would be considered to be defeating the

standard, except under limited circumstances discussed below.

Electronic controls that recognize when the engine is being tested for

emissions and adjust the emissions from the engine would be another

example of a defeat device, regardless of the emissions performance of

the engine.

We are aware that marine diesel engines may not be able to meet the

emissions limit under all conditions. Specifically, there are times

when emission control must be compromised for startability or safety.

We have excluded engine starting from NTE testing. In addition, our

defeat device provisions accommodate the manufacturers potential need

to allow emissions to increase to the extent necessary to protect the

engine, such as responding to engine overheating.

Manufacturers may ask us to approve an adjusted size or shape of

the NTE zone for certain engines if they can show us that the engines

will only operate within the revised NTE zone in normal use. This way,

manufacturers can avoid testing their engines under operation they

would rarely experience in a vessel. However, manufacturers are still

responsible for any engine operation seen in normal use. They are also

responsible for ensuring that their specified operation is indicative

of real-world operation. In addition, if a manufacturer designs an

engine for operation at speeds and loads outside of the NTE zone, the

manufacturer is responsible for notifying us so their NTE zone can be

modified appropriately to include this operation.

We are not in this final rule setting an NTE limit for auxiliary

marine engines. We do not yet have enough data on the operating

characteristics of auxiliary engines to determine NTE zones and the

associated limits for these engines. We expect to pursue similar

requirements for land-based nonroad diesel engines. If we adopt NTE

requirements for land-based nonroad diesel engines, we expect to extend

those provisions to marine auxiliary engines at the same time.

The NTE provisions will go into effect in the 2010 model year for

post-manufacture marinizers and in the 2007 model year for other

manufacturers for all commercial marine diesel engines. Manufacturers

have agreed to collect and show us data on their engines operating in

the NTE zone before the NTE standards take effect. We may also choose

to require them to give us this data under Sec. 208 of the Clean Air

Act. This delay in implementation of the NTE provisions for most

Category 1 engines will provide reasonable lead time by allowing more

time to collect data and assess engine operation in the NTE zone. For

larger engines, the early banking program will provide manufacturers

with an incentive to produce low-emission engines prior to 2007. This

way, if these manufacturers chose to stagger their product line and

produce low emission engines early, they will be able to add NTE-type

testing to the testing they perform while calibrating their engines.

[[Page 73315]]

H. Voluntary Low-Emitting Engine Program

In the final rule for land-based nonroad diesel engines, we

included a program of voluntary standards for low-emitting engines,

referring to these as ``Blue Sky Series'' engines (63 FR 56967, October

23, 1998). We are setting similar voluntary standards as part of this

rulemaking. The program, if successful, will lead to the introduction

and more widespread use of these low-emission technologies. The

qualifying emission levels are listed in Table 4. The voluntary

standards for the expanded subcategories above 15 L/cyl all follow the

pattern of a 40 percent reduction relative to the mandatory standards.

While the Blue Sky Series emission limits are voluntary, a manufacturer

choosing to certify an engine under this program must meet all the

provisions established to demonstrate compliance with these limits,

including allowable maintenance, warranty, useful life, rebuild, and

deterioration factor provisions.

Table 4.--Voluntary Emission Standards (g/kW-hr)

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

Engine size HC+NOX PM

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

Power 37 kW, and displ.displ.displ.displ.displ.disp. disp. 3300 kW.......................................

20.0 L disp. disp. 7

We are also establishing provisions to ensure proper maintenance and

repair of engines throughout their lifetime. The durability provisions,

described below, are intended to ensure that engines continue to meet

the applicable standards in use. The specific areas of the durability

program focused on here are useful life, warranty periods,

deterioration factors, and rebuilding requirements. Most of these

provisions are carried over from the land-based or locomotive programs.

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

\7\ This is different from the approach used in MARPOL Annex VI,

according to which manufacturers must ensure their engines meet the

emission limits at the time of certification but ship owners become

responsible for their continued compliance with the limits. Under

that program, compliance is verified during flag-state and port-

state inspections.

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1. Useful Life

Useful life is the period during which the marine engine is

required to meet the emission standards. For Category 1 engines, we are

setting a minimum useful life of 10 years or 10,000 hours of operation.

Specifically, the 10,000-hour requirement is based on an expected five-

year period until the first time the engine is rebuilt, and an expected

usage rate of 2,000 hours per year. For Category 2 engines, we are

setting a minimum useful life of 10 years or 20,000 hours of operation.

In this case, the 20,000-hour requirement for marine engines is

calculated based on an operating rate of 4,000 hours of use per year,

with five years between rebuilds. The useful life figures are minimum

values to take into account the possibility that manufacturers may in

the future design their engines for a longer period of operation before

rebuilding. If an engine is designed to be in service until rebuild

longer than our minimum useful life period, then the manufacturer must

specify a corresponding longer useful life for that engine family.

The above approach of basing useful life on time to first rebuild

was chosen because it is difficult to justify holding the engine

manufacturer responsible for an engine's emissions after the engine is

rebuilt. The original engine manufacturer has little, if any, control

over the rebuild process. When done improperly, the rebuilding process

can include changes to the engine that adversely affect emissions. At

the same time, however, these engines are often kept in service much

longer than the minimum useful life. Median values for service lives

are 15 years for Category 1 propulsion engines and 23 years for

Category 2 engines. These longer service lives mean that the engine may

be exempt from in-use testing for more than half its service life. We

therefore believe it is important to be able to conduct recall testing

on these engines throughout the established useful life period. We are

also establishing requirements for engine rebuilders.

To address the possibility of light commercial applications with

much shorter design lifetimes, the final rule allows manufacturers to

request a

[[Page 73316]]

shorter useful life for certain engines. Manufacturers in this case

need to determine the alternate useful life based on the documented

hourly service life of these engines in the field. This may in some

cases be much less than 10,000 hours of operation. To prevent abuse of

this provision, we won't approve any useful life less than 1,000 hours

and we will require that the manufacturer display the certified useful

life on the engine label. Also, the shortened useful life may not be

less the manufacturer's recommended overhaul interval or mechanical

warranty for that engine.

2. Warranty Periods

Tied to the useful life is the minimum warranty period imposed

under the Clean Air Act. The warranty periods for marine diesel engines

are based on the ratio of useful life and warranty periods established

for land-based nonroad engines. Specifically, we are setting a warranty

period that is 50 percent as long as the useful life (in both operating

hours and years) for both Category 1 and Category 2 engines. Also, the

emissions warranty may not be less than any mechanical warranties

offered by the manufacturer. This applies whether the mechanical

warranty is published or negotiated, and whether it is offered for a

fee or at no extra charge. Table 5 summarizes the useful life and

warranty values that apply.

We are also including defect reporting requirements in the final

rule. We require engine manufacturers to tell us whenever they identify

a specific emission-related defect in 25 or more Category 1 engines,

consistent with the provisions that apply to highway and land-based

nonroad engines. Similarly, we require notification for specific

emission-related defects in 10 or more Category 2 engines, which is the

same threshold that applies to locomotives. This is not limited to a

single engine model or model year.

Table 5.--Useful Life and Warranty Periods

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

Useful Life Warranty Period

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

Category Hours of Hours of

operation Years operation Years

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

Category 1.......................................................... 10,000 10 5,000 5

Category 2.......................................................... 20,000 10 10,000 5

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

3. Deterioration Factors

To further ensure that the emission standards are met in use, we

require the application of a deterioration factor (DeF) in evaluating

emission control performance during the certification and production-

line testing process. The emissions from new engines are adjusted using

the DF to account for the expected deterioration in emissions over the

life of the engine due to wear and aging of the engine and emission

controls. The resulting emission level (i.e., the final deteriorated

emission level) represents the expected emissions at the end of the

useful life period. New emission control technologies such as

aftertreatment, sophisticated fuel delivery controls, and some cooling

systems, may lose some of their effectiveness as they age. DFs are

already required for highway vehicles and engines, land-based nonroad

engines, and locomotives. We are extending this approach to marine

diesel engines.

Marine diesel engine DFs will be determined by the engine

manufacturers in accordance with good engineering practices. Consistent

with the land-based nonroad and locomotive programs, we are not

specifying a detailed procedure. In generating DFs, however,

manufacturers must observe some general guidelines and get our

approval. In particular, the DF must be consistent with emissions

increases observed in-use based on emission testing of similar engines.

Additionally, the DF should be calculated for the worst-case engine

calibration offered within the engine family.8 DFs must be

calculated as an additive value (i.e., the arithmetic difference

between emission level at full useful life and the emission level at

the test point) for engines without exhaust aftertreatment devices. In

contrast, DFs must be calculated as a multiplicative value (i.e., the

ratio of the emission level at full useful life to the emission level

at the test point) for engines using exhaust aftertreatment devices.

This is consistent with the DF requirements applicable to other diesel

engines, based on observed patterns of emission deterioration.

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\8\ The worst case would be the engine calibration expected to

generate the highest level of emission deterioration over the useful

life, using good engineering judgement.

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It is not our intent to require a great deal of data gathering on

engines that use established technology for which the manufacturers

have the experience to develop appropriate DFs. New DF testing may not

be needed where sufficient data already exists. However, we are

applying the DF requirement to all engines to be sure that

manufacturers are using reasonable methods to ascertain the capability

of engines to meet standards throughout their useful lives. Consistent

with the land-based engine programs, we will allow marine diesel engine

manufacturers the flexibility of using carryover and carryacross of

durability emission data from a single engine that has been certified

to the same or more stringent standard for which all of the data

applicable for certification has been submitted. In addition, we are

allowing deterioration data from highway or land-based nonroad engines

to be used for similar marine diesel engines.

Service accumulation is necessary to generate DFs from engines in

the laboratory. Consistent with the land-based nonroad rule, we are

specifying minimum allowable maintenance intervals for marine diesel

engine service accumulation to ensure that durability data represent

in-use performance (see 40 CFR 94.211(e)). These minimum intervals for

marine diesel engines are equivalent to those required for nonroad and

highway diesel engines (40 CFR 89.109; 40 CFR 86.094-25). For Category

2 engines, we will allow engine manufacturers to request alternate

minimum maintenance intervals at the time of certification, subject to

our approval. This allowance for Category 2 engines is necessary to

allow harmonization with locomotive maintenance practices (63 FR 18978,

April 16, 1998).

4. Rebuilt Engines

It is common for marine diesel engines to be rebuilt several times

during the course of their lifetimes. Similar to land-based nonroad

engines, we have two concerns regarding the rebuilding of marine diesel

engines. First, there may not be an incentive to check and repair

emission controls that do not affect engine performance. Second, there

may be an incentive to rebuild engines to an older

[[Page 73317]]

configuration due to real or perceived performance penalties associated

with technologies used to meet the new emission standards. Such

practices would likely result in increased emissions. To address these

concerns, we are extending the land-based nonroad rebuild requirements

to marine diesel engines. Under these requirements, the parties

involved in the process of rebuilding or remanufacturing engines must

follow specific provisions to avoid tampering with the engine and

emission controls. This requirement is based on the statutory

prohibition against tampering with regulated engines. The rebuild

requirements apply to any engine built on or after the date that new

emission standards apply to that engine's specific category or group,

regardless of the emission levels that the individual engine is

designed to achieve.

Anyone who rebuilds engines, in whole or part, and fails to comply

with these provisions may be liable for tampering. Individuals or

companies are responsible for the activities over which they have

control. Therefore, there may be more than one responsible party for a

single engine in cases where different parties perform different tasks

during the engine rebuilding process (e.g., engine rebuild, full engine

assembly, installation). We are not including any certification or in-

use emissions requirements for the rebuilder or engine owner.

We are adopting modest record keeping requirements that should be

in line with customary business practices. People involved in the

process of marine diesel engine rebuilding or remanufacturing will keep

the records. The required records include the hours of use accumulated

on the engine at the time of rebuild and a list of the work performed

on the engine or related systems. For work performed on the engine,

rebuilders must include a list of replacement parts used, engine

parameter adjustments, design element changes, and a description of any

work performed. Parties must keep the information for two years and may

use any format or system, provided that the information can be readily

understood by an EPA enforcement officer. We do not require that

companies keep information that is not reasonably available through

normal business practices. In cases where it is customary practice to

keep records for engine families rather than specific engines, where

the engines within that family are being rebuilt or remanufactured to

an identical configuration, such record keeping practices are

satisfactory. Rebuilders may use records such as build lists, parts

lists, and engineering parameters that they keep of the engine families

being rebuilt rather than on individual engines, provided that each

engine is rebuilt in the same way to those specifications.

5. Replacement Engines

There may be situations in which a marine diesel engine can or must

be replaced with a new engine. In general, we require that these

replacement engines meet the certification requirements that apply to

new engines for the year it is manufactured. The final rule makes

provision for engine manufacturers to produce new engines to replace an

older, uncertified model, where the replacement engine doesn't need to

comply with the emission standards that would otherwise apply to new

engines. This exemption for replacement engines is available if no new,

compliant engine is available that meets the physical and performance

characteristics of the engine being replaced (subject to our approval).

There is no exemption for engines that are replacing certified engines.

Consistent with replacement engine provisions in other programs, some

additional constraints ensure that companies do not circumvent the

regulations.

J. Certification

As discussed previously, we expect technology to be shared between

land-based engines and marine engines. Some engine manufacturers will

likely produce engines of the same basic design for sale in both areas.

Specifically, we expect Category 1 marine engines to share the

technology developed for land-based nonroad engines, and Category 2

engines to share technology developed for locomotive engines. To

account for this product overlap, we are basing certification data and

administration requirements for Category 1 on the existing program for

land-based nonroad engines, and for Category 2 marine engines on the

existing program for locomotive engines.9 Specific

certification provisions are discussed more fully in the following

sections.

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\9\See 40 CFR part 89, subpart B, for the provisions of the

land-based nonroad engine program and 40 CFR part 92, subpart C, for

the provisions of the locomotive program.

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1. Engine Family Definition

Engine grouping for the purpose of certification is accomplished

through the application of an ``engine family'' definition. Engines

expected to have similar emission characteristics throughout the useful

life are classified in the same engine family. Separate engine family

classification is also required for each marine engine category (i.e.,

Categories 1, 2, and 3 will be in separate engine families). We are

establishing specific parameters to define engine family for each

category of marine engine. To provide for administrative flexibility,

we may separate engines normally grouped together or to combine engines

normally grouped separately based upon a manufacturer's request

substantiated with an evaluation of emission characteristics over the

engine's useful life.

For Category 1, we are using the engine family definition for land-

based nonroad engines, with the addition of the type of fuel system and

whether fuel injection is controlled mechanically or electronically.

For Category 2, we are using the engine family definition for

locomotive engines.

These definitions provide consistency between land-based and marine

engines of the same basic type. The fuel system type and control type

were added to the land-based nonroad engine family definition to reduce

the variability of emissions within an engine family. This change will

aid manufacturers in selecting the ``worst-case'' engine for emission

testing. It will lessen the chance of noncompliance in use by ensuring

that the highest emitting engine is tested during certification.

Under the provisions of the land-based nonroad rule, engine

manufacturers have the option to petition for their marine engines to

be included in land-based engine families. We are not including this

flexibility for marine engines rated over 37 kW because the ``not-to-

exceed'' provisions in this final rule apply uniquely to marine

engines. We do, however, allow manufacturers to rely on the land-based

certification for land-based engines that are marinized without

affecting emissions (see Section II.F.).

The engine family definition is fundamental to the certification

process and to a large degree determines the amount of testing required

for certification. Manufacturers are required to estimate the rate of

deterioration for each engine family (see Section IV.I.3. for further

details). Compliance with the emission standard will also be

demonstrated for each engine family based upon required testing and the

application of the deterioration factor. Separate certificates of

conformity are required for each engine family.

2. Emission Data Engine Selection

Manufacturers must select the highest emitting engine (i.e.,

``worst-case'' engine) in a family for certification

[[Page 73318]]

testing. In making that determination, the manufacturer must use good

engineering judgement (considering, for example, all engine

configurations and power ratings within the engine family and the range

of installation options allowed). By requiring manufacturers to test

the worst-case engine, we can be sure that all engines within the

engine family are complying with emission standards for the least cost

(as measured by the number of tests required). Manufacturers may

request the separation of the dissimilar calibrations into separate

engine families. This may be appropriate, for example, if a

manufacturer feels that an engine family is grouped too broadly or that

the worst-case emission data engine underestimates the emission credits

available under the ABT provisions.

K. Production-Line Testing

One of the challenges of serial engine production is ensuring that

each engine produced has the same emission characteristics as the

original certification engine. We are finalizing a requirement for

manufacturers to conduct production line testing (PLT). The general

object of a PLT program is to show, with reasonable certainty, whether

certification designs have been translated into production engines that

meet applicable standards (or FELs) at the time of production, before

excess emissions are generated in use. PLT is performed on a regular

basis during the year by the engine manufacturer according to our

criteria.

With PLT testing, a manufacturer selects engines from its

production line for confirmatory testing. In general, a manufacturer

must test one percent of its total projected annual U.S. marine diesel

engine sales (propulsion and auxiliary) for each category each year. We

believe that a one percent sampling rate is appropriate for the marine

diesel engine industry because of its low production volumes, and that

a higher sampling rate would be overly burdensome for this industry. We

are not specifying a minimum number of tests for Category 1 engines. If

a manufacturer sells fewer than 100 Category units in the United States

in a given year, it is not required to do any PLT testing for those

engines that year. For Category 2 engines, a manufacturer must conduct

a minimum of one PLT test per year. Thus, for manufacturers with sales

of less than 100 Category 2 engines in a given year, one test is

required that year. For purposes of calculating the number of tests

required, Category 1 and Category 2 annual engine sales must be

considered separately.

The manufacturer selects a random sample of test engines that is

representative of annual production. We reserve the right to reject any

engines selected by manufacturers if we determine that such engines do

not represent production engines. Engines selected should cover the

broadest range of production possible, and from year to year should be

varied to cover all engine families if possible. Tests should also be

distributed evenly throughout the model year, to the extent possible.

Manufacturers must conduct emission testing of PLT engines in

accordance with the applicable federal testing procedures. Compliance

with the NTE provisions must be demonstrated as part of PLT testing.

The results must be communicated to us in periodic reports that

summarize emissions results, test procedures, and events such as the

date, time, and location of each test. These reports allow us to

continually monitor the PLT data. Reports must be submitted each

quarter. If no testing is performed during the period, no report is

required.

Under this testing scheme, if an engine fails a production line

test, the manufacturer must test two additional engines out of either

the next two days' production or the next fifteen engines produced in

that engine family in accordance with the applicable federal testing

procedures. This dual approach to testing additional engines accounts

for variations in production volumes. If production volumes are high,

then we believe the two-day provision will allow for the orderly

selection of additional test engines. Likewise, if production volumes

are low, then the provision allowing the engines to be selected from

the next fifteen produced will allow for orderly selection. When the

average of the three test results, for any pollutant, are greater than

the applicable standard or FEL for any pollutant, the manufacturer

fails the PLT for that engine family. Such failures must be reported to

us within two working days of the determination of a failure. Note that

compliance with the standards is required of every covered engine.

Thus, every engine failing a PLT test is considered noncompliant with

the standards and must be brought into compliance. Using the average of

three tests to determine compliance with the PLT program serves 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.

In the PLT program, the Administrator can suspend or revoke the

manufacturer's certificate of conformity, in whole or in part, thirty

days after we determine that an engine family is noncompliant, or if

the engine manufacturer's report reveals that the PLT tests were not

performed correctly. During the thirty-day period after we establish

noncompliance, we will coordinate with the manufacturer to facilitate

the approval of the required production line remedy to eliminate the

need to halt production as much as possible. The manufacturer must then

address the noncompliance for the engines produced prior to the

suspension or revocation of the certificate of conformity (for example,

by bringing them into compliance or removing them from service). We can

reinstate the certificate after a suspension, or reissue one after a

revocation, if the manufacturer demonstrates through its PLT program

that improvements, modifications, or replacements have brought the

engine family into compliance. The regulations include hearing

provisions that provide a mechanism to resolve disputes between

manufacturers and us regarding a suspension or revocation decision

based on noncompliance with the PLT. It is important to point out that

we retain the legal authority to inspect and test engines if problems

arise in the PLT program. Note also that the definition of ``failure''

of the PLT is limited to the PLT program, and does not define failure

or noncompliance for other purposes. It is based in part on the

severity of the result of a failure (suspension or revocation of a

certificate) and is not meant to limit in any way the overall

obligation of the manufacturer to produce engines that meet the

standard.

We recognize the need for a PLT program that does not impose an

unreasonable burden on manufacturers. Therefore, consistent with the

requirement that testing be required on one percent of total marine

diesel engine production for each category, no PLT is required for

manufacturers whose Category 1 marine diesel engines sales are less

than 100 per year. This is because companies with such low sales are

unlikely to have in-house testing facilities, and requiring such

companies to send an engine to an independent test facility for PLT

purposes may be too burdensome. Note that companies exempt from the PLT

program are not exempt from other certification and compliance

provisions. Engines exempt from the PLT program must still meet the

emission limits as produced and in use. We reserve the right to conduct

an SEA on any manufacturer with engines certified to the requirements

of this final rule. In addition, we are not extending

[[Page 73319]]

this flexibility provision to the PLT program for Category 2 marine

diesel engines, since they are typically produced in very small

volumes.

Finally, while we believe this PLT program takes into account the

circumstances of this industry, we also understand that alternative

plans may be developed that better account for the individual needs of

an individual manufacturer. Thus, a manufacturer may submit an

alternative plan for a PLT program, subject to our approval. A

manufacturer's petition to use an alternative plan needs to address the

need for the alternative and include justifications for the number and

representativeness of engines tested. The alternative plan must also

have specific provisions regarding what constitutes a PLT failure for

an engine family.

L. Miscellaneous Compliance Issues

We are extending the general compliance provisions for land-based

nonroad engines to Category 1 and Category 2 marine diesel engines.

These include the tampering, defeat device, imported engines and

vessels, and general prohibition provisions.

M. Averaging, Banking, and Trading Program

Along with the emission standards, we are including a marine

averaging, banking, and trading (ABT) program. An ABT program is an

important factor that EPA takes into consideration in setting emission

standards that are appropriate under section 213 of the Clean Air Act.

ABT reduces the cost and improves the technological feasibility of

achieving the standards, helping to ensure the attainment of the

standards earlier than would otherwise be possible. Manufacturers gain

flexibility in product planning and the opportunity for a more cost-

effective introduction of product lines meeting a new standard. ABT

also creates an incentive for the early introduction of new technology,

which allows certain engine families to act as trail blazers for new

technology. This can help provide valuable information to manufacturers

on the technology before manufacturers need apply the technology

throughout their product line. This early introduction of clean

technology improves the feasibility of achieving the standards and can

provide valuable information for use in other regulatory programs that

may benefit from similar technologies.

The voluntary ABT program allows the certification of one or more

engine families within a given manufacturer's product line at emission

levels above the applicable emission standards, provided that the

increased emissions are offset by one or more families certified below

the emission standards. The average of all emissions for a particular

manufacturer's production (weighted by sales-weighted average power,

production volume and useful life) must be at or below the level of the

applicable emission standards. In addition to the averaging program

just described, the ABT program contains banking and trading

provisions, which allow a manufacturer to generate emission credits and

bank them for future use in its own averaging program or sell them to

another entity. Compliance is determined on a total mass emissions

basis to account for differences in production volume, power and useful

life among engine families.

The ABT program for marine diesel engines over 37 kW is based on

the corresponding ABT programs recently adopted for land-based nonroad

engines (63 FR 56967, October 23, 1998) and locomotives (63 FR 18978,

April 16, 1998), which roughly correspond to the Category 1 and

Category 2 engines, respectively. A manufacturer choosing to

participate in the ABT program must certify each participating engine

family to a family emission limit (FEL) determined by the manufacturer

during certification testing. A separate FEL must be determined for

each pollutant the manufacturer includes in the ABT program. The ABT

program is limited to HC+NOX and PM emissions. Thus, only

two different FELs may be generated for a given engine family.

Consistent with the recently finalized land-based nonroad engine

program, marine engine credits are to be calculated based on the

difference between the applicable standard(s) and FEL(s). However,

credit calculation for marine engines is somewhat different than that

for land-based nonroad engines, in that a load factor is inserted in

the equation. This term is necessary because, contrary to land-based

nonroad case, not all marine engines are expected to operate at the

same load. The credit calculation equation is as follows:

Emission credits = (Std--FEL) x (UL) x (Production) x (AvgPR) x

(10-6) x (LF)

Where:

Std = the applicable cycle-weighted marine engine

THC+NOX and/or PM emission standard in grams per kilowatt-

hour.

FEL = the family emission limit for the engine family in grams

per kilowatt-hour. (The FEL may not exceed the limit established in

Sec. 94.304(m) for each pollutant.)

UL = the useful life in hours.

Production = the number of engines participating in the

averaging, banking, and trading program within the given engine family

during the calendar year (or the number of engines in the subset of the

engine family for which credits are being calculated). Quarterly

production projections are used for initial certification. Actual

applicable production/sales volumes are used for end-of-year compliance

determination.

AvgPR = average power rating of all of the configurations

within an engine family, calculated on a sales-weighted basis, in

kilowatts.

LF = the load factor, dependent on whether the engine is

intended for propulsion or auxiliary applications, as follows:

A. 0.69 for propulsion engines

B. 0.51 for auxiliary engines.

We are prohibiting the generation of credits for one pollutant and

the simultaneous use of credits for the other pollutant within the same

engine family. In other words, a manufacturer may not simultaneously

generate HC+NOX credits and use PM credits on the same

engine family, and vice versa. This is consistent with the recently

finalized emission standards for land-based nonroad diesel engines.

This also reflects the inherent trade-off between NOX and PM

emissions in diesel engines.

FEL upper limits apply in the same manner as those in the

comparable land-based ABT programs to ensure that the emissions from

any given family certified under this ABT program not be significantly

higher than the applicable emission standards. In general, these FEL

upper limits correspond to the existing previous tier of standards for

the various classes. In other words, the FEL upper limits are generally

the Tier 1 standards for engines certifying according to the ABT

provisions relative to the Tier 2 standards. Since we are not including

any Tier 1 standards for marine engines in this rulemaking, the land-

based Tier 1 standards serve as FEL upper limits for the Tier 2 marine

engine standards. When the ABT provisions for land-based nonroad

engines were recently revised, there were no Tier 1 standards in place

for some land-based categories and pollutants. These cases correspond

to some Category 1 marine engines. In those cases we chose FEL upper

limits based on typical in-use emission levels of precontrol engines,

or existing

[[Page 73320]]

California Air Resources Board emission standards. For a more complete

discussion of the rationale for the Tier 2 FEL upper limits for

Category 1 engines the reader is directed to the most recent final rule

concerning land-based nonroad engine emission standards.

Consistent with the land-based ABT programs from which the marine

program is derived, ABT credits generated under this program do not

expire and are not discounted. Also consistent with the recently

finalized land-based nonroad diesel rule, credits generated on land-

based engines may not be used for demonstrating compliance for marine

diesel engines. We are concerned that manufacturers who produce engines

used in both marine and land-based applications could effectively trade

out of the marine portion of the program, thereby potentially obtaining

a competitive advantage over small marinizers who sell only marine

engines. For similar reasons, credits generated on Category 2 engines

can not be used for Category 1 engine compliance. For similar reasons

we proposed to prevent the use of credits generated on Category 1

engines from being used for Category 2 engines. Since the expressed

concern does not apply to credit exchanges going from smaller to bigger

engines, the final rule allows this. However, to account for the

likelihood that Category 2 engines will undergo more rebuilds in their

lifetime than Category 1 engines, manufacturers must discount any

Category 1 engine credits by 25 percent if they are used for Category 2

engine compliance.

Effective immediately, early credit generation is available for all

Category 1 and 2 commercial CI marine engines. Credits will be

generated relative to the actual Tier 2 standards and will be

undiscounted. However, if a manufacturer believes it should be allowed

to generate credits relative to an engine family's pre-control emission

levels (rather than the Tier 2 standards), it can choose to develop

engine family-specific baseline emission levels. Credits will then be

calculated relative to the manufacturer-generated baseline emission

rates, rather than the Tier 2 standards. Engine manufacturers that are

not post-manufacture marinizers generate baseline emission rates by

testing three engines from the family for which the baseline is being

generated, with the baseline calculated as the average of the three

engines. Under this option, engines must still meet the Tier 2

standards for all pollutants to generate credits, but the credits will

be calculated relative to the generated baseline rather than the Tier 2

standards. Any credits generated between a measured baseline and the

Tier 2 levels will be discounted by reducing the measured baseline

value by 10 percent. This is to account for the variability of testing

in-use engines to establish the baseline due to differences in hours of

use and maintenance practices.

Some early banking provisions apply uniquely to post-manufacture

marinizers. In recognition of their small size, more difficult resource

constraints and general reliance on engine manufacturers to produce

base engines, additional flexibility is warranted to ease the

transition to these rules. Therefore, post-manufacture marinizers may

establish a measured baseline by testing a single engine. Consistent

with the provisions of Sec. 94.209(a), the baseline established by this

single engine may be used for broadened engine families, provided the

marinizer starts with certified land-based engines. Also, they may

certify an engine under the early banking program with an engine that

does not meet the Tier 2 emission standards. However, since this

program is only intended to ease the transition to full compliance with

these standards and rules, the credits will only be available to post-

manufacture marinizers through the 2007 model years

In the recent rulemaking for nonroad diesel engines, we also set

emission standards for marine diesel engines below 37 kW. These engines

were also included in the land-based ABT program in that rule, with

some restrictions. We are not changing the way we treat these small

marine diesel engines. We are not integrating the ABT program in that

rule with the requirements in this final rule, so we don't allow

manufacturers to exchange credits for engines above and below 37 kW.

Credits may not be exchanged between Category 1 marine engine

families and land-based nonroad engine families. As with the

restriction of credit exchanges between engine families above and below

37 kW, this restriction applies because the stringency of the land-

based standards was determined in the absence of the availability of

credit exchange between marine and land-based engines. In addition,

there are differences in the way that marine and land-based credits are

calculated that are implicit in the calculation and that make the

credits somewhat incompatible. The first is that the difference in test

duty cycles means there is an implicit difference in load factor

between the two. The second is that there are provisions in this final

rule for varying useful lives of marine engine families, which are not

included in the land-based nonroad regulations. In addition, as

discussed above, the actual credit calculation equations for the two

programs are different.

We don't allow trading between Category 2 engines and locomotive

engines, because locomotive credits are calculated based on expected

remaining service life (which could be many useful life periods, due to

the inclusion of the remanufacturing provisions for locomotives),

whereas Category 2 marine engine credits are only calculated on the

basis of a single useful life.

Participation in the marine diesel ABT program is voluntary. For

those manufacturers choosing to use the program, compliance for

participating engine families is evaluated in two ways. First,

compliance of individual engine families with their FELs is determined

and enforced in the same manner as compliance with the emission

standards in the absence of an averaging, banking and trading program.

Each engine family must certify to the FEL (or FELs, as applicable),

and the FEL is treated as the emission limit for certification,

production-line and in-use testing (as well as for any other testing

done for other enforcement purposes) for each engine in the family.

Second, the final number of credits available to the manufacturer at

the end of a model year after considering the manufacturer's use of

credits from averaging, banking and trading must be greater than or

equal to zero.

The generation transfer and use of credits in the ABT program does

not change the obligation of all manufacturers to meet the applicable

standards. This provision is consistent with other mobile source ABT

programs. The marine diesel engine certificates of both parties

involved in the violating trading transaction could be voided ab initio

(i.e. back to date of issue) if the engine family or families exceed

emission standards as a result of a credit shortfall. A buyer of

credits which are shown later to be invalid will only be required to

make up the credit shortfall. There will be no penalty associated with

the unknowing purchase of invalid credits.

The integrity of the marine diesel averaging, banking and trading

program depends on manufacturers' accuracy in recordkeeping and

reporting and our effectiveness in tracking and auditing this

information. Failure of a manufacturer to maintain the required records

would result in the certificates for the affected engine family or

families being voided retroactively. Violations of

[[Page 73321]]

reporting requirements could result in a manufacturer being subject to

civil penalties as authorized by sections 213 and 205 of the Clean Air

Act. We allow positive reporting errors (i.e., those errors that result

in an underestimation of the manufacturer's positive credit balance) to

be corrected provided that the errors are identified within 180 days of

the time we receive the manufacturer's annual report.

N. Special Provisions for Post-Manufacture Marinizers

In general, we set engine emission standards that take effect at a

set point in time, concurrently precluding the installation in vehicles

or equipment of engines not certified to the new standards. The

rigidity of this approach is lessened to some extent through averaging,

banking, and trading programs, which allow engine manufacturers to

produce engines that exceed the emission limits as long as the added

emissions can be offset by engines that emit below the required levels.

While this approach generally works well, additional flexibility

provisions to help relieve compliance burdens may be needed in special

cases.

Marine diesel engines are produced using one of three basic

manufacturing methods. In the first, least common, method, marine

engines are designed and built exclusively for marine applications.

This is typically the case for very large Category 3 engines as well as

some smaller engines that are produced for special niche markets. In

the second method, an engine manufacturer produces a marine diesel

engine using a land-based engine that was built by that same

manufacturer. In the third method, an unrelated company, referred to

here as a ``marinizer'' produces a marine diesel engine by purchasing a

completed or partially completed land-based nonroad or highway engine

from an engine manufacturer and modifying it for use in the marine

environment according to the marinizing company's own processes.

Marinizers tend to be small companies and their output is often

designed for niche markets. To address their concerns, we are adopting

several provisions to streamline the certification process for

marinizers.

1. Application of Flexibility Provisions

The following flexibility provisions will be available only to

these marinizers. We define the term post-manufacture marinizer as ``an

entity that produces a marine engine by modifying a non-marine engine,

whether certified or uncertified, complete or partially complete, where

such entity is not controlled by the manufacturer of the base engine or

by an entity that also controls the manufacturer of the base engine.''

This definition no longer refers only to companies that ``substantially

modify'' non-marine engines because the engine dressing exemption makes

provision for companies whose marinization process does not include

steps that might affect emissions.

A vessel manufacturer that substantially modifies a certified

engine or an engine certified to a previous tier of emission limits or

that installs an uncertified engine will be considered a marinizer and

must comply with the certification and compliance provisions in this

final rule. This clarification is necessary because it is not uncommon

for vessel manufacturers to modify marine engines. This may be done to

increase the power of an engine or to respond to the needs of a

particular user. By considering these vessel manufacturers as

marinizers, we will ensure that the engine modifications do not also

increase the emissions of an otherwise certified engine.

2. Broader Engine Families

We are allowing marinizers to use a broad engine family definition.

Under this provision, a marinizer may include any engines that have

similar emission deterioration characteristics in one engine family.

Thus, a marinizer could conceivably group all commercial marine diesel

engines into one engine family. These engines must all be in the same

category and they must be previously certified to meet land-based

nonroad, locomotive, or heavy-duty highway emission standards. Separate

engine families will be required for each category of marine engines

Note that all other provisions of the final rule apply to this

broad engine family including, but not limited to, selection and

testing of an emission data engine, application of a deterioration

factor (DF), and compliance with the standards.

Even with these larger engine families, marinizers are responsible

to conduct testing on a worst-case engine. We can suggest some

guidelines for identifying worst-emitter engines without the expense of

conducting a full emission test on each engine calibration of each

model.

Marinizers can utilize low-cost equipment and a simple procedure to

routinely measure parts per million (ppm) levels of gaseous pollutants.

We expect that every company operates most or all production engines

for quality control purposes, probably with a small number of fixed

cycles. Measuring for NOX emissions during that time

provides an additional diagnostic for engine performance, and should

provide a good benchmark for comparing emission levels across the

product line. Measured ppm NOX readings should correlate

closely with NOX emission levels from a full certification

test. Conversely, the lowest measured NOX emissions (or

highest CO emissions) are an indication of the worst PM emitter. The

marinizer may choose to send in test data from a single duty cycle on a

single engine, but remains liable for all pollutants on all engines in

the family, with any applicable duty cycle.

This guidance suggests a possible means by which a post-manufacture

marinizer can limit the testing burden in the effort to certify broad

engine families where it may not be apparent which engine to test. If

this does not address a marinizer's concerns, the remaining alternative

is to certify each engine family, using the standard engine-family

definition.

3. Carryover Provisions

Engine manufacturers may carry over engine data generated in a

previous model year's certification to certify for the current year.

This provision will also apply to the broader engine families of

marinizers, with the constraint that the marinizer will need to

generate new data if any model in the broad engine family is modified

in any way that will make it the highest emitter in the family.

4. Streamlined Certification for Subsequent Years

We are adopting a streamlined certification process for marinizers.

This process applies beginning with the year after the relevant

implementation dates and continues until engine design changes cause a

different engine model to be the highest emitter in the marinizer's

broad engine family. Recertification would be required at that point.

Under this streamlined certification process, the marinizer submits an

annual certification application stating that there have been no

changes in the design or production of the engine models that make up

the engine family. If there have been changes, the marinizer can still

avoid a complete certification submission with test data by

demonstrating that there is no change in the identity of the highest

emitter or its emissions.

5. Additional Compliance Time

Marinizers generally depend on engine manufacturers producing base

engines for marinizing and may therefore be affected by circumstances

[[Page 73322]]

beyond their control. This can make it difficult to certify the

marinized engines. Consequently, there may be situations in which,

despite its best efforts, a marinizer cannot meet the implementation

dates, even with the flexibility provisions described in this section.

Such a situation may occur if an engine supplier without a major

business interest in a marinizer were to change or drop an engine model

very late in the implementation process, or was not able to supply the

marinizer with an engine in sufficient time for the marinizer to

recertify the engine. Based on this concern, we are allowing a one-year

delay in the implementation dates for post-manufacture marinizers. In

this case, marinizers would need only notify us that they are using the

additional year before meeting emission standards.

A similar need for additional lead time is appropriate for post-

manufacture marinizers to demonstrate compliance with Not-to-Exceed

requirements. Post-manufacture marinizer's reliance on another

company's base engines affects the time needed for the development and

testing work needed to comply. As described above, engine manufacturers

generally have until 2007 to comply with Not-to-Exceed requirements. We

are extending that to 2010 for post-manufacture marinizers. Three years

of extra lead time (compared to one year for the primary certification

standards) is appropriate considering their more limited resources.

6. Special Hardship Provision

As a relief mechanism of last resort, we are also extending to

post-manufacture marinizers the hardship relief provisions we included

in the recently finalized land-based nonroad rule (see 40 CFR

89.102(f)). Under this provision, marinizers can ask us for additional

time to meet the emission limits. Under this hardship relief provision,

appeals must be made in writing, be submitted before the earliest date

of noncompliance, include evidence that failure to comply was not the

fault of the marinizer (e.g., a supply contract was broken by the

engine supplier), and include evidence that the inability to sell the

subject engines will have a major impact on the company's solvency. We

would work with the applicant to ensure that all other remedies

available under the flexibility provisions are exhausted before

granting additional relief, and limit the period of relief to no more

than one year. Furthermore, any relief may not exceed one year beyond

the date relief is granted. We expect that this provision will be used

only rarely. Each granting of relief would be treated as a separate

agreement, with no prior guarantee of success, and with the inclusion

of measures, agreed to in writing by the marinizer, for recovering the

lost environmental benefit. If a marinizer during this hardship period

produces certified engines (to emission levels less stringent than

would otherwise be required), we would take that into account in

determining the lost environmental benefit. This provision is not

limited to small businesses, as described in the proposal, since all

post-manufacture marinizers have a similar reliance on other

manufacturers to produce their engines.

7. Incomplete Marine Engine Exemption

We finalized the nonroad diesel rule with no allowance to import

uncertified nonroad engines that will be changed into a marine engine.

This final rule is changing the definition of marine engines to include

those that are ``intended'' to be installed on a marine vessel. This is

necessary to allow post-manufacture marinizers to import loose engines

for marinizing. We also include provisions specifically allowing post-

manufacture marinizers to import uncertified engines. Once emission

standards apply, a marinizer importing such engines must already have a

certificate showing that the engine is part of a certified engine

family. The regulations also obligate the marinizer to modify all the

imported engines to comply with the requirements of 40 CFR part 94.

V. Technological Feasibility

The emissions standards in this final rule apply to a large variety

of marine diesel engine sizes and applications. Section 213(a)(3) of

the Clean Air Act directs us to establish standards that provide the

``greatest degree of emission reduction achievable through the

application of technology which the Administrator determines will be

available for the engines or vehicles to which such standards apply,

giving appropriate consideration to the cost of applying such

technology within the period of time available to manufacturers and to

noise, energy, and safety factors associated with the application of

such technology.''

We have concluded that the requirements in this final rule are

appropriate under section 213 of the Clean Air Act and are

technologically feasible on the prescribed schedule. The Final RIA and

the Summary and Analysis of Comments contain a detailed treatment of

emission-control technologies and the basis for selecting the

individual standards. The costs associated with these technologies are

discussed in Section VII. We have also concluded, as described in the

Final RIA, that the emission standards will have no significant

negative effect on noise, energy, or safety.

VI. Areas for Future Action

A. Tier 3 Emission Standards

We have decided not to finalize the proposed Tier 3 emission

standards at this time. We intend to address this next tier of emission

standards through a separate final rule. This may involve a

supplemental proposal. Delaying action on Tier 3 standards will allow

us to learn from the application of Tier 3 technology to land-based

nonroad diesel engines. Also, it will give us time to consider emission

control strategies such as aftertreatment.

B. Emission Standards for Remanufactured Engines

As described in the proposed rule, we are aware of the obstacles to

implementing emission standards that would apply to existing engines at

the point of rebuild or remanufacture. The comments in favor of such

standards did not address these questions. Nevertheless, we are

concerned that the gradual turnover to new engines and vessels will

cause a very slow introduction of new technologies. As new technologies

become available to comply with MARPOL Annex VI emission standards and

the emission standards in this final rule, we are hopeful that emission

controls on new engines will improve even before our standards take

effect. Our early banking provisions add an incentive for this to

occur.

To the extent that we observe companies not taking reasonable

measures to introduce emission control technologies, we will need to

reconsider the importance of setting standards on remanufactured

engines. In contrast, introduction and use of emission control

technologies ahead of the regulated schedule may reduce the need for a

control program for these engines.

C. NTE Requirements for Auxiliary Engines

We are not at this time finalizing NTE requirements for auxiliary

marine engines in this final rule. We are contemplating, however, to

establish NTE requirements for similar land-based nonroad diesel

engines. When we adopt such requirements for nonroad diesel engines, we

expect to apply the same provisions, including zones and caps, to

auxiliary marine diesel engines at the same time.

[[Page 73323]]

D. Application of Provisions to Marine Diesel Engines Less than 37 kW

Marine diesel engines less than 37 kW were included in the

rulemaking for nonroad diesel engines and are subject to the emission

control program contained in 40 CFR Part 89. That program has two tiers

of emission limits, phased in from 1999 to 2000 for Tier 1 and 2004 to

2005 for Tier 2. In general, marine diesel engines less than 37 kW are

subject to the same certification and compliance program as land-based

nonroad diesel engines. Exceptions to this general approach include the

duty cycle (E3, but with a C1 option), ABT program restrictions (land-

based credits cannot be used to offset marine diesel emissions), and

implementation flexibility provisions that allow post-manufacture

marinizers to phase in compliance with Tier 1 emission limits according

to the schedule extended to nonroad equipment manufacturers.

We intend eventually to consolidate the smaller engines in a

general marine diesel engine regulation. Consolidating existing

requirements without reopening those issues may, however, cause

confusion. Commenters did not feel strongly that there would be an

advantage to combining programs, so we are not consolidating them at

this time. We will likely pursue the next tier of emission standards

(i.e., Tier 3) for all marine diesel engines together. This way we will

be able to integrate the requirements for varying engines sizes in the

most sensible way.

E. Category 3 Engines

State and environmental organization commenters have made clear in

their comments that they are eager to see greater emission reductions

from Category 3 engines, including PM emissions. These commenters are

particularly concerned that the MARPOL NOX limits are not

stringent enough to appreciably reduce NOX inventories and

ozone levels. Chapter 5 of the Final RIA describes the expected

NOX reductions from the MARPOL Annex VI limits in more

detail. There is enough foreign vessel traffic in U.S. ports that these

engines contribute substantially to local air pollution in port areas.

However, imposing separate national requirements on foreign-flagged

ships that use U.S. ports raises sensitive concerns relating to

international trade and policy. Consequently, we will recommend that

the United States urge the International Maritime Organization to

consider and adopt more stringent NOX limits as well as PM

limits for marine diesel engines. Technologies currently under

development for very large marine engines hold a lot of promise for

reducing their emissions in the future. The emission standards

finalized in this final rule for engines capable of burning heavy fuels

(15 L/cyl and larger) also suggest that emission improvements can be

obtained from slow- and medium-speed engines. Finally, the standards in

this final rule for smaller marine diesel engines will provide a good

starting point for a new tier of international standards for those

engines.

VII. Projected Impacts

A. Environmental Impacts

Chapter 5 of the Final Regulatory Impact Analysis provides a

detailed explanation of the methodology we used to determine the

environmental benefits from marine diesel engines associated with this

final rule. The following discussion gives a general overview of the

methodology and the results.

1. Category 1 Engines

For the purposes of the inventory analysis, Category 1 commercial

engines were divided into commercial propulsion and auxiliary

categories. Annual emissions were then calculated using engine

populations, load factors, annual hours of use, rated power, emission

factors, turnover, and growth rates. The sources for and the values of

these factors are provided in the Final RIA. Note that we received some

indication that the annual use for recreational engines may be lower

than assumed in the inventory analysis and calculations (Table 5-2 of

the Final Regulatory Impact Analysis).

Table 6 presents the projected emissions inventory from Category 1

commercial propulsion and auxiliary marine engines with and without the

new emission standards. Table 6 also presents the anticipated effects

of the MARPOL Annex VI standards on the Category 1 NOX

inventory. The CO standard places a cap on existing emission levels, so

no benefits are claimed here.

Table 6.--Category 1 Commercial Propulsion and Auxiliary Emissions Inventory (thousand short tons per year)

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

HC NOX PM CO

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

Year MARPOL

Base Control Base Annex Control Base Control Base

VI

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

2000.................................... 11.3 11.3 436 434 434 14.0 14.0 69

2005.................................... 11.9 11.5 457 449 435 14.7 14.7 72

2010.................................... 12.5 11.1 479 465 406 15.4 12.9 76

2020.................................... 13.7 10.4 527 506 368 17.0 11.1 83

2030.................................... 15.1 11.2 580 556 392 18.7 11.7 91

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

2. Category 2 Engines

We developed baseline emission inventories for Category 2 marine

engines under contract with Carnegie Mellon University.10

For the purposes of this analysis, emissions are included from all

Category 2 engines operated in the Great Lakes, inland waterways, and

coastal waters up to 320 kilometers (200 miles) offshore. Emissions

from U.S.-flagged vessels were determined using ship registry data,

fuel consumption, rated power, operation assumptions, and fuel specific

emission factors. Emissions from foreign-flagged vessels were developed

based on cargo movements and waterways data, vessel speeds, average

dead weight tonnage per ship, and assumed cargo capacity factors.

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

\10\ Corbett, J., Fischbeck, P., ``Commercial Marine Emissions

Inventory and Analysis for United States Continental and Inland

Waterways,'' Carnegie Mellon University, Order No. 8A-0516-NATX,

September 1998 (Docket A-97-50; document II-A-01).

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

To model the benefits of the new standards, we applied an engine

replacement schedule and new engine standards to the baseline

inventory. In this case, no emission reductions are expected beyond the

already low levels of HC. Also, the PM and CO standards are intended as

caps, and no benefits are claimed for those pollutants. Table 7 shows

the projected emissions for

[[Page 73324]]

Category 2 vessels with and without the new emission standards. The

anticipated NOX impacts for the application of MARPOL Annex

VI standards to U.S.-flagged vessels are also included. The analysis

presumes no control of emissions beyond MARPOL levels for foreign-

flagged vessels; these are included in the analysis because they

operate in U.S. waters.

Table 7.--Category 2 Emissions Inventory (thousand short tons per year)

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

HC NOX PM CO

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

Year MARPOL

Base Base Annex Control Base Base

VI

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

2000...................................................... 11.1 267 265 265 6.1 34.1

2010...................................................... 12.3 295 278 266 6.8 37.7

2020...................................................... 13.6 325 292 250 7.5 41.7

2030...................................................... 15.0 360 315 243 8.3 46.0

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

3. Total Impacts

Table 9 contains the baseline annual emissions from marine diesel

engines at or above 37 kW as a whole as well as projections of the

annual emissions with the MARPOL Annex VI requirements and EPA

standards in place. According to this analysis, the emission standards

in this final rule will result in reductions, beyond the MARPOL Annex

VI limits, of 8 percent HC, 15 percent NOX, and 11 percent

PM percent CO from marine diesel engines in 2020. Nationally, these

reductions represents reductions of 0.9 percent NOX and 0.1

percent PM. The percent reduction would clearly be much higher for port

areas. This is especially true for San Diego, Beaumont-Port Arthur, San

Francisco and similar ports where marine diesel engines account for a

large fraction of the NOX emissions.11

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

\11\ Marine diesel engines make up about approximately 17% of

the NOX on a summer day for San Diego, 15% for Beaumont-

Port Arthur, and 12% for San Francisco. See the final report

``Commercial Marine Vessel Contributions to Emission Inventories,''

submitted by Booz-Allen & Hamilton, Inc., October 7, 1991 (Docket A-

97-50; document II-A-5).

Table 9.--Emission Reductions from Engines Subject to Tier 2 Standards

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

2000 2010 2020 2030

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

HC (103 short tons).................. Baseline..................... 22.4 24.7 27.3 30.1

Controlled................... 22.4 23.3 24.0 26.2

Reduction.................... 0% 6% 12% 13%

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

NOX (103 short tons)................. Baseline..................... 702.2 773.5 852.2 939.0

MARPOL....................... 699.6 742.3 797.5 871.1

Controlled................... 699.6 672.1 618.0 634.7

Reduction*................... 0% 13% 27% 32%

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

PM 103 short tons.................... Baseline..................... 20.1 22.2 24.4 27.0

Controlled................... 201.1 19.7 18.6 20.0

Reduction.................... 0% 11% 24% 26%

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

*This reduction is from the baseline. The Tier 2 standards are expected to achieve a 23 percent reduction in

2020 from the levels expected from the MARPOL standards.

In addition to the effect of the new standards on direct PM

emissions noted above, the standards are expected to reduce the

concentrations of secondary PM. Secondary PM is formed when

NOX reacts with ammonia in the atmosphere to yield ammonium

nitrate particulate. As described in Chapter 5 of the Final RIA, each

100 tons of NOX reduction results in about a 4-ton reduction

in secondary PM. This conversion rate varies from region to region, and

is greatest in the West. We estimate that the 257,000 tons per year

total NOX reduction projected for marine engines in 2020

will simultaneously reduce secondary PM by about 10,300 tons. This

secondary PM reduction is almost double the direct PM reductions for

2020 projected for this rulemaking.

B. Noise, Energy, and Safety

Engines designed to meet the new emission standards will generally

operate at lower noise levels. One important source of noise in diesel

combustion is the sound associated with the combustion event itself.

When a premixed charge of fuel and air ignites, the very rapid

combustion leads to a sharp increase in pressure, which is easily heard

and recognized as the characteristic sound of a diesel engine. The

conditions that lead to high noise levels also cause high levels of

NOX formation. Fuel injection changes and other

NOX control strategies therefore typically reduce engine

noise, sometimes dramatically.

We do not anticipate any negative impacts on energy or safety as a

result of this final rule. The impact of the new standards on energy is

measured by the effect on fuel consumption from complying engines.

Although it is not expected to be a primary compliance strategy, marine

engine manufacturers could retard engine timing to comply with emission

limits. This could lead to an increase in fuel consumption in the

absence of other changes to the engines. Most of the technology changes

anticipated in response to the new standards, however, have the

potential to reduce fuel consumption as well as emissions. Therefore,

on balance, no increase in energy consumption is expected. As far as

safety is concerned, we believe that marine engine manufacturers will

use only proven technology that is currently used in

[[Page 73325]]

other engines such as nonroad land-based diesel applications,

locomotives, and diesel trucks.

C. Economic Impacts

In assessing the economic impact of setting emission standards, we

have made a best estimate of the combination of technologies that an

engine manufacturer will most likely use to meet the new standards. The

analysis presents estimated cost increases for new engines and

equipment. This economic impact is comprised of variable costs (for

hardware and assembly time) and fixed costs (for research and

development, retooling, and certification). The analysis considers

total operating costs, including maintenance and fuel consumption, as

well. Cost estimates based on these projected technology packages

represent an expected change in the cost of engines as they begin to

comply with new emission standards. Separate projected costs were

derived for engines used in five different ranges of rated power; costs

were developed for engines near the middle of the listed ranges. All

costs are presented in 1997 dollars. Full details of our cost analysis

can be found in Chapter 4 of the Final RIA.

Table 10 summarizes the projected costs of these technologies for

meeting the new emission limits. Anticipated incremental cost impacts

of the Tier 2 emission limits for the first years of

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