United States
Environmental Protection
Agency
Air and Radiation
EPA420-R-99-003
March 1999
0 EPA
Final Regulatory Impact
Analysis
Phase 2: Emission Standards for
New Nonroad Nonhandheld
Spark-Ignition Engines At or
Below 19 Kilowatts
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FINAL REGULATORY IMPACT ANALYSIS
Phase 2: Emission Standards for
New Nonroad Nonhandheld Spark-Ignition Engines
At or Below 19 Kilowatts
March 1999
U.S. Environmental Protection Agency
Office of Mobile Sources
Engine Program and Compliance Division
2000 Traverwood Drive
Ann Arbor, MI 48105
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ACKNOWLEDGMENTS
PHASE 2 NONHANDHELD
EPA reviewed the technical feasibility for this rulemaking in light of actions with the
industry and the California ARE in March 1998. The emission standards for small spark
ignition engines set by California ARE were reviewed by EPA. EPA followed up with
discussions with the major stakeholders of engine manufacturers as to their agreement for
incorporating emission reduction technologies for tighter standards for Class I. EPA
understood that tighter standards would mean the requirement of longer lead times and those
have been incorporated in this FRM. EPA acknowledges the hard work, now and in the future,
that the engine and equipment manufacturers will undertake in order to assure their part of
providing clean air.
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11
TABLE OF CONTENTS
Chapter 1: Introduction 1-1
Chapter 2: Exhaust Emission Test Cycle and Test Procedures 2-1
2.1 Introduction 2-1
2.2 Phase 1 test procedures and test cycle 2-1
2.3 Agency review of Phase 1 test cycle and procedure for final Phase 2 rule 2-2
2.3.1 Review of Non-handheld Test Cycle 2-3
2.4 Additional changes to Phase 1 test procedure 2-6
Chapter 2 References 2-7
Chapter 3: Technologies and Standards 3-1
3.1 Introduction 3-1
3.2 Technologies 3-2
3.2.1 Conversion of SVto OHV Design for4-Stroke Engines 3-2
3.2.1.1 Description of Technology for SVto OHV Conversion 3-2
3.2.1.2 Current State of Technology Development for SV to OHV
Conversion 3-2
3.2.1.3 Description of 4-stroke SV Technology 3-2
3.2.1.3.1 Uncontrolled and Phase 1 Technology SV
Engines 3-3
3.2.1.4 Description of 4-stroke Over-head Valve Technology 3-5
3.2.1.4.1 Uncontrolled and Phase 1 Technology OHV Engines
3-5
3.2.1.5 Exhaust Emission Performance and Costs of SV to OHV
Conversion 3-8
3.2.1.6 Impact on Equipment Design and Use of SV to OHV Conversion
3-9
3.2.1.7 Technology Impact on Noise, Safety, and Energy for SV to OHV
Conversion 3-10
3.2.2 Improvements to Existing 4-stroke Over-head Valve Engines 3-10
3.2.2.1 Description of 4-stroke Over-head Valve Technology .... 3-10
3.2.2.2 Current State of Development for OHV Technology 3-10
3.2.2.3 Exhaust Emission Performance and Costs of OHV Technology
3-11
3.2.2.3.1 Improvements to Phase 1 Technology OHV Engines
3-11
3.2.2.4 Impact on Equipment Design and Use 3-14
3.2.2.5 Technology Impact on Noise, Safety, and Energy 3-14
3.2.3 Application of Catalytic Converters to 4-stroke Nonhandheld Engines
3-15
3.2.3.1 Description of Catalyst Technology 3-15
3.2.3.2 Current State of Catalyst Technology Development 3-15
3.2.3.3 Exhaust Emission Performance of Catalysts 3-16
3.2.3.4 Cost Estimates of Catalysts Systems 3-18
3.2.3.5 Impact on Equipment Design and Use of Catalyst 3-20
3.2.3.6 Catalyst Technology Impact on Noise, Safety, and Energy 3-
20
3.2.4 Discussion of Other Engine Technologies 3-21
3.2.4.1 Vaporizing Carburetion 3-21
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Ill
3.2.4.2 Spark Ignition Technologies 3-24
3.2.4.3 Other Technologies 3-25
3.3 Final Exhaust Emission Standards 3-26
3.3.1 Final HC+NOx Standards for Class I Engines 3-26
3.3.2 Final HC+NOx Standards for Class II Engines 3-27
Chapter 3 References 3-30
Chapter 4: Technology Market Mix and Cost Estimates for Small SI Engines and Related
Equipment 4-1
4.1 Engine Technology Market Mix Estimates 4-3
4.1.1 Phase 1 Market Mix 4-4
4.1.2 Phase 2 Market Mix 4-5
4.1.2.1 Potential Emission Reduction Technologies 4-5
4.1.2.1.1 Class I 4-6
4.1.2.1.2 Class II 4-7
4.1.2.2 Engine Families Selected for Emission Improvement 4-8
4.1.2.2.1 Nonhandheld 4-9
4.2 Variable Hardware and Production Cost Estimates per Engine Class 4-13
4.3 Fixed Production and Research and Development Cost Estimates per Engine Class
4-15
4.4 Equipment Cost Estimates 4-20
4.5 Fuel Savings and Impacts on Performance 4-24
4.5.1 Fuel Consumption 4-24
4.5.2. Power 4-26
Chapter 4: References 4-27
Chapter 5: Compliance Program Costs 5-1
5.1 Background 5-1
5.1.1 Engine Families 5-1
5.1.2 Alternative Fueled Engine Families 5-2
5.1.3 Assumed Costs 5-2
5.2 Certification 5-3
5.2.1 Cost Inputs and Methodology 5-3
5.3 Averaging, Banking and Trading 5-5
5.4 Production Line Testing 5-6
5.4.1 Rationale for Production Line Testing 5-6
5.4.2 Cost Inputs and Methodology 5-7
5.5 Voluntary In-Use Testing 5-8
5.5.1 Rationale for Voluntary In-Use Testing 5-8
5.6 Summary Tables 5-9
5.6.1 Cost Methodology 5-9
Chapter 5: References 5-12
Chapter 6: Environmental Benefit 6-1
6.1 Estimated Emissions Reductions 6-2
6.1.1 Aggregate HC+ NOx Reductions 6-3
6.1.1.1 In-use Population 6-3
6.1.1.2 Growth Estimates 6-3
6.1.1.3 Scrappage 6-4
6.1.1.4 Emission Factors 6-4
6.1.1.5 Emissions reductions 6-5
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IV
6.2 Air Quality Benefits 6-7
6.2.1 VOC 6-7
6.2.1.1 Health and Welfare Effects of VOC Emissions 6-7
6.2.2 Benzene 6-8
6.2.2.1 Projected Benzene Emission Reductions 6-9
6.2.2.2 Health Effects of Benzene Emissions 6-9
6.2.2.3 Carcinogenicity of Benzene and Unit Risk Estimates 6-10
6.2.3 1,3- Butadiene 6-12
6.2.3.1 Projected 1,3-Butadiene Emission Reductions 6-12
6.2.3.2 Health Effects of 1,3 - Butadiene Exposure 6-13
6.2.3.3 Carcinogenicity of 1,3-Butadiene 6-14
6.2.4 CO 6-14
6.2.4.1 Health and Welfare Effects of CO 6-15
6.2.4.2 Developmental Toxicity and Other Systemic Effects of Carbon
monoxide 6-17
Chapter 6: References 6-19
Chapter 7: Analysis of Aggregate Costs 7-1
7.1 Aggregate Cost Analysis 7-1
7.1.1 Uniform Annualized Costs 7-3
7.1.1.1 Variable Costs 7-4
7.1.1.2 Capital Costs 7-4
7.1.1.3 Compliance Costs 7-5
7.1.1.4 Fuel Savings 7-6
7.1.2 Average Cost Per Equipment 7-7
7.1.2.1 Fuel Savings 7-8
7.2 Cost Effectiveness 7-10
7.3 20-Year Analysis 7-11
7.3.1. Costs 7-11
7.3.2. Fuel Savings 7-14
Chapter 7 References 7-16
Chapter 8: Assessment of Impact on Small Entities 8-1
8.1 Introduction and Methodology 8-1
8.1.2 Methodology 8-3
8.2 Impact on Engine Manufacturers 8-5
8.2.1 Identification of Manufacturers 8-5
8.2.2 Expected Technologies/Costs 8-5
8.2.3 Expected Impact on Small Business Entities 8-6
8.2.4 Sales Test for Engine Manufacturers 8-7
8.3 Impact on Equipment Manufacturers 8-8
8.3.1 Number of Small Manufacturers 8-8
8.3.2 Impact on Equipment Manufacturers 8-9
8.3.3 Possibility of Cost Passthrough 8-10
8.3.4 Other Considerations 8-12
8.4 Estimation of Impacts on Small-Volume Equipment Manufacturers 8-12
8.4.1 Base Case-No Flexibilities 8-12
8.4.2. Flexibilities Case 8-14
8.5 Conclusions 8-15
8.6 Outreach Activities 8-17
Chapter 8: References 8-18
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V
Chapter 9: Useful Life and Flexibility Supporting Data 9-1
9.1 Information on Useful Life 9-1
9.1.1 Nonhandheld Useful Life Estimates from GARB 9-2
9.1.2 Nonhandheld Useful Life Estimates from OPEI 9-3
9.1.3 Small Engine Equipment Usage Estimates used by EPA 9-4
9.1.4 Final Phase 2 Nonhandheld Useful Life Categories 9-5
9.2 Background for Choice of Small Volume and Small Family Cutoffs 9-6
9.2.1. Small Volume Engine Manufacturers 9-6
9.2.2 Small Volume Engine Family 9-7
9.2.3 Small Volume Equipment Manufacturer 9-8
9.2.4 Small Volume Equipment Model 9-9
Chapter 9: References 9-12
Appendix A: Industry Characterization A-1
Appendix B: Manufacturer and Product Summary B-1
B.1 Introduction B-1
B.2 Engine Manufacturer Summary B-1
B.2.1. Listing of Known Engine Manufacturers B-1
B.2.2. Listing of Known Engine Models per Manufacturer B-1
B.2.2.1. Number of Engine Models B-2
B.2.2.2. Engine Family and Emissions Per Engine Family Per Class
B-2
B.3 Estimate of Historical and Future Equipment Consumption (Population) . . . B-3
Appendix C Compliance Cost Estimate Spreadsheets
Appendix D (Reserved)
Appendix E Rulemaking Cost Spreadsheets
Appendix F Nonroad Small Engine Emission Model Tables
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Chapter 1: Introduction
Chapter 1: Introduction
This Regulatory Impact Analysis (RIA) contains the supporting
information and analysis for this Phase 2 final rulemaking. The information was
gathered from sources including the Regulatory Negotiation (1993-1996),
industry meetings (1993-1998), EPA contracts, comments to the NPRM and
discussions with manufacturers and inventors. The Regulatory Negotiation task
groups provided information on test procedure, technologies, compliance
programs and costs. Industry provided data on the in-use deterioration
characteristics of Phase 1 engines from their own test programs and on costs of
technologies to the consumer. EPA contracts provided information on available
technologies, costs of technology changes and regulatory impacts for small
volume entities. Comments to the NPRM provided information on a number of
issues including the timeframe for certain technologies, costs of technologies,
costs of testing, the need for additional nonhandheld classes, etc. Discussions
with manufacturers and inventors since the publication of the NPRM provided
EPA with information on the latest in emission reduction technologies and costs.
All of this information is utilized in the chapters of this RSD as described below.
Chapter 2 contains a summary of the work done by the Test Procedure
Task Group of the Regulatory Negotiation Committee, as it relates to the rule, as
well as the test procedure changes for this final rulemaking. The work by the
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Chapter 1: Introduction
Task Group included an investigation into the differences in emission results
when small engines1 are tested on steady state and transient test cycles. The
outcome for this final rule is the use of the Phase 1 steady state test procedure
with several adjustments including 1) engines equipped with engine speed
governors must utilize the governor during the test cycle (with some
modifications to test cycle requirements as commented by EMA in docket A-96-
55 item #IV-D-12), and 2) measures are included for natural gas fueled
nonhandheld engines for measuring methane emissions.
Chapter 3 of this RSD presents the supporting rationale for the level of the
standards for this final rulemaking including a comparison of cost estimates for
various technologies. Information on technologies was provided by several
sources including the Technology Subgroup of the Regulatory Negotiation, an
EPA work assignment with SwRI and discussions with manufacturers and
inventors. The Technology Subgroup of the Regulatory Negotiation investigated
a number of engine emission reducing technologies for the exhaust system and
fuel system of small SI engines. The results of the research and testing during
these years revealed that some technologies required other engine improvements
to be achieved prior to their use (such as catalysts), some technologies were
currently too expensive compared to the price of the engine (such as fuel
injection on a Class I consumer engine) and some were in the pre-prototype
stages and required additional development before they can be relied upon (such
as a fuel vaporization design for Class I SV engines). In 1996, EPA conducted a
work assignment with SwRI to investigate Phase 1 engines and identify the
features of low and high emitting handheld and nonhandheld engines.
Discussions with inventors gave insight into the possibilities of nontraditional
1 The small engines were tested in Phase 1 and "future technology" configurations.
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Chapter 1: Introduction
technologies, however these are not included as a basis for this rulemaking since
they are not yet proven technologies.
Cost information was submitted to EPA by industry groups, individual
companies and through a work assignment with ICF, Incorporated (docket A-93-
29, item II-A-04), herein referred to as the "1996 Cost Study". Information on
costs was pulled from each source and updated through discussions with
industry after the NPRM was published in order to best represent the likely costs
that could be incurred as a result of the new standards being finalized for this
industry.
Chapter 4, and Appendix B, contain the data and analysis behind the
estimated costs for the technologies for this rule. The impact of technology
changes to the Phase 1 engine families are based on review of the Phase 1
certification database and the final regulatory programs. The number of
nonhandheld engine families that are likely to be improved are estimated based
on the use of ABT by the engine manufacturers2 and the layout of a
manufacturer's current product offering with respect to the ability to accumulate
a number of credits by changing a minimum number of engine families.
Technology improvements for nonhandheld engines include conversion of
engine families from SV to OHV design and improvements in OHV emission
performance. Costs assumed for each technology are also presented in this
chapter.
Chapter 5 contains the detail of each compliance program and outlines the
costs assumed for each program. The programs for this final rulemaking include
certification and production line testing. One major assumption made here for
the majority of these programs is the useful lives that would be chosen by engine
The ABT calculation is performed for each engine manufacturer given the
information in the Phase 1 certification database of which some is confidential.
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Chapter 1: Introduction
manufacturers for their engine families. This was done based on the market
focus of the engine manufacturers from low cost to high durability to automotive
related. Appendix C contains the spreadsheets for this analysis.
Chapter 6 contains a description of the methodology used to calculate
anticipated emission reductions and fuel savings as a result of this final
rulemaking. Appendix F contains related data used in EPA's NONROAD
Model. The new engine HC, NOx and CO emission rates for the Phase 1 baseline
were based on the Phase 1 HC, NOx and CO standards (based on the Phase 1
certification database as of September 1998) and in-use deterioration
characteristics were based on information provided in EPA's Phase 1 model3.
Phase 2 new engine HC, NOx and CO emission rates were based on the Phase 2
standards4 and anticipated HC/NOx split based on anticipated emission
reduction technologies. The in-use emission deteriorations were based on the
expected technologies. Impacts on brake specific fuel consumption rates were
based on those used for the Phase 1 rulemaking and anticipated fuel savings
from Phase 2 technologies.
Chapter 7 contains the aggregate cost analysis for this rulemaking and
Appendix E contains the corresponding spreadsheets. The cost estimates
3 EPA used the NONROAD model for this rulemaking and therefore incorporated
the methodology in that model. The in-use deterioration rates provided by some
industry members, based on accelerated aging, were not used in place of some
deterioration estimates in the Phase 1 model. In nearly all classes and engine
designs, with the exception of Class I SV engines in which the deterioration factor
is higher than that in industry data, the deteriorations were similar. The change in
the Class I SV df may be acceptable for the NONROAD model is to account for
real world in-use and most Class I engines are consumer use for which data was
not available by the industry.
4 In the case of Class IOHV engines, the Phase 2 standard is the same as the Phase
1 baseline.
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Chapter 1: Introduction
presented in Chapters 4 and 5 are used to calculate these costs which include
uniform annualized costs for variable and fixed costs per class, average cost per
equipment per class and overall cost effectiveness. The cost effectiveness with
fuel savings and a 20 year annualized cost analysis are also presented.
Chapter 8 outlines the analysis of impacts on small entities for this rule.
The work for this analysis was completed through a work assignment with ICF,
Incorporated in 1997 and additional work by EPA in 1998. Through this work,
EPA analyzed the expected impact on small production volume engine and
equipment manufacturers based on the final standards and programmatic
content of this rulemaking5. Based on the phase-in, ABT, and a number of
flexibilities including reduced compliance demonstration burden and additional
lead time, it is anticipated that the impact on small volume manufacturers and
small volume models will be minimal.
Chapter 9 contains the background information and analysis on useful
lives and regulatory flexibility parameters. The standards in this final
rulemaking are to be met by engines based on the emissions at the end of the
useful life of the engine. Three choices of useful lives for nonhandheld (Class I:
125, 250 and 500 and for Class II: 250, 500, 1000). These options were based on
useful life information by CARB, OPEI and EPA's own analysis. The production
volume cutoffs for the various flexibilities for this rulemaking were based on the
information available in the 1996 PSR DELINK database. Chapter 9 contains the
rationale behind the decisions for each flexibility cutoff.
5 This includes certification and production line testing.
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Chapter 2: Test Cycle and Test Procedures
Chapter 2: Exhaust Emission Test Cycle and Test Procedures
2.1 Introduction
In order for EPA to successfully regulate exhaust emissions from small
nonroad engines, the Agency strives to establish test procedures and cycles
which ensure technologies used by manufacturers not only meet the emission
standards when tested over the required test procedures, but also result in a
predictable emission reduction in actual use. Test procedures are specified to a
level of detail necessary to produce accurate, repeatable results.
2.2 Phase 1 test procedures and test cycle
The Phase 1 test procedure is described in 40 CFR Part 90, Subparts D and
E. The Phase 1 test procedure is based upon well established and accepted on-
highway exhaust emission methods and equipment, with some modification to
take into account the unique nature of small SI engines. The procedures are
designed to accurately measure engine emission performance. A description of
the Phase 1 test cycles and procedures were included in the final RSD for the
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Chapter 2: Test Cycle and Test Procedures
Phase 1 rule. (Ref. 1) The Phase 1 test cycles (two for nonhandheld) are
comprised of a series of steady state 'modes'. A mode is a specified engine speed
and load condition, during which the engine is stabilized and emissions are
sampled. The emission results for all of the modes are combined using
'weighting factors' into a single number for each pollutant.
Two distinct cycles (sets of modes) are used for small non-handheld
engines: (1) engines used in non-handheld intermediate speed applications; and
(2) engines used in non-handheld rated speed applications. The test cycle for
non-handheld intermediate speed engines consists of six different speed/load
modes, five load conditions that span the load range of the engine at
intermediate speed and one no-load condition at idle speed. The test cycle for
non-handheld rated speed applications also consists of six different modes, five
load conditions at rated speed and one no-load condition at idle speed.
The Agency determined during the Phase 1 rulemaking, based on the
information available at the time, that for the range of technologies expected to
be used to meet the Phase 1 standards, that the Phase 1 test cycle and weighting
factors were appropriate.
2.3 Agency review of Phase 1 test cycle and procedure for final Phase 2
rule
Prior to proposing Phase 2 emission standards for small nonroad engines,
the Agency first undertook, with the cooperation of the engine industry and
members of the Negotiated Rulemaking Committee, a test program to determine
if the Phase 2 rule should contain a change in the test cycle. The Agency has
found for other mobile source categories that steady-state test cycles often do not
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Chapter 2: Test Cycle and Test Procedures
result in real in-use emission reductions and that 'transient' test cycles which
more closely mimic real world operating conditions are necessary. A transient
cycle means a combination of speed and/or load conditions which vary with
time, such as the on-highway Federal Test Procedure for light-duty vehicles.
During the Reg/Neg process the Agency expressed concerns regarding
the ability of the Phase 1 steady-state test cycles to adequately predict in-use
emission reductions for a Phase 2 rule which would result in different engine
technologies being employed. The Reg/Neg committee established a Test
Procedure Task Group to examine the existing Phase 1 test cycle and procedure
and make recommendations to the committee regarding any appropriate
changes. (Ref. 2) The Test Procedure Task Group established two subgroups to
examine the Phase 1 steady state non-handheld and handheld test cycles.
2.3.1 Review of Non-handheld Test Cycle
The Test Procedure Task Group established a Nonhandheld Subgroup,
consisting of one EPA technical staff person and two industry engineers, to
develop and carry-out a test program to determine if "future" technology non-
handheld engine emission reductions could be predicted with the use of a steady
state test cycle or if a transient test cycle was necessary. This task group
undertook a test program lasting several months which included; development
of a transient test cycle and procedure, development of a comparable steady state
test cycle, development of a "future" technology engine, and completing a series
of emission tests. The work done by the Nonhandheld Subgroup is well
documented in their final report. (Ref. 3)
The Nonhandheld Subgroup developed a representative transient cycle
based on field data for a walk-behind rotary mower application, referred to as
the grass cutting duty cycle (GCDC). The Nonhandheld Subgroup also
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Chapter 2: Test Cycle and Test Procedures
developed a steady-state cycle with a comparable load-factor to the GCDC which
could be used for comparative purposes. The Nonhandheld Subgroup utilized
three test engines for comparison testing between transient and steady-state
operations; two baseline technology engines and one future technology engine.
The baseline engines were single-cylinder OHV walk-behind mower engines The
future technology was based on the same model, but with an experimental
carburetor and accelerator pump which allowed the engine to perform at
enleaned air-fuel ratios and rely on the accelerator pump for accelerations. Table
2-01 contains a summary of the relevant data from the Nonhandheld Subgroup
final report regarding the comparison between steady-state and transient results.
Table 2-01
Summary of Results from Nonhandheld Transient/Steady State Cycle Program
Test Engine
Engine #1
Engine #1
Engine #2
Engine #2
Engine #3, Enleaned
w/ Accelerator Pump
Engine #3, Enleaned
w/ Accelerator Pump
Cycle
steady-state
transient
steady-state
transient
steady-state
transient
Avg. HC
(g/kW-hr
10.50
10.50
16.43
17.90
5.61
5.31
Avg. NOx
(g/kW-hr)
3.06
3.34
2.37
2.04
5.47
3.88
Avg. CO
(g/kW-hr)
322
272
441
453
83
51
The steady-state cycle results shown in Table 2-01 are based on the
Nonhandheld Subgroup's steady-state cycle which was developed to have the
same load factor as the transient GCDC. As discussed in Chapter 3 of this RIA,
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Chapter 2: Test Cycle and Test Procedures
the Agency is finalizing standards for Class I and Class II engines which can be
met by clean OHV technology such as the OHV technology used in Engine #3.
Therefore, based on the relatively minor differences in HC and NOx emissions
between the steady-state and transient cycles for Engine #3, and the appearance
that the steady state cycle is a worst case test, the Agency concludes a steady-
state cycle is appropriate for Phase 2 nonhandheld engines.
During discussions with nonhandheld engine manufacturers within the
Test Procedure Task Group, engine manufacturers and the Agency generally
agreed that the Phase 1 test procedure practice of using fixed throttle operation
during the steady state cycle was not considered an ideal test method for
characterizing real-world emissions from engines equipped with engine
rotational speed governors. For Phase 1 engines, 40 CFR 91.409 allows a
manufacturer to choose between using the engines speed governor or using an
external throttle controller to maintain engine speed and load. The Agency is
concerned that as standards become more stringent the potential negative effects
from artificial control of an engines throttle valve may become increasingly
important.
Based on discussion during the meetings of the Test Procedure Task
Group and the Agency's desire to maintain an appropriate relationship between
the Federal Test Procedure and real world operation, the Agency is finalizing
that Phase 2 Class I and II engines equipped with engine speed governors must
utilize the governor during the test cycle with a few exceptions. For Phase 2
Class I and Class II engines equipped with an engine speed governor, the
governor must be used to control engine speed during all test cycle modes except
for Mode 1 or Mode 6, and no external throttle control may be used that
interferes with the function of the engine's governor. For Phase 2 Class I and
Class II engines equipped with an engine speed governor, a controller may be
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Chapter 2: Test Cycle and Test Procedures
used to adjust the governor setting for the desired engine speed in Modes 2-5 or
Modes 7-10. For Phase 2 Class I and Class II engines equipped with an engine
speed governor, during Mode 1 or Mode 6 fixed throttle operation may be used
to determine the 100% torque value. The changes are contained in final
regulatory modifications to Subpart E of 40 CFR Part 90.
2.4 Additional changes to Phase 1 test procedure
In order to accommodate the final optional non-methane hydrocarbon
(NMHC) standard for natural gas fueled nonhandheld engines, the Agency is
proposing to incorporate by reference the appropriate sections from 40 CFR Part
86 which relate to the measurement of methane emissions from spark-ignited
engines. These appropriate sections were published as part of a final rulemaking
titled "Standards for Emissions From Natural Gas-Fueled, and Liquefied
Petroleum Gas-Fueled Motor Vehicles and Motor Vehicle Engines, and
Certification Procedures for Aftermarket Conversions" see 59 FR 48472,
published on September 21, 1994. The specific sections being incorporated can be
found in the final regulatory language contained in this proposal at §90.301 (d)
and §90.40l(d).
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Chapter 2: Test Cycle and Test Procedures
Chapter 2 References
1. "Regulatory Support Document, Control of Air Pollution, Emission Standards for
New Nonroad Spark-Ignition Engines at or Below 19 kiloWatts" US EPA, May 1995,
EPA Air Docket A-93-25, Docket Item #V-B-01.
2. Handouts and Notes from all Meetings of the Test Procedure Task Group held
during the Phase 2 Regulatory Negotiation are available in EPA Air Docket A-93-92.
3. "Transient Versus Steady State Test Procedure Evaluation of Small Utility Engines",
EPA Air Docket A-93-29, Docket Item II-M-27.
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Chapter 3: Technologies and Standards
Chapter3: Technologies and Standards
3.1 Introduction
Section 213(a)(3) of the Clean Air Act as amended in 1990 presents
statutory criteria that EPA must evaluate in determining standards for nonroad
engines and vehicles. The standards must "achieve 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." This chapter presents the technical analyses and information that
form the basis of EPA's determination that the final emission standards are
technically achievable accounting for all the above factors.6 Specific areas of
discussion include a basic description of the technologies examined, current
status of the technology in the existing market, new and in-use emission
performance of each technology, impact of the engine technology on equipment
design and use, and impact of the technology on noise, safety, and energy.
Finally, this chapter concludes with a discussion of the final standards and how
While costs are listed in this chapter, they are used for comparison of technologies
only. Chapter 4 lists the costs used in the analysis for this rulemaking.
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Chapter 3: Technologies and Standards
these standards meet the statutory criteria.
3.2 Technologies
Section 3.2. contains emission reduction projections and per engine cost
estimates on the several types of technologies the Agency considered during the
development of the Phase 2 standards.
3.2.1 Conversion of SV to OHV Design for 4-Stroke Engines
The way for manufacturers of large volumes of Class I and Class II SV
engines to meet the Phase 2 standards, on average, is to reduce the emissions
from their large production SV engine families. One way is to convert their
existing SV engine designs to cleanly designed OHV.
3.2.1.1 Description of Technology for SV to OHV Conversion In this
analysis, the Agency considered the conversion not simply to OHV technology,
but to emissions optimized OHV engines, which would incorporate designs for
improved new engine and in-use emission performance beyond existing Phase 1
technology OHV engines. The new OHV engines would have similar new and
in-use emission performance as the improved Phase 1 OHV engines described in
Section 3.2.2.
3.2.1.2 Current State of Technology Development for SV to OHV
Conversion OHV design and manufacturing information is well known by
manufacturers of small Class I and II engines. Therefore the Agency believes
design and manufacturing techniques for OHV engines are also well known to
small engine manufacturers.
3.2.1.3 Description of 4-stroke SV Technology -- Four stroke Otto-cycle
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Chapter 3: Technologies and Standards
side-valve (SV) engines utilize four distinct strokes to complete a combustion
cycle (i.e., intake, compression, expansion, and exhaust). Additional information
regarding the 4-stroke Otto-cycle can be found in ICF, 1996 (see reference 1 of
this Chapter). In a SV 4-stroke Otto-cycle engine, the intake and exhaust valves
are located to one side of the combustion chamber, with the valve stems located
below the combustion chamber. In order to accommodate the location of the
intake and exhaust valve, the combustion chamber is relatively long and flat, as
compared to a 4-stroke over-head valve design (see Section 3.2.2, "Improvements
to Existing 4-stroke OHV Engines").
3.2.1.3.1 Uncontrolled and Phase 1 Technology SV Engines The
Agency presented information on uncontrolled SV Class I and Class II emission
rates in the RSD for the Phase 1 rule (see ref. 7 to this Chapter). The Agency
estimated the new engine HC+NOx emissions for uncontrolled Class I and Class
II SV engines to be 55 g/kW-hr and 16 g/kW-hr respectively. The Phase 1
HC+NOx standards for Class I and II engines are 16.1 and 13.4 g/kW-hr,
respectively.
Information on the in-use deterioration of uncontrolled SV engines is
somewhat limited, however, the Agency estimated at the time of the Phase 1 rule
that HC emissions increased by a factor of 2.1 and NOx decreased by
approximately 60 percent during the lifetime of an engine (see ref. 7 to this
Chapter). Much more data is available on Phase 1 SV technology in-use emission
performance. In 1996, the Agency received information from several engine
manufacturers regarding the in-use performance of Phase 1 technology Class I
and II engines, both SV and OHV designs. This in-use manufacturer controlled
field data was collected by several manufacturers who hired an independent
contractor, Air Improvement Resources (AIR), to evaluate the data.(Ref. 1) AIR
analyzed deterioration information from 39 Class I SV engines and 25 Class II SV
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Chapter 3: Technologies and Standards
engines. These engines were aged to a range of in-use hours, between 20 and 300
hours for the Class I engines, and between 110 and 450 hours for the majority of
Class II SV engines. (Two Class II SV engines exceeded 1,000 hours of use.) AIR
analyzed the HC+NOx deterioration data from these engines, along with data
from new engine quality audit data, manufacturer sales information, and
individual engine manufacturer's engineering judgement. AIR determined the
best fit to the deterioration data was of the form:
HC + NOx Deterioration Factor = 1 + CONSTANT x \jEngine Hours
AIR's results indicate that the HC+NOx deterioration factor (DF) is 1.9 for a
Phase 1 Class I SV engine at 66 hours7 of use, and 1.6 for a Phase 1 Class II SV
engine at 250 hours of use.
While the final rulemaking has set the minimum useful life hours for Class
I at 125 hours, AIR did not perform an analysis at this number of hours since this
number was not being considered at the time. Therefore, in order to verify the
AIR data, the Agency analyzed a subset of the data examined by AIR, namely,
the field tested engine data at 66 hours and then at 125 hours. To do this, EPA
performed an ordinary least square analysis of HC+NOx deterioration factor
(DF) versus usage in hours for the square root of hours function shown above.
The Agency's results predict that the Class I SV HC+NOx DF at 66 hours is 1.9,
and the Class II SV HC+NOx DF at 250 hours is 1.6. The Agency's analysis
produced very similar results to the AIR analysis. Based on discussions with
several of the engine manufacturers who provided test data to AIR, the Agency
believes that the majority of the field aged engines used in this study would be
7 The 66 hours is used as a reference point between AIR analysis and EPA analysis.
The analysis is then used to determine a deterioration factor at 125 hours which
AIR did not analyze.
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Chapter 3: Technologies and Standards
considered typical engines used in residential applications where the engines are
designed for relatively low useful lives.
Now that the AIR analysis is verified, a DF for Phase 2 Class I SV engines
can be determined for the minimum useful life of 125 hours. The deterioration
factor calculation, as listed in the equation above, is based on the constant times
the square root of the number of hours. Using the constants, for HC and NOx,
calculated from all of the data EPA analyzed for the 66 hour case (0.13 for HC
and .02 for NOx) the individual deterioration factors calculate to 2.45 for HC and
1.224 for NOx. Splitting the Phase 1 standard with the HC/NOx split found in
the EPA Phase 1 certification database (16.1 => 11.27HC, 4.83 NOx), results in a
HC+NOx value of 33.5 g/kWh, and a df of 2.1 for HC+NOx. For Phase 2 Class II
SV engines, multiplying the DF times estimate at 250 hours times the Phase 1
standards is 21.4 g/kW-hr (i.e., 1.6*13.4 g/kW-hr). These results are a
conservative estimate of the in-use emission rate of Phase 1 SV engines since they
are based on using the standard as the new engine value rather than an engine
specific emission level.
3.2.1.4 Description of 4-stroke Over-head Valve Technology Four-
stroke over-head valve (OHV) engine designs have intake and exhaust valves
located above the cylinder head and combustion chamber, rather than to the side
of the cylinder head as in SV engine designs. Additional information describing
the design details of 4-stroke OHV, as well as 4-stroke SV is available in the 1996
ICF report (ref. 1 to this Chapter).
3.2.1.4.1 Uncontrolled and Phase 1 Technology OHV Engines
During the development of the Phase 1 regulation the Agency had little
information regarding the in-use HC and NOx exhaust emission performance of
OHV technology. In fact, most of the Agency's assumptions regarding OHV
deterioration were based on data from SV technology (see ref. 7 to this Chapter).
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Chapter 3: Technologies and Standards
In 1996, the Agency received information from several engine
manufacturers regarding the in-use performance of Phase 1 technology Class I
and II engines, both SV and OHV designs (see ref. 14 to this Chapter). Air
Improvement Resources (AIR) analyzed deterioration information from 12 Class
I OHV engines and 35 Class II OHV engines. These engines were aged to a range
of in-use hours, between 120 and 300 hours for the Class I OHV engines, and
between 180 and 475 hours for the Class II OHV engines. AIR analyzed the
HC+NOx deterioration data from these engines, along with data from new
engine quality audit data, manufacturer sales information, and individual engine
manufacturer's engineering judgement. AIR determined the best fit to the
deterioration data was of the form;
HC + NOx Deterioration Factor = 1 + CONSTANT x \jEngine Hours
AIR's results indicate that the HC+NOx deterioration factor (DF) is 1.4 for a
Phase 1 Class I OHV engine at 66 hours of use, and 1.4 for a Phase 1 Class II OHV
engine at 250 hours of use.
As it did for SV engines, the Agency verified AIR's analysis by analyzing
a subset of the data examined by AIR, namely, the field tested engine data. EPA
performed an ordinary least square analysis of HC+NOx deterioration factor
(DF) versus usage in hours for the square root of hours function shown above.
The Agency's results predict that the Class I OHV HC+NOx DF is 1.35 at 66
hours, and the Class II OHV HC+NOx DF is 1.73 at 250 hours. The Agency's
analysis produced very similar results to the AIR analysis for a Class I OHV
engine, but higher results for a Class II OHV engine. The Agency believes the
difference in the Class II OHV DF estimate is likely a result of the different
methodologies used by AIR and by EPA. Specifically, the Agency's analysis did
not include new engine quality audit data, manufacturer sales information, or
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Chapter 3: Technologies and Standards
individual engine manufacturer's engineering judgement. Due to the similarities
in the HC+NOx DF estimate for the Class I OHV, and the Class I and II SV
engines (see Section 3.2.1.3), the Agency is comfortable relying on the industry
estimate for Class II OHV engines.
As noted in 3.2.1.3.1 on SV engines, the EPA is finalizing a minimum
useful life of 125 hours for Class I engines. Therefore the DF for HC and NOx
need to be calculated from the analysis of the data by EPA. EPA determined
constants of .05 for HC and .03 for NOx separately for use in the modeling of
emissions. Using these constants in the equation above, the deterioration factors
calculate to 1.56 for HC and 1.335 for NOx. Splitting the Phase 1 standard with
the HC/NOx split found in the EPA Phase 1 certification database (12.1 =>
11.27HC, 4.34 NOx), results in a HC+NOx value of 23.4 g/kW-hr and an overall
HC+NOx DF of 1.5. The Class II OHV estimate at 250 hours is 18.8 g/kW-hr (i.e.,
1.4*13.4 g/kW-hr). Multiplying these DFs times the Phase 1 standards results in
a conservative estimate of the in-use emission rate of Phase 1 OHV engines.
A number of engine families will have longer useful lives than those
analyzed above and are typically manufactured with commercial use of the
engine in mind. Based on discussions with several of the engine manufacturers
who provided test data on Class II engines to AIR, the Agency believes that the
majority of the field aged engines used in this study would be considered typical
of those engines used in residential applications which are designed for
relatively low useful lives. However, at the Agency's request, manufacturers
identified a small sample of Class II OHV engines which were considered to have
design characteristics representative of a 500 hour useful life engine. A
discussion of the EPA analysis of this data is contained in the public docket for
this rule.(Ref. 2) This analysis indicates an HC+NOx DF on the order of 1.2 at
500 hours. The Agency's conclusion, based on this very small data set, is that
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Chapter 3: Technologies and Standards
Class II OHV engines designed for a 500 hour useful life had very similar, and
perhaps better, HC+NOx deterioration at 500 hours compared to Class II OHV
engines designed for a 250 hour useful life. Unfortunately, the AIR data set did
not contain field aged data on Class I OHV engines which have design
characteristics representative of a 250 or 500 hours useful life engine, nor did it
contain field aged data on Class II OHV engines with design characteristics
representative of 1,000 hour useful life engines. The data set did contain (data on
two field aged SV engines at or over 1000 hours. The DFs seen from these
engines averaged 1.3 for HC+NOx.
3.2.1.5 Exhaust Emission Performance and Costs of SV to OHV
Conversion EPA believes the information contained in Section 3.2.2 on the
emission performance of improved OHV engines is also appropriate for the new
OHV engines which have been converted from SV designs. As stated in Section
3.2.2.3.1, the Agency estimates a Class I OHV engine can achieve an in-use
emission rate between 15.5 and 16.9 g/kW-hr at 125 hours, and Class II OHV
engines can achieve an in-use emission rate between 11.7 and 12.8 g/kW-hr at
250 hours.
In the draft RSD, the Agency relied on the cost estimates contained in
Chapter 3 of the 1996 ICF report (see ref. 1 to this Chapter) of converting existing
SV production capabilities to OHV manufacturing. However, EPA received
comments from one large engine manufacturer of SV engines asserting that the
cost estimates contained in the draft RSD analysis did not accurately reflect those
costs that would be incurred to convert from SV to OHV engines. EPA has
updated the cost estimates based on submitted data from the two largest SV
engine manufacturers on the expected cost of conversion from SV to OHV engine
designs.
Table 3-01 contains a summary of the cost estimates for both variable
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Chapter 3: Technologies and Standards
manufacturing costs and fixed costs for converting from SV to OHV technology.
Variable manufacturing costs include includes material costs, components costs,
and manufacturing labor. Fixed cost estimates include engineering costs,
changes to technical support training and manuals, and changes in tooling costs.
TABLE 3-01
Summary of per Engine Cost for Conversion from SV to OHV Technology
by Class
Conversion of Phase 1 SV
Engines to OHV Technology
Variable Costs
Fixed Costs8
Class I
$13.68
$16,770,000
Class II
$22.00
$18,440,000
3.2.1.6 Impact on Equipment Design and Use of SV to OHV Conversion
SV and OHV engines are similar in many ways from an overall packaging
perspective. The Agency expects that for many applications, new OHV designs
will present no changes for equipment manufacturers from a design perspective.
However, for some equipment types, the change in cylinder head configuration
for the OHV design or increases in cylinder head and/or exhaust gas
temperature will require changes in equipment design. Section 4.4.1. of this RIA,
contains a detailed description of the equipment design changes the Agency
would expect to see as a result of conversion from SV to OHV engine design.
The costs were then accounted for those engine families that were likely to
require new production facilities and averaged over all SV engine families
that were assumed to be improved (note the production volume of smaller
SV engine families may be covered by production capacity in existing
similar OHV engine families - this accounted for one engine family in
Class I and no engine families in Class II).
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Chapter 3: Technologies and Standards
The Agency expects no changes in the operational characteristics of
equipment as a result of the conversion from SV to OHV technology. From the
perspective of the user, SV and OHV engines should perform the same way with
respect to power generation.
3.2.1.7 Technology Impact on Noise, Safety, and Energy for SV to OHV
Conversion The Agency expects no significant changes in the noise or
operational safety of engines from the conversion of SV engines to OHV
technology. OHV engines are widely used in the nonhandheld market, and
there are no technical reasons the Agency is aware of which would cause an
increase in noise, or present an unsafe technology, from of the conversion of SV
technology to OHV engines.
The Agency would expect improvements in fuel economy from the
conversion of SV engines to OHV technology. Section 4.6.1 of this RIA contains
additional information on the expected fuel savings from the conversion to OHV
technology. OHV engines are more fuel efficient than SV designs, and the
Agency expects to see approximately a 15 percent reduction in the fuel
consumption from OHV engines compared to SV engines.
3.2.2 Improvements to Existing 4-stroke Over-head Valve Engines
3.2.2.1 Description of 4-stroke Over-head Valve Technology The reader
is referred to section 3.2.1.4 for a description of 4-stroke Overhead Valve
technology.
3.2.2.2 Current State of Development for OHV Technology OHV engine
designs have been manufactured and sold for use in nonhandheld applications
for many years. According to sales information available from Power Systems
Research (see ref. 13 to this Chapter), OHV engines represented less than 1
percent of Class I engine sales prior to 1986, but since that time they have grown
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Chapter 3: Technologies and Standards
to represent between 10 and 15 percent of total U.S. sales for the past eight years.
In the 1970's and 1980's, Class II engines were predominantly SV technology.
Beginning in 1985, OHV engines have steadily increased as a percentage of Class
II sales, averaging approximately a 3 percent increase per year. By 1995 OHV
engines represented approximately 35 percent of Class II engine sales.
Manufacturers have had many years experience in designing and producing
OHV technology.
3.2.2.3 Exhaust Emission Performance and Costs of OHV Technology
The reader is referred to section 3.2.1.4.1 for this information.
3.2.2.3.1 Improvements to Phase 1 Technology OHV Engines
The Agency considered several improvements to Phase 1 OHV technology
during the development of the Phase 2 nonhandheld rulemaking. Based on
information contained in a 1996 ICF report (see ref. 1 of this Chapter), and a 1996
report prepared by Southwest Research Institute (see ref. 3 of this Chapter),
several improvements to Phase 1 OHV technology were considered, a summary
of which is provided here. For Class I, approximately 15 percent of the
production is made up of OHV technology and approximately half of the OHV
engine families are estimated to already be below the final Phase 2 standard. For
Class II, 54 percent of the production are OHV technology and approximately
half of the OHV engine families are estimated to be below the final Phase 2
standard.
One area considered by the Agency was improvements to combustion
chamber design and intake systems. Improvements to combustion chamber
designs can result in more complete combustion of the air/fuel mixture, and may
improve the engines ability to operate at leaner air/fuel mixtures (see Chapter
5.1 of ref. 1 of this chapter, and Chapter 6 of ref. 3 of this chapter). Redesigning
the intake system can result in additional charge swirl within the combustion
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Chapter 3: Technologies and Standards
chamber for a more homogenous charge which, in turn, can result in more
complete combustion.
The Agency also considered improvements to the piston and piston ring
design, and cylinder bore smoothness. The objective of these improvements
would be to improve oil control. Poor oil control can result in the formation of
combustion chamber deposits, which will increase the in-use emissions from an
engine (see Chapter 5.1 of Ref. 1 of this chapter, and Chapter 6 of Ref. 3 of this
chapter). Some Phase 1 OHV engines have likely already incorporated
improvements to improve oil control. However, for those engine models which
have not, the Agency believes improvements to the piston and piston ring design
may be necessary to reduce oil consumption. In addition, improvements to
cylinder roundness and finish may also be required to reduce oil consumption.
The 1996 ICF report contains a detailed discussion of the per engine costs
of applying these improvements to Phase 1 technology Class I and II OHV
engines (see Chapter 5 of Ref. 1 of this chapter). As presented in the 1996 ICF
report, per engine costs are affected by engine family production volumes. ICF
analyzed costs for engine families based on production volumes of 35,000 units,
200,000 units and 1,200,000 units for nonhandheld engines. The Agency believes
the 1.2 million estimate is not appropriate for nonhandheld Class I or II engines,
because there are no OHV engine families being produced with annual
production volumes near 1.2 million. Table 3-04 presents a summary of the per-
engine costs associated with improvements to nonhandheld OHV technology.
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Chapter 3: Technologies and Standards
TABLE 3-02
Estimated per Engine Costs for Improvements to Class I and Class II OHV
Engines (Variable and Capital Costs)
Improvements to
Phase 1 Class I and II
OHV Engines
Combustion and
Intake Systems
Piston and Ring
Designs
Per Engine Costs for
Family w/ 35, 000 Units
Annual Production
$3.05
$4.60
Per Engine Costs for Family
w/ 200,000 Units Annual
Production
$0.53
$2.67
The improvements the Agency has examined for OHV engines would be
expected to reduce new engine and in-use HC+NOx emission deterioration.
Based on the information presented in Table 3-02, the Agency estimates that
improvements to a Class I or Class II OHV engine could cost up to between $3.20
and $7.65 per engine, depending on the improvements required and the annual
production volume of the engine family. The Agency estimates these
improvements would reduce the Phase 1 OHV new engine HC+NOx values 10
percent for Class I and Class II engines . The Agency also estimates an improve
in-use deterioration of Phase 1 Class I OHV engines to an average HC+NOx df
level of 1.4 for Class I and 1.3 for Class II.
Appendix B contains a list of engine families certified under the EPA's
Phase 1 program. The Agency also has access to manufacturers' production
volume projections (which manufacturers have asked to be treated
confidentially) for each engine family. As of September, 1998, 61 Class I engine
families (8.4 million engines) and 152 Class II engine families (3.1 million
engines) had been certified. Based on historical sales data this would appear to
be the majority of nonhandheld engines sold in a single year. Using the
estimated production information, the sales weighted HC+NOx certification
level is 11.2 g/kW-hr for Class I OHV engines, and 9.1 g/kW-hr for Class II OHV
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Chapter 3: Technologies and Standards
engines. Based on the Agency's experience with on-highway engines, the
Agency estimates a typical compliance margin used by manufacturers to be
between 10 and 20 percent. By achieving lower new engine levels and a reduced
HC+NOx DF, combined with a compliance margin between 10 and 20 percent
and the sales weighted Phase 1 certification levels, the Agency estimates
improvements to OHV engines would achieve an in-use emission rate between
15.5 and 16.9 g/kW-hr at 125 hours for Class I engines, and between 11.7 and
12.8 g/kW-hr at 250 hours for Class II OHV engines. (The range presented is
based on an estimated manufacturer compliance margin of 10% for the lower
value and 20% for the upper value.) It should be noted that only about 15
percent of Class I engines currently certified to the Phase 1 regulation are OHV
technology. The performance of these specific Class I engines may not be
representative of what would occur if all Class I engines were converted to OHV
technology.
3.2.2.4 Impact on Equipment Design and Use As discussed
previously, OHV technology has been used for many years in nonhandheld
equipment. The improvements to OHV technology described in this section
would have no negative impacts on nonhandheld equipment design and use,
since most of the improvements discussed are internal to the engine and would
not effect the overall shape or functionality of the engine with respect to its use in
a piece of equipment.
3.2.2.5 Technology Impact on Noise, Safety, and Energy The Agency
expects no negative impacts on the noise level or the operational safety from
improvements to Phase 1 technology OHV engines. As discussed in Section
3.2.2.3, the Agency considered internal improvements to OHV engines, which
would have no impact on noise levels or safety.
The Agency expects no significant changes in the energy consumption
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Chapter 3: Technologies and Standards
from improvements to Phase 1 technology OHV engines. The improvements
considered by the Agency (see Section 3.2.5.3) would reduce the in-use HC and
NOx deterioration of the engines, but would have only marginal, if any, effects
on fuel consumption.
3.2.3 Application of Catalytic Converters to 4-stroke Nonhandheld
Engines
3.2.3.1 Description of Catalyst Technology Catalytic converters are
add-on devices used to lower exhaust emissions from engines after they exit the
combustion chamber. Typically, a catalyst consists of a ceramic or metallic
support (often called the substrate), that is coated with a wash-coat which
contains catalytic material (typically a rare-earth element such as platinum,
rhodium and/or palladium). The catalytic material initiates a chemical reaction
which can oxidize hydrocarbons and carbon monoxide, and it can reduce oxides
of nitrogen.
Additional information regarding the fundamentals of catalytic
converters, and information specific to catalyst and small engines can be found
in "Report - Exhaust Systems Subgroup of the Technology Task Group", a report
published by a task group established during the Regulatory Negotiation for
Small Engine Phase 2 Rulemaking.(Ref. 3)
3.2.3.2 Current State of Catalyst Technology Development Historical
data indicate that catalysts have seen limited use on small engines in the U.S.
Prior to EPA or California ARE small engine regulations, catalysts were used in
limited numbers on some types of indoor equipment, such as indoor propane
fueled floor buffers (also called floor burnishers). Certification information from
EPA's Phase 1 program indicates that a small number of Class II engine families
have also been certified using catalyst technology on 4-stroke SV engines in
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Chapter 3: Technologies and Standards
tillers and pumps. The projected sales for these engines represent less than 1
percent of nonhandheld engine sales.
3.2.3.3 Exhaust Emission Performance of Catalysts The report
entitled "Report - Exhaust Systems Subgroup of the Technology Task Group"
(Ref. 10) contains a summary of new engine data on the HC and NOx reduction
potential from the application of catalysts to 4-stroke small SI engines. The
majority of these engines were uncontrolled or Phase 1 technology gasoline
engines with a prototype catalyst added on. The application of catalysts to these
small gasoline 4-stroke engines showed reductions of 40 to 80 percent in new
engine HC emissions and reductions of 20 to 80 percent for NOx emissions.
However, for some 4-stroke engines NOx emissions increased 25 to 50 percent.
Based on this information, the Agency estimates that catalyst technology has the
potential to reduce new engine HC+NOx emissions from 4-stroke engines by 20
to 80 percent from uncontrolled and Phase 1 technology.
The reductions in HC and NOx described above are reductions in the new
engine emission rates of small engines. The in-use performance of catalysts can
degrade from several mechanisms, including the physical deterioration of the
substrate from mechanical shock, vibration, and extreme temperatures, and the
deactivation of the catalyst material from chemical poisoning (such as sulfur in
the oil). There is limited data on the deterioration of catalysts on small engines
due to the limited use of catalysts to date. Only in the past 2-4 years have
catalysts been used on nonhandheld equipment.9 Data on the catalysts from
these engines are not available and therefore research data is the only
information available to determine the deterioration of catalysts in-use. Three
pieces of research data describe the range of results seen to date on the
As of November 17, 1998, it is known that catalysts are used on 150,000
nonhandheld equipment in Europe and 100,000 lawnmowers in the US.
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Chapter 3: Technologies and Standards
deterioration of catalyst on small engines and they include one SAE paper and
two correspondence from MECA to the EPA. The 1994 SAE paper includes
information on catalysts aged on uncontrolled engines.10 The data shows that the
catalysts' HC+NOx conversion efficiency decreases by an average of 73% after
120 hours (Ref. 4). The paper described the main reason for this large
degradation to be poisoning accumulation based on high oil consumption typical
of small SI engines. The oil consumption can increase the rate of poison
deposition in the catalyst washcoat that will plug up the pore mouth and impede
catalyst performance. The paper continues to state that work needs to be done to
produce a safe and functional catalyst design for ULGE engines. Some areas
where additional efforts need to be expended include 1) leaner running air
cooled engines, 2) low cost fuel management systems, 3) improve engine oil
consumption, 4) catalyst durability and thermal stability, 5) thermal control and
lock out devices, 6) high temperature mounting systems, and 7) cooling air
management and heat shielding. The first set of data from MECA regarding
catalyst deterioration on a 5.5hp Class I OHV engine(Ref. 5) shows that after 100
hours, HC conversion efficiency is decreased by 44% and NOx conversion is
decreased 26% (values are read from a graph). The author states that better HC
conversion can be obtained with additional air added to the system. The second
set of MECA data, also on a 5.5hp Class I engine, was on a catalyst system that
was optimized for HC. Results showed an approximate 15% decrease in HC and
61% decrease in NOx11 (Ref. 6) after 100 hours. Sufficient data was not provided
10 The engines were Class n SV engines of 319cc which emitted 10-20% above the
Phase 1 standard. The size of the engine was determined by questioning the
catalyst manufacturer author of the paper.
11 The data indicates that the catalyst changed from a reducing catalyst (where the
oxygen is taken from the NOx) to an oxidizing catalyst (where the oxygen is taken
from additional oxygen present in the exhaust and CO is also converted) during
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Chapter 3: Technologies and Standards
in this last item to know if it was a SV or OHV engine or to calculate its
combined HC+NOx emission deterioration.
3.2.3.4 Cost Estimates of Catalysts Systems Costs are available from
two sources for this final rule and include 1) the ICF 1996 report (see reference 1
to this Chapter - the costs of applying a catalyst to a 2-stroke engine were
estimated), and 2) MECA's comments submitted in the response to the NPRM.
For the ICF data, the Agency estimates the costs of applying a catalyst to a
4-stroke engine would be similar to the 2-stroke estimate, particularly for the
engineering research and development work. However, the catalyst would
likely be larger for a nonhandheld 4-stroke engine in order to handle the
increased exhaust gas flow rate from the larger nonhandheld engines, and
therefore one would expect the costs to be higher.12 ICF considered the costs for
both a metallic substrate and for a ceramic substrate, with the estimated cost of a
metallic substrate being substantially more. Table 3-02 is a summary of the cost
information contained in the ICF 1996 report for ceramic catalyst and 4-stroke
engines. Based on discussions with industry and MECA during the Reg Neg
Exhaust System Technology Task Group work, it is believed that metallic
catalysts are only required in handheld equipment where the vibrational
characteristics of the equipment require a more durable substrate and therefore
ICF's estimates for metallic catalysts are not included in the table.
MECA provided NPRM comments on the cost of catalysts, of several
conversion efficiencies, for Class I and II. Table 3-03 presents a summary of the
the 100 hour test.
12 A detailed analysis of the costs associated with applying a catalyst to
nonhandheld engines was not performed, so these numbers should only
be considered rough estimates, and not as reliable as the estimates for 2-
stroke engine.
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Chapter 3: Technologies and Standards
data supplied by MECA. MECA states that the costs may decrease over time if
catalyst technology is encouraged to develop. MECA's cost estimates do not
include any other costs of the catalyst system or for the steps to install the
catalyst on the engine.
TABLE 3-02
Summary of ICF per Engine Cost Estimate for Application of a Catalyst
to a Non-handheld 4-stroke Engine (data from ICF, 1996)
Cost Item
Catalyst
Catalyst Assembly Labor
Catalyst Fixed Cost
Muffler/ Heat Shield
Hardware Cost
Muffler/ Heat Shield
Fixed Costs
Total
Engine Family Annual
Production = 90,000,
ceramic substrate
$4.00
$0.58
$1.20
$0.90
$0.98
$7.66
Engine Family Annual
Production = 400,000,
ceramic substrate
$4.00
$0.58
$0.30
$0.90
$0.24
$6.02
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Chapter 3: Technologies and Standards
TABLE 3-03
Summary of MECA per Engine Cost Estimate for Catalyst of
Specific Conversion Efficiency per Class
UNITS
2,000
10,000
several
million
Class I
4-5 hp
25% at
250 hours
$4.00
$2.69
Class I
4-5 hp
40% at
250 hours
$4.94
$3.10
Class II
12-14hp
25% at
250 hours
$8.80
$6.17
Class II
12-14hp
40% at
250 hours
$10.99
$6.92
By combining Tables 3-02 and Table 3-03 and by using the MECA data for
the cost of the catalyst piece (washcoat and substrate), it can be calculated that
the cost of adding a catalyst and hardware to a 4-stroke engine is estimated to be
between $4.71 and $8.60 per Class I engine, and $8.19 to $14.65 per Class II
engine depending on the percent conversion efficiency at the end of an engine's
useful life and the annual production of the engine family. This does not include
any engine modifications that must be made to incorporate catalyst technology
as outlined in 3.2.3.3.
3.2.3.5 Impact on Equipment Design and Use of Catalyst The use of
catalysts would affect the muffler design of small engines. Mufflers would need
redesigns in order to house the converter, as well as additional heat shielding or
other safety shields to protect the user from excessive muffler skin temperature.
In addition, the muffler design may need to be modified in order to
accommodate increased exhaust gas temperature.
3.2.3.6 Catalyst Technology Impact on Noise, Safety, and Energy The
Agency would expect little impact on engine noise from the application of
catalysts to small engines. If any impact on noise did occur, it is likely the catalyst
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Chapter 3: Technologies and Standards
plus a redesigned muffler would act to lower the noise generated by an engine,
since the catalyst would absorb and not generate sound.
Engine manufacturers have raised concerns regarding the safety of
catalysts on small engines. The principle concerns relate to increases in muffler
skin temperature and exhaust gas temperature from the use of a catalyst. This
could be especially troublesome in equipment which encase the engine and
muffler in a shroud and are used in grassy environments. The heat increase
within the piece of equipment may result in an extremely hot environment which
may result in poor running of the engine, potential melting of the plastic shroud
and potential fire due to the presence of grass. Equipment which do not house
the engine and muffler within the equipment, such as a lawnmower may be able
to successfully use a catalyst. This has been proven through sale of lawnmowers
with catalysts in Europe.
The addition of a catalyst would have no significant impact on the energy
consumption of an engine. Catalysts are add-on devices which would have
minimal, if any, impact on the engine's air/fuel ratio or power output, and
therefore no change in fuel consumption would be anticipated.
3.2.4 Discussion of Other Engine Technologies
The standard for Class I engines (with ABT) is 16.1 and it is implemented
in 2007, with new engine families required to meet the standard after 2003. This
lead time allows the manufacturers to acquire the large amount of tooling and
building of facilities, if necessary, to produce engines to meet this standard. The
time also allows engine manufacturers to develop alternative technologies to
meeting the standard. Several potential inventor technologies are described in
the sections below.
3.2.4.1 Vaporizing Carburetion In August 1995, as part of
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Chapter 3: Technologies and Standards
investigating technologies for the Phase 2 Reg/Neg, the EPA assembled a report
on emission testing of a B&S Quantum engine using a vaporizing carburetion
technology (Ref. 7). The vaporizing carburetor was a box add-on device which
used a hair dryer to heat the inlet air (which could later be provided by the
engine exhaust or cylinder head). The inventor stated in the report that "the
technology allows the engine to operate stably at lean burn air/fuel ratios at
partial power and provides richer air/fuel ratios for full power and engine
warm-up." The inventor also stated that "the use of the technology is expected to
result in longer engine useful life due to clean operation and less carbon buildup
on engine pistons, valves and surfaces within the combustion chamber itself."
The testing revealed that the technology was able to achieve low
emission levels on a SV engine, see Table 3-04. Power differences were seen to
differ only 5.9% at mode 2 (75% load), between the baseline and prototype
engine, and were the same as the baseline for the remaining modes. The exhaust
temperature increased 105 degrees C from baseline in modes 3-7 of the test
procedure while the cylinder head temperatures were observed to be nearly the
same on average. The device ran rich at wide open throttle in order to sustain
power.
Table 3-04
Vaporizing Carburetor Technology On a B&S SV Engine (g/kW-hr)
Average of Three Tests Each
Baseline
With technology
% Difference
HC
18.4
8.4
54%
NOx
2.5
3.7
-48%
CO
459
116
75%
Further development of the technology was needed in order to produce a
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Chapter 3: Technologies and Standards
production ready engine with the technology. Testing showed that engine
operation was rough as the torque was less consistent with the technology than
the baseline engine. This was noted by the inventor as it was having difficulties
in maintaining consistent A/F delivery to the engine with its current prototype.
It was also noted that the achievable idle speed with the technology result in
erratic engine operation. The inventor said it had not seen this result prior to
applying the technology to the engine and it may be due to improvements made
in the SV engine in order to meet California ARE and EPA regulations. Nothing
else has been submitted to EPA to date by the company following this testing.
In late summer 1998, EPA learned of another vaporizing carburetor
concept. The technology is a much simpler concept than that tested during the
Phase 2 Reg/Neg and it has been used successfully in performance machines
such as snowmobiles (which was confirmed) (Ref. 8) and motor cross bikes. As
stated in the brochure, "The Super Cycler works in the last few centimeters of the
intake tract to further enhance the production and delivery of super-cooled,
completely phase-shifted vapor. The device allows the return pulse to feed its
energy into the next intake pulse, adding both completely phase shifted vapor
and return pulse energy to each succeeding intake pulse. The high frequency
reverse wave energy created by piston reciprocation pounds its way back toward
the center of the carburetor along the edges of the manifold and carburetor outlet
where it is directed into a narrow outer chamber created by the Super Cycler.
This high-velocity pulse then bounces back toward the direction of positive flow
and into the rushing positive ulse through a series of holes drilled in the section
of the Super Cycler closest to the throttle valve. The Super Cycler utilizes the
return pulse as a self-powered mini supercharger, setting up a kind of pulse
driven feeding frenzy in the intake manifold that is reponsible in part for the
increase in power. The function of the Super Cycler is based on Boswell's
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Chapter 3: Technologies and Standards
discovery that the return pulse is strongest in the boundary layer next to the
venturi wall. The return pulse is channeled into the narrow Cycler chamber
where it is reflected back through a series of holes creating a reverse pulse-
powered velocity booster" (Ref. 9).
While the device has been used in production on some high performance
2-stroke applications, which run at approximately 10,000 rpm, it has not yet been
proven in the marketplace to be applicable or effective to the small 4-stroke
engines covered by this rulemaking, which run at lower speeds (approximately
3,200 rpm). While EPA has not done any independent testing on the device, it is
assumed that, if successfully applied, the emission results will be similar to those
seen in Table 3-03 based on the fact that the combustion chamber sees similar
vaporized fuel.
3.2.4.2 Spark Ignition Technologies -- During the summer of 1998, one
company presented EPA with information on a spark ignition technology that it
had developed (Ref. 10). It is a very simple technology and may result in some
emission benefits in terms of improved emission deterioration in 4-stroke
engines. Versions of the technology are in the marketplace today, however the
inventors have investigated those technologies and note that theirs has some
benefits that have not yet been included in previous designs.
The inventors of the technology have performed a number of tests of the
technology on 2-stroke and 4-stroke engines. While they have seen a notable
benefit in new engine values on 2-stroke engines, they have not observed the
same in 4-stroke engines. The company claims there are benefits to the use of the
device in 4-stroke applications, however, it found that benefits were limited in
side valve engines. This is believed to be consistent with the combustion theory
surrounding the benefits of the device. The L-head or side valve engine
configuration compresses the ability of the flame front to spread into the
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Chapter 3: Technologies and Standards
combustion chamber and therefore inherently limits the combustion propagation
characteristics of any ignition device in such an engine. The tests have confirmed
significantly improved BSFC and it is believed that the absence or reduction of
combustion chamber deposits over time would contribute to improved emission
deterioration over time. Although no tests have been performed to confirm this
on 4-stroke engines, some tests have been performed on 2-stroke engines.
Examination of the piston face revealed less combustion chamber deposits than
an engine without the device.
It is expected that the technology may result in some improved emission
deterioration, although not yet proven on 4-stroke engines, and therefore engine
manufacturers may choose the technology where this is needed. It is not known
how much emission improvement can be obtained in 4-stroke engines, however
it may provide enough benefit that a lesser number of engine families may have
to be improved in order to meet the average standard.
3.2.4.3 Other Technologies The Agency is aware there are
additional technologies not discussed in this RIA. These include electronic fuel
injection, three-way catalyst with closed loop air/fuel control, and fuel
vaporization.
The Agency has not afforded these technologies the same in-depth
analysis given presented in Sections 3.2.1 thru 3.2.4 for a variety of reasons.
These include factors such as unknown emission performance, no in-use
performance data, unknown application to small engine equipment, and
unknown or high costs. In summary, EPA is not able, at this point, to determine
that these technologies are widely available to the extent needed in order to base
an emissions standard on them.
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Chapter 3: Technologies and Standards
3.3 Final Exhaust Emission Standards
This section contains information the Agency used to determine the
appropriate standards contained in the final regulations. Additional information
is contained in the Preamble for this Rulemaking.
3.3.1 Final HC+NOx Standards for Class I Engines
The Agency is adopting a corporate average exhaust emission level of
16.1g/kW-hr HC+NOx for Class I engines beginning with all new engine
families produced after August 1, 2003 and with every manufacturer certifying,
on average, after August 1, 2007. This final standard is applicable for all three
useful life categories of 125, 250, and 500 hours. The Agency has performed an
analysis using the existing Phase 1 certification data (which contains production
projections that manufacturers have asked to be treated confidentially) combined
with reasonable assumptions for in-use deterioration. This analysis indicates a
standard of 16.1 g/kW-hr is achievable through conversion to clean OHV engine
design and by internal improvements to some existing Phase 1 OHV engines.
Manufacturers will need to make improvements and major retooling of engine
production lines will be required. The use of ABT across Classes I and II
provides manufacturers with flexibility for determining the most appropriate
expenditure of resources when deciding which engine families will need specific
improvements to meet the final levels. The time between the finalization of this
rule and August 1, 2007 will be sufficient for manufacturers to meet the final
HC+NOx level.
3.3.2 Final HC+NOx Standards for Class II Engines
The Agency is adopting a corporate average HC+NOx emission standard
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Chapter 3: Technologies and Standards
of 12.1 g/kW-hr which will be phased in over five years, beginning in model
year 2001. The HC+NOx phase-in standards are 18.0g/kW-hr in model year
2001, 16.6 in 2002, 15.0 in 2003, and 13.6 in 2004. These standards are applicable
for all three useful life categories of 250, 500, and 1000 hours. Based on the
information presented in this Chapter, the Agency believes an in-use level of
12.1g/kW-hr can be met by the conversion of Phase 1 SV engines to OHV
technology (see Section 3.2.6), and by internal improvements to some existing
Phase 1 OHV engines (see Section 3.2.5).
The final standards require significant production line changes for the
majority of Class II engine manufacturers to convert existing SV models to OHV
designs, as well as modifications to a number of Phase 1 OHV models which may
need internal improvements to meet the 12.1 g/kW-hr level. To accommodate a
smooth transition of existing SV engine family production lines to the new OHV
technology or other comparably clean technology, the Agency is adopting the
five year phase-in period noted above. The Agency expects the final standards
for Class II engines will result in increased penetration of and conversion to clean
OHV technology by 2005. However, the rulemaking does not preclude other
technologies from meeting the final standard.
The Agency recognizes that there are large differences in technology
mixes currently being produced by Class II engine manufacturers. Some Class II
engine manufacturers have already made significant investments in OHV
technology prior to and during the Phase 1 program. For some of these
manufacturers, the standards in the early years of the Phase 2 phase-in (i.e., the
2001 standard of 18g/kW-hr and the 2002 standard of 16.6 g/kW-hr) may not
require additional reductions in Class II engine emissions beyond what
manufacturers may currently achieve with ome engine families. At the same
time, the Phase 1 standards do not require a shift to clean, durable OHV
3-27
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Chapter 3: Technologies and Standards
technology or comparably clean technology, and several Class II engine
manufacturers currently produce a significant number of SV engines. For
manufacturers who are relying on SV technology, the final phase-in schedule
will allow them to shift their production to new, cleaner technology which is
capable of meeting the 2005 standard of 12.1g/kW-hr. The Agency believes the
phase-in standards will address the inequities among manufacturers' current
technology mixes but will also require manufacturers to produce the clean,
durable 12.1g/kW-hr engines in 2005. Manufacturers have indicated the early
banking provisions will result in pulling ahead clean technology and ease the
transition to the 12.1 standard. However, due to the wide discrepancy between
manufacturers current technology mix, some manufacturers may generate
significant credits during the phase-in period. The Agency has performed an
analysis, based on Federal Phase 1 certification data, which indicates under some
conditions early banking would result in significant credits being generated
during the phase-in period which may in fact undermine the 12.1g/kW-hr
standard in model year 2005. To assure this does not occur, the Agency has
finalized certain restrictions for Class II engines in the ABT program, as
discussed in the Preamble, Section IV.A.5.
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Chapter 3: Technologies and Standards
Chapter 3 References
1. "Tier 1 Deterioration Factors for Small Nonroad Engines", Sept., 1996, a report by
Air Improvement Resources, available in EPA Air Docket A-96-55, Docket Item
II-D-11.
2. "Summary of EPA Analysis of Nonhandheld Engine Hydrocarbon and Oxides of
Nitrogen Exhaust Emission Deterioration Data for 500 Hour Useful Life Class II
OHV Engines", EPA Memorandum, August 4, 1997, available in EPA Air Docket
A-96-55, Docket Item # II-B-02.
3. "Exhaust Systems Subgroup of the Technology Task Group - Report", September
25, 1995, available in EPA Air Docket A-95-55, Docket Item # II-D-17.
4. "Exhaust Emission Control of Small 4-Stroke Air Cooled Utility Engines An
Initial R&D Report", SAE 941807.
5. Letter from Bruce Bertelsen of MECA to Bob Larson of the EPA, October 19,
1998, EPA Air Docket A-96-55, Item # IV-G-25.
6. "Phase 2 Emission Standards for New Nonroad Spark Ignition Engines at or
Below 19 Kilowatts, Air docket No. A-96-55", MECA, March 13, 1998, EPA Air
Docket A-96-55, Docket Item # IV-D-13.
7. "Emission Testing Report Vaporizing Carburetor On Briggs and Stratton
Quantum Engine", US. EPA, August 1995, EPA Air Docket A-96-55, Docket Item
#(yet to be assigned)
8. Conversation between Cheryl Caffrey and David Wahl Regarding the Boswell
Energy System technology on snowmobiles, December 15, 1998, EPA Air Docket
A-96-55, Docket Item # (yet to be assigned).
9. "The Boswell Technology", Boswell Fuel Systems, EPA Air docket A-96-55,
Docket Item #IV-D-24.
10. "Technical Summary and Report Spark Ignition Device Research", Pyrotek, Inc.,
November 13, 1998, EPA Air Docket A-96-55, Docket Item # IV-G-29.
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Chapter 4: Technology Market Mix and Cost Estimates
Chapter 4: Technology Market Mix and Cost Estimates
for Small SI Engines and Related Equipment
This chapter analyses the variable costs and fixed costs per engine family
modified in each class. This chapter also presents a "schedule" for how these
engine modifications are phased-in. These costs are costs to manufacture.
Clean Air Act section 213(a) (3) requires that EPA must consider cost in
adopting standards that achieve the greatest degree of emission reduction. This
Chapter and Appendix C present the Agency's estimation of costs for expected
technologies including associated variable costs (hardware and production),
fixed costs (production and research and development), related equipment costs,
engine fuel savings and engine compliance costs. Details of the methodology for
determining the compliance costs are presented in Chapter 5.
To calculate estimated costs incurred by engine manufacturers, market
mix13 percentage estimates for pre-Phase 2 (Phase 1) and Phase 2 engines are first
determined. This is done by determining the Phase 1 engine market mix from
sales estimates provided by manufacturers as part of their 1998 model year
certification applications. Analysis of this data formed the assumed product mix
13 Market mix is the percentage of engines of specific engine design sold in
the marketplace (ex: 4-stroke SV and 4-stroke OHV) compared to others in
the same Class.
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Chapter 4: Technology Market Mix and Cost Estimates
that will be in place as a result of the Phase 1 rulemaking. A comparison was
then made to the assumed product mix (including technical enhancements) that
would need to be in place to meet the Phase 2 standards. A description of the
methodologies and resultant market mixes for these estimates are described in
4.1. Engine Technology Market Mix Estimates.
Many of the emission reduction technologies assumed feasible for this
rule include changes in manufacturer production, such as the number of tools
and changes in the die designs. The following definitions were utilized to
separate costs for emission reduction technologies into variable hardware,
variable production, fixed production and fixed research and development.
Variable hardware costs are those costs which are associated with pieces of
hardware added to an engine. Examples include rocker arms and push rods that
are added to an engine that is converted from SV to OHV. Variable production
costs are those costs which relate to inputs in production. These costs consist of
additional production tasks, such as assemblers for additional components for an
OHV line which were not in place for assembly of a side valve line. Variable
hardware and production costs are determined by estimating variable costs for
each emission reduction technology and applying those costs to that portion of
the Phase 2 product mix assumed to have required that technical change. The
methodology for estimating variable hardware and production costs for
applying emission control technology are presented in 4.2. Variable Hardware
and Production Cost Estimates per Engine Class.
Fixed production costs are those costs which are related to added or
modified piece(s) of machinery to an existing engine line due to this final rule,
such as tooling and die design changes. Fixed costs of research and
development are those costs associated with development of engine and engine
component designs to meet emission standards. These costs are incurred prior to
4-2
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Chapter 4: Technology Market Mix and Cost Estimates
production and amortized for recovery over 5 years and therefore do not apply
on a per engine basis as do variable cost estimates. Discussion of the
methodology utilized to estimate fixed costs are presented in 4.3. Fixed
Production and Research and Development Cost Estimates per Engine Class.
Engines are utilized in equipment which may require alterations due to
changes in the engines required to meet the Phase 2 final standards. A
discussion of equipment impacts is presented in 4.4 Equipment Cost Estimates.
Lastly, Section 4.5 details fuel savings and changes in power expected with the
Phase 2 engine technologies. Cost impacts from changes in maintenance, engine
durability and life expectancy were not quantified or included in this cost
analysis. Since the quality of the Phase 2 engines is expected to be better than
comparable Phase 1 engines, these factors are should improve in ways which
directly benefit the consumer but information was insufficient to quantify these
benefits.
4.1 Engine Technology Market Mix Estimates
Market mix estimates consist of the number of engine families and sales
estimates of engine designs (i.e., side valve, overhead valve, 2-stroke, etc.) per
class (i.e., Classes I-II). Market mixes are determined for the 1998 model year (to
characterize technology under the Phase 1 regulation) and the first year of full
implementation of the Phase 2 emissions regulation. The following describes the
methodology used to estimate market mix and emission reduction technologies
for small nonhandheld SI engines. This analysis includes only those engine
families and production volumes certified to EPA's Phase 1 standard as of
September 1998. This does not include engine production volumes intended for
sale in California since California also regulates these engines. A summary of
results are in Tables 4-01 to 4-04 with manufacturer specific details and emission
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Chapter 4: Technology Market Mix and Cost Estimates
data in Appendix B Manufacturer and Product Summary.
4.1.1 Phase 1 Market Mix
The most accurate and up-to-date information source on engine families
and manufacturers in the marketplace today is the EPA Phase 1 engine
certification list. The list, as of September 1998, was utilized to estimate the
number of engine families per engine design and technology for Classes I-II14 as
shown in Table 4-01 (Table B-01 in Appendix B contains breakout per
manufacturer) . Table 4-02 summarizes the sales in each engine class per engine
design.
Table 4-01
Phase 1 Technology Mix
Engine Families per Technology Type
CLASS
I
TT##
TOTAL
SV
18
25
43
OHV
40
118
158
SVw/
cat
2
2
OHV
w/ cat*
5
5
TBIon
OHV
2
2
2-
stroke
3
3
TOTAL
61
152
213
* These engines include propane engines that are installed in equipment used indoors and must
work to allow facilities to meet OSHA time measured safety levels for CO.
** There is one OHV engine with EGR used on a utility vehicle.
14
There are special cases in which engines do not have to meet the Phase 1 standards.
These include engines utilized solely in wintertime equipment, such as snowblowers
and ice augers, that only have to meet the CO standard. Two- stroke Class I engines are
under a special program to be phased-out over a period of years and need only meet the
handheld standards.
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Chapter 4: Technology Market Mix and Cost Estimates
Table 4-02
Assumed Phase 1 Sales per Class and Technology Type
Phase 1 Database as of September 1998
CLASS
I
II
TOTAL
SV
7,222,296
1,427,337
8,649,633
OHV
1,182,196
1,697,306
2,879,502
SVw/
cat
conf
conf
OHV
w/cat
3,125
3,125
TBIon
OHV
conf
conf
2-stroke
conf
--
conf
TOTAL
8,404,492+
3,127,768+
11,532,260*
* This number does not include the number of engines that are used in snowblowers that
do nothave to meet the HC+NOx standards.
Some of the blocks state "conf to honor confidentiality if only one or two companies
contribute to the total number of engine families in that block.
4.1.2 Phase 2 Market Mix
To determine the Phase 2 market mix, information was collected on
potential emission reduction technologies and then the likely percentage usages
of such technologies, as required by the Phase 1 engines, were estimated using
averaging, banking and trading within each Class per manufacturer.
4.1.2.1 Potential Emission Reduction Technologies Potential emission
reduction technologies were based on information provided in a work
assignment with SwRI(Ref. 1). SwRI compared the characteristics of engines that
were below the Phase 2 standards to those engines that were above the Phase 2
standards and provided a list of characteristics/technologies of low emitting
engines. EPA supplemented this analysis with one additional Phase 2
technology tested during the Phase 2 Reg/Neg and compiled a list, see Table 4-
03.
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Chapter 4: Technology Market Mix and Cost Estimates
Table 4-03
Potential Emission Reduction Technologies
ENGINE
TECHNOLOGY
POTENTIAL TECHNOLOGIES
4 stroke SV
OHV technology
Vaporizing Carburetion15
4 stroke OHV
Improved induction systems and combustion chamber design
Carburetor enleanment and improved engine cooling
Improved tolerances for carburetor with more precise air/fuel control and
reduced part to part variability
Optimized ignition timing
Flex head valves, improved cylinder structural integrity, modified valve
placement
Intake valve stem seals
Design improvements that reduce cylinder distortion
Reduced manufacturing tolerances
Use of piston oil control ring
This cost analysis uses a portion of these technologies per engine design
per engine class. This is based on a comparison of deteriorated emission data,
based on the EPA Phase 1 certification database and deterioration factors
presented in Chapter 3, to the final Phase 2 standards, see Table 4-04. The
following describes the rationale behind the estimation of use of these
technologies by engine Class and engine technology. It should be noted that
while these engine technologies are focused on reducing HC+NOx emissions, it
is expected that CO emissions will decrease due to further enleanment of the
engines due to internal engine improvements made to decrease HC+NOx.
4.1.2.1.1 Class I - The majority of engines in Class I are produced
for the low cost consumer market and are of side valve design (86% SV). Many
15
Still a developing technology. See section 3.2.4.1 for discussion.
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Chapter 4: Technology Market Mix and Cost Estimates
internal engine design improvements, such as material selection, enleanment,
and valve placement, have been made on a large portion of these engines in
order to meet the Phase 1 new engine emission regulations. To meet the
standards in this final Phase 2 regulation, EPA estimates that Class I SV engines
will be converted to OHV technology for improved fuel combustion efficiency.16
Components on the low cost engines may also need to be improved in order to
increase emission durability. Improvements to the carburetor, combustion
chamber and intake will reduce new engine emissions while oil control rings and
valve stem seals will improve emissions durability by lowering combustion
chamber deposits from the seepage of oil. Some Class I OHV engines may also
utilize these technologies to decrease emissions and increase durability to meet
the Phase 2 standards.
4.1.2.1.2 Class II - Class II engines are nearly equal in number of
engine population of four-stroke side valve and overhead valve designs. While
there are durable side valve engine families in this class, particularly those
geared towards commercial applications, it is expected that most of Class II SV
engines will convert to a clean durable OHV emission performance technology.
Some small volume Class II SV families may continue to be produced with
manufacturers taking advantage of ABT to cover thier likely higher emissions.
However, this cost saving opportunity is not evaluated in this analysis.
Current OHV engines will be improved by lowering new engine levels
and improved emission durability. Improvements in combustion chamber
design and intake system will allow the engines to run more efficiently and
thereby lower new engine emissions. Improvements in emission durability will
16 The vaporizing carburet!on technology discussion in 3.2.4.1 has not yet been
proven applicable to this industry and therefore is not used as the basis of this cost
analysis.
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Chapter 4: Technology Market Mix and Cost Estimates
be achieved by refinement of piston profile and improved piston ring
specifications to reduce oil seepage into the combustion chamber.
Table 4-04
ASSUMED TECHNOLOGY IMPROVEMENTS FOR THIS ANALYSIS
CLASS
I
II
ENGINE
DESIGN
4 stroke - SV
4 stroke - OHV
2 stroke
4 stroke - SV
4 stroke - OHV
ASSUMED TECHNOLOGIES
Conversion to Clean OHV
Piston and Piston Ring Improvements
Improved Combustion and Intake System
None necessary
(engines being phased out through Phase 1 process)
Conversion to Clean OHV
Piston and Piston Ring Improvements
Improved Combustion and Intake System
4.1.2.2 Engine Families Selected for Emission Improvement The Phase 1
certification database was utilized in the analysis to determine the number of
engine families and corresponding production volume that would need to
incorporate emission improvements.17 Refer to Tables B-02 through B-06 in
Appendix B for specific emission data per engine manufacturer per engine
family. Note also that the analysis for this document assumes that all engines
that are assumed to require emission reduction technology, per class and engine
design, will utilize the same set of technologies.
17
The database contains several entries per engine family as manufacturers
show that the engine family meets the emission standard among its
adjustable parameters (particularly the carburetor). For such engine
families, the maximum emission rate for HC+NOx was utilized in setting
the point at which the engine family emitted for Phase 1.
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Chapter 4: Technology Market Mix and Cost Estimates
4.1.2.2.1 Nonhandheld The emission standards for Class I
engines are fully implemented in 2007. The emission standards for Class II
engines are phased in from 2001-2005. ABT across classes is allowed in this final
rule, however, EPA performed the analysis for each class separately since the
path to be chosen by each manufacturer is unknown. The EPA Phase 1
certification database as of September 1998 was used as the basis of
manufacturers, engine families, emission data, rated power and production. The
following paragraphs describe the methodology used to analyze the data for
engines in Classes I and II.
The Phase 1 standards are new engine standards and therefore a
deterioration factor must be applied to the engine families in order to acquire a
number to which the Phase 2 standards can be compared. For Class I engines,
deterioration factors of 1.50 for overhead valve engines, 2.1 for side valve
engines and 1.6 for propane engines with a catalyst18 were used (see Chapter 3
for the basis of these values). The Averaging, Banking, and Trading (ABT)
equation was then applied to each engine manufacturer's set of engine families.19
The ABT calculation is (Standard-FEL)*Power (Maximum Modal)*Useful
Life*Load Factor ^Production.
If a manufacturer's resultant ABT calculation was negative (ie: needed
18 Industry submitted data analyzed by AIR was the basis from which the
df's for OHV and SV engines were determined. SAE 932445 presents test
results on a Class II propane engine with air/fuel ratio control and 3-way
catalyst. Results show 1.6 deterioration of HC+NOx at 300 hours and 1.8
deterioration of HC+NOx at 500 hours. It is assumed that all propane
engines certified to Phase 1 that have extremely low CO emissions will
utilize such a system for they are marketed for indoor use.
19 This ABT program allows engine manufacturers some flexibility as they
optimize their choice of engine families to meet or exceed the Phase 2
standard. It is available only to nonhandheld engine families.
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Chapter 4: Technology Market Mix and Cost Estimates
credits), then it was assumed that the manufacturer would focus on improving
the engine families that produced the greatest need for credits such that it would
receive the largest benefit for the improvements to the engine family. In making
this determination, families were ranked according to the combination of
emission level and production volume such that the highest ranked family
would provide the greatest assumed emission benefit when modified to comply
with the emission standard. The chosen engine family was assumed to have an
PEL just below the standard (15.4 g/kWh), and the manufacturer's production
weighted emission average was recalculated.20 This was done for as many
engine families as necessary until the engine manufacturer's ABT calculation was
above zero. The expected technologies for these engines include conversion to
OHV or improved OHV and therefore the Phase 2 market mix for Class I is
changed. The most notable change is the conversion of Class I SV to OHV.
PPA's analysis showed that 11 SV engine families would be converted to OHV
and 8 OHV engine families would be improved. These engine families account
for 87.5% of the engines in this Class.
The standard for nonhandheld Class II engines is also a production
weighted average standard; however the standard is sequentially tightened over
a phase-in period from 2001-2005. The analysis was performed in the same
manner as for Class I engines for each implementation year; however the
deterioration factor applied to SV engines in this class was 1.6, OHV was 1.4 (see
Chapter 3 for the basis of these values) and 1.8 for propane engines with a
catalyst. The market mix for these engines is expected to change as SV engine
20 This is a conservative assumption since application of these technologies
would be expected to result in emission levels somewhat below 22.5
g/kWh thus questioning greater emission benefit than assumed by this
calculation.
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Chapter 4: Technology Market Mix and Cost Estimates
families are converted to OHV engine families during the phase-in. This analysis
assumes that all SV engine families that are converted to OHV do result in a new
engine family and that existing OHV production does not fulfill the need of the
discontinued SV engine families. Class II engines also include SV and OHV
engines that utilize catalysts, OHV engines that use Throttle Body Injection and
EGR. Based on review of the Phase 1 certification database of emission data, it is
calculated that 4 SV engine families would convert to OHV, 18 OHV engine
families are to be improved, and five of the OHV engines converted to LPG for
indoor use will need slight emission improvement. It is assumed that the LPG
converters would be able to achieve emission reductions through use of emission
reduced OHV engines and through optimization of their LPG regulation and
catalyst system. The engine families incorporating emission reduction represent
47% of the engines in this Class.
Table 4-05 contains the resultant assumed phase-in of engine families per
class per phase-in year, if applicable, and the corresponding technology change.21
Table 4-06 contains the resultant number of engines that correspond to those
engine families being improved. Table 4-07 shows the resultant assumed Phase 2
market mix for Class II engines.
21 A special provision for small engine families of SV design exists for this
rulemaking. The provision is that Class II engine families under 1000
engines are allowed to meet a higher standard of 24 g/kWh. This analysis
found two small SV engine families.
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Chapter 4: Technology Market Mix and Cost Estimates
Table 4-05
ASSUMED PHASE-IN SCHEDULE OF ENGINE FAMILY CHANGES
(Number of Engine Families)
CLASS
I
II
Specific
Technology
Change
SV to OHV
Improved OHV
Improved OHV
SV to OHV
2001
0
0
2002
0
1
2003
3
0
2004
6
1
2005
14
2
2006
2007
11
8
Note that not all engine families need improvement, therefore the
numbers in this table do not add up to the numbers in Table 4-01.
Table 4-06
Production Volume (and % of Total) Represented by Engine Families
CLASS
I
II
Specific
Technology
Change
SV to OHV
Improved OHV
SV to OHV
Improved OHV
Full Implementation
(1998 Sales Estimates)
# of Engines
6,975,149
381,405
1,040,615
362,498
% Within Tech
Within Class
97%
52%
74%
20%
% Within Class
83%
5%
33%
12%
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Chapter 4: Technology Market Mix and Cost Estimates
Table 4-07
Phase 2 Technology Mix in 2007
Engine Families Per Technology Type
CLAS
S
I
II***
TOTAL
sv
7
21
28
OHV
51
122
173
SVw/
cat
2
2
OHVw/
cat*
5
5
TBIon
OHV
2
2
2 -stroke
3
TOTAL
**
61
152
213
* These engines include propane engines that are installed in equipment used indoors and must work to allow
facilities to meet OSHA time measured safety levels for CO.
** This analysis assumes the same number of engine families before and after Phase 2. There is the possibility
that some engine families may be dropped or some may be combined in order to reduce costs.
*** There is one OHV engine with EGR used on a utility vehicle.
Table 4-08
Assumed Phase 2 Sales per Class and Technology Type
(Based on Phase 1 Database as of September 1998)
CLASS
I
II
TOTAL
SV***
247,147
386,722
633,869
OHV
8,157,345
2,737,921
10,895,266
SVw/
cat
conf
conf
OHV
w/cat
3,125
3,125
TBIon
OHV
conf
conf
2-
stroke
conf**
--
conf
TOTAL
#
8,404,492+
3,127,768+
11,532,260
* This analysis assumes no loss in engine sales
** Some of the blocks state "conf" to honor confidentiality if only one or two companies contribute to the total
number of engine families in that block.
***SV families <1000 units, those that are geared solely to snowblowers, and several others remain unchanged.
4.2 Variable Hardware and Production Cost Estimates per Engine Class
EPA developed cost estimates for variable hardware and production costs
for Phase 2 engines. The cost estimates were taken from the cost report from ICF
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Chapter 4: Technology Market Mix and Cost Estimates
and EF&EE (Ref. 2) and manufacturer information for the variable hardware cost
and production cost for each emission reduction technology per class and engine
design (see Tables 4-09 and 4-10).
Table 4-09 lists the assumed variable hardware and production costs for
each technology per engine class and engine design. The ICF and EF&EE cost
study was used for cost estimates in the NPRM. ICF's cost estimate for SV to
OHV conversion for nonhandheld engines have been adjusted since the NPRM.
EPA received comments by one large manufacturer which pointed out several
major items that were left out of the ICF cost study. As a result, EPA calculated a
sales weighted average of the data for capital costs and variable costs for
conversion from SV to OHV for Class I and II from manufacturer cost data of
several companies.
Estimated costs for improved OHV engines were taken from ICF and
EF&EE's report for several production model volumes. This analysis uses only
one production volume estimate for all engine families per class per engine
design. This was determined by choosing the production volume estimate that
best represents the sales estimates presented in the Phase 1 certification database
sales estimates.
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Chapter 4: Technology Market Mix and Cost Estimates
Table 4-09
Estimated Variable Hardware Costs for Technology Changes
CLASS
I
II
ENGINE
DESIGN
Improved
OHV
SV to OHV
OHV
SV to OHV
SPECIFIC
TECHNOLOGY
Piston and Piston
rings improvement
Improved
Combustion and
Intake System
Additional parts in
OHV, assembly
Piston and Piston
rings improvement
Improved
Combustion and
Intake System
Additional parts in
OHV, assembly
HARDWARE
VARIABLE ($)
$2.25
$0.00
$4.56
$2.25
$0.00
$7.33
PRODUCTION
VARIABLE($)
$0.00
$0.00
$9.12
$0.00
$0.00
$14.67
TOTAL
VARIABLE
$2.25
$0.00
$13.68
$2.25
$0.00
$22.00
NOTE: Technology changes with $0.00 indicate that there is no variable cost
assumed for this technology.
4.3 Fixed Production and Research and Development Cost Estimates per
Engine Class
Many of the technology changes required to meet Phase 2 standards
require the manufacturer to expend capital on production and research and
development. Production costs include new tooling machines, molds, dies and
other equipment needed to produce the changed or additional parts; the costs of
changing the production line to accommodate the changes in the assembly
process and in the size and number of parts; and the costs of updating parts lists.
Research and development costs include engineering time and resources spent to
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Chapter 4: Technology Market Mix and Cost Estimates
investigate emissions on current engines, and design and prototyping of engine
design changes and/or emission reduction technology. At the first sign of
stringent regulations by the California ARE, small engine manufacturers have
already begun research and development activities to address emission
reductions on a portion of their production. EPA has not removed any costs for
manufacturers to meet California ARB's standards for 2000 and beyond since
costs to apply the technologies to nationwide sales is a substantial investment.22
If EPA were to remove any costs associated with CARB Tier II, the research and
development costs for engines used in CARB's preempted farm and construction
applications would still be applied to the federal rule.
Review and analysis of EPA Phase 1 certification database indicate that
Class I engines will require R&D for a limited number of existing engine
families, see Table 4-04. The technologies are already known for OHV engines
are currently produced, however in lower volumes. Steps for emission
durability are known by the fact that commercial market engines have shown
lower deterioration than consumer use products (Ref. 3).
Cost information was taken from the 1996 cost study by ICF and EF&EE
as well as manufacturer data. The manufacturer data was used to estimate the
cost of conversation from SV to OHV engine designs and the ICF and EF&EE
cost estimates were used for improved OHV design. The report by ICF and
EF&EE contain estimates for several sizes of engine families, 1.2 million, 200,000
and 35,000. The estimated sizes of engine families is mostly used by ICF and
EF&EE to calculate fixed cost/engine for their report. This analysis uses Phase 1
engine family production data which varies from engine family to engine family
and therefore the cost estimates are not influenced very much by the choice of
22 If EPA were not setting such standards, it is possible that manufacturers would
just manufacture a portion of their product line for the California market.
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Chapter 4: Technology Market Mix and Cost Estimates
engine family size in the ICF and EF&EE report. In cases in which it did affect
the base estimate (ie: more machines required for the 200,000 case versus the
35,000 case), the cost estimate for the 200,000 case was used for all Class I engine
families and the 35,000 case was used for all Class II engine families as described
below. This analysis amortizes all costs to 5 years whereas the ICF and EF&EE
report amortizes most costs to 5 years and tooling costs to 10 years.
For Class I and Class II, several SV engine families are expected to be
converted to OHV design and an even larger number of OHV families are
expected to incorporate emission improvements. For the cost of conversion
from SV to OHV engine design per class, EPA examined confidential data from
two manufacturers to obtain an average capital cost which would at least be
representative for these manufacturers. The Phase 1 database was then
examined for any other engine manufacturers that would be expected to convert
an engine family from SV to OHV design. For Class I two SV engine families are
produced by other manufacturers and, for Class II, one SV engine family.
However, due to the low volumes of these engine families, it was assumed that
the lines would not be updated, but that production on existing OHV lines
would be increased to take over the loss of SV production. The number of
engine families that would be expected to convert from SV to OHV was
multiplied by the average capital cost per engine family and then that number
was divided by the total Phase 1 SV engine families to arrive at an average cost
of conversion per Phase 1 SV family.23
Improvements in new engine and emission durability for OHV will also
23 This was done due to the fact that the cost effectiveness spreadsheet (found in
Appendix E) multiplies the capital costs times the number of SV engine families
to be improved regardless of whether they will actually be converted to OHV or
discontinued.
4-17
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Chapter 4: Technology Market Mix and Cost Estimates
likely require some fixed costs for improved combustion chamber and intake
system, and improved piston and ring design and bore smoothness. Eight Class
I and 22 Class II OHV families assumed to require emission improvements.
Seven of eight Class I families and all of the Class II families were close to the
35,000 case.24 Therefore, the 35,000 case was used for all engine families in Class
I. Cost estimates for the changes assumed for these engines did not differ
between the 200,000 and 35,000 cases for the combustion chamber redesign and
intake system. The cost was $395,000 per engine family. Cost estimates for the
piston, ring design and bore smoothness technologies was $310,000. The 35,000
case was $75,000 less than the 200,000 case.25
Costs that were limited in the analysis include any additional label
lettering, updated service manuals (writers, documentation) and seminars for
dealers and training for technicians. Updated service manuals and training were
limited due to the possibility that industry will find more inexpensive ways to
meet the Phase 2 regulations and therefore, any overestimation of cost would
account for these costs. It is also expected that the service manual updates and
trainings can be incorporated during the phase-in years and prior to the phase-in
years as these activities take place due to ongoing manufacturer model changes.26
24 It should be noted that 13 Class II and one Class I engine family were less than
3,000 units and therefore one could consider whether the full changes
contemplated here would be incurred by these engine families.
25 The piston improvement, from die-cast to permanent-mold casting, for a
more heat tolerant (less distortion) design assumed purchasing pistons
from an outside source. If an engine manufacturer produced the pistons
itself, the cost may be lower.
26 The majority of technologies for the nonhandheld engines are currently
being utilized in engine families and therefore are not new to the
technicians or dealers.
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Chapter 4: Technology Market Mix and Cost Estimates
The extra lettering on the label was not included for there are several options
available to the manufacturer which include use of California ARB's label
nationwide. While the California ARE label is not yet complete, there is
discussion of a much simplified label being used.
Table 4-10
ASSUMED FIXED COSTS FOR NONHANDHELD PER MODEL($)*
CLASS
I
II
ENGINE
DESIGN
SV
OHV
SV
OHV
TECHNOLOGY
SV to OHV
Improved
Combustion and
Intake System
Improved Piston
and Ring Design
and Bore
Smoothness
SV to OHV
Improved
Combustion and
Intake System
Improved Piston
and Ring Design
and Bore
Smoothness
FIXED
PRODUCTION
$16,770,000
$110,000
$65,000
$18,440,000
$110,000
$65,000
FIXED R&D
$0
$185,000
$245,000
$0
$185,000
$245,000
TOTAL FIXED
COSTS
$16,770,000
$295,000
$310,000
$18,440,000
$295,000
$310,000
*Per engine family as determined in this analysis.
The cost estimate for research and development cost for improved
combustion chamber and intake system for Class II OHV engines has been
modified from the cost estimate in the ICF and EF&EE cost study. In the report,
ICF and EF&EE estimate that two engineer years would be required to carry out
the research development and design work involved in improving combustion
and intake systems for the OHV engines based. This is based on the assumption
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Chapter 4: Technology Market Mix and Cost Estimates
that engine manufacturers have more experience with SV than OHV engines.
EPA's review of the Phase 1 certification database, in comparison to the Phase 2
standard, shows that majority of engine manufacturers with the OHV experience
will be incorporating this technology. As a result, the cost estimate has been
reduced from $200,000 to $100,000 for the engineering portion of the total
research and development cost for this technology.
4.4 Equipment Cost Estimates
Small engines are utilized in a wide variety of equipment from
lawnmowers to garden tractors and generator sets, see Table 4-11
Table 4-11
Common Equipment Types Per Class
Class I
mowers
tiller
snowblower
generator
Class II
tractor
mower
comm turf
generator
snowblower
pumps
The wide variety of equipment designs, and the varying ease of designing
equipment which use small SI engines, presents a challenge when estimating
costs for these classes of engines. Thereby, the analyses have been performed on
the most common equipment types for each class as shown in Table 4-11 Data
for the analysis is provided by the 1996 PSR DELINK database(Ref. 4), the EPA
Phase 1 certification database and the ICE cost study (Ref. 2). Results from this
analysis are shown in Table 4-12. These estimates are an average over all
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Chapter 4: Technology Market Mix and Cost Estimates
equipment engine families, types and sales per class. The actual cost increase
will depend on the equipment application and flexibility of the original
equipment design to incorporate a new engine.
It should be noted that this analysis has assumed the full cost of die
replacement and this likely results in overestimated costs. Changes to an
equipment manufacturers line may be made more economical with planning.
For instance, the timing of new dies in relation to the useful life of the existing
dies can minimize an equipment manufacturer's costs. According to ICF, typical
equipment dies last 3-10 years and produce upwards of 250,000 units. Due to the
fact that there is substantial lead time for this rulemaking as well as the phase-in
period for incorporation of OHV class II engines, it is expected that equipment
manufacturers will purchase new dies near or at the end of the useful life of their
existing dies. Equipment manufacturers will likely have to work closely with
engine manufacturers to ensure the availability of OHV engine designs in a
reasonable time frame for equipment engineering requirements. The majority of
the nonhandheld industry manufacturer either the engine or the equipment.
Estimates for equipment changes have been based on the estimated engine
changes for Class I and Class II engines which are the conversion of large
production SV engine families to OHV 27 and improved OHV. Changes for
equipment using Class I or Class II SV engines are expected to range from
nothing at all to extensive, depending on the particular design of the piece of
equipment and current engine design used in the piece of equipment. The main
reason for equipment changes is that the OHV engines are taller than SV engines
due to the fact that the valve train is not on the side of the engine block but in the
cylinder head. Based on the ICF report (Ref. 2), some equipment will require
27 Although it is possible that in the 8 years following the required implementation
date, industry will develop a solution alternatively to conversion to OHV.
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Chapter 4: Technology Market Mix and Cost Estimates
that OHV engines be reoriented 90 degrees from the SV engine so that the
cylinder is parallel to the center line of the equipment. This requires changes
including mounting holes, controls, exhaust and oil drains. Lawn tractors
traditionally have a hood covering over the engine and thereby the hood will
need to be lengthened. A new injection molding die to create a redesigned
plastic hood is assumed to be required. Other costs are similar to the rear engine
rider. Lawn and garden tractors typically always have the cylinder head facing
forward and have room under the hood to handle a V-twin OHV engine.
Generators and pumps are usually encased in frames that hold the engine and
other parts of the equipment. The taller OHV may require that the frame or case
around the equipment be redesigned, developed, tooled and fabricated. The fuel
tank may also need to be redesigned and possibly the muffler relocated. No
costs were assumed for equipment currently using Class I or Class II OHV
engines for changes to these engines are expected to be minor and internal,
thereby not influencing outer dimensions or operating parameters.
Data on the number of equipment manufacturers that use Class I or Class
II SV engines, and the number of models per manufacturer, was obtained from
the 1996 PSR database. For Class I, EPA utilized the contents of the PSR database
which pertained to equipment manufacturers using Class I SV engines.28 For
Class II, EPA utilized only the high volume equipment producers (account for
approximately 95% of the engines) from the PSR database as the basis of the costs
for this rule. This decision was based on EPA's work with ICF, to analyze the
impacts on small production volume equipment manufacturers who were
thought to be using Class II SV engines (2). This analysis revealed that the
28
Discussions with several Class I equipment manufacturers revealed that large volume
consumer focused businesses may incur design changes due to their equipment design
to be unique in the marketplace. Manufacturers of niche markets may incur less costs in
switching from SV or OHV engine due to their need to be flexible in the marketplace.
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Chapter 4: Technology Market Mix and Cost Estimates
majority of small business equipment companies had already switched from SV
to OHV engines for market competitive reasons (2) or were out of business. A
summary of the costs used for this analysis is presented in Table 4-14.
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Chapter 4: Technology Market Mix and Cost Estimates
Table 4-12
ESTIMATED COSTS PER NONHANDHELD EQUIPMENT APPLICATION
Application29
Walk Behind
Lawnmowers
Rear Engine Riders
Commercial Turf
12hp
>12to 16hp
16 to 25 hp
Other Agricultural
Equip
Leaf Blower/Vacuum
Tillers
Generator Sets
Pumps
Roller, Concrete Saw
Other
Fixed Costs
(per line)
$70,000
$50,000
$1,000
$600,000
$100,000
$100,000
$50,000
$50,000
$100,000
$50,000
$50,000
$50,000
Variable Costs
(per Unit)
$0
$0
$0
$0
$12
$0
$0
$0
$0
$0
$0
$0
Equipment Changes
Engineering work and die
replacement to redesign deck if
not sufficient space for OHV
engine
mounting holes, longer control
wires, modified exhaust/air
filter positioning, and
relocation of oil drains
-mounting holes, controls,
exhaust and oil drains
-new injection molding die to
create a redesigned plastic
hood
additional baffling
Modified exhaust positioning,
relocation of oil drains, and a
redesigned baffle
Frame or case be redesigned,
developed, tooled and
fabricated. Redesigned fuel
tank and relocated muffler
Source: ICF report (Ref. 5)and equipment manufacturer discussions
29
No costs are assumed for modifications to snowblowers for they are not
required to use engines certified to the HC+NOx standards due the
special provision in the Phase 2 rulemaking.
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Chapter 4: Technology Market Mix and Cost Estimates
4.5 Fuel Savings and Impacts on Performance
Section 213(a)(3) of the 1990 Clean Air Act Amendments requires that EPA
consider factors including energy, noise and safety associated with the
application of technologies estimated for this rulemaking. This section discusses
EPA's assessment of the effects of this proposal on energy (i.e., fuel economy)
and power. Impacts on noise, safety and maintenance can be found in Chapter 3.
4.5.1 Fuel Consumption
EPA estimates that the conversion of SV engine designs to OHV engine
designs or the use of other emissions technologies to reduce new engine out
emissions and emissions durability, will result in a decrease in fuel consumption.
Estimates for Phase 2 engines were based on the estimated fuel
consumption from Phase 1 engines found in the Phase 1 Regulatory Support
Document (see Table 4-15) Tables 4-13 and 4-14 contain information found on
brake specific fuel consumption of typical Class II OHV that are close to the
Phase 2 standard and Class II SV engines. Industry has also submitted a limited
amount of BSFC information on Phase 1 engines. All of this information was
considered and fuel consumption values for Phase 2 OHV and SV engines were
determined, see Table 4-19. Note that the value for Class II SV engines does not
change from the value used in Phase I. This is based on the fact that the
NONROAD model, that calculates emission benefits and fuel savings, considers
that all SV engines will become OHV engines or have OHV like characteristics
(ie: emission benefits, fuel usage, etc.). Fuel savings for Class I SV conversion to
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Chapter 4: Technology Market Mix and Cost Estimates
OHV were assumed to be the same as those for Class II SV engines. Also, no
assumption was used for changes in fuel consumption as engines age over time.
Table 4-13
Fuel Consumption of OHV Class II Engines
Close to the Phase 2 Standard
ENGINE
11 hp
(HC+NOx emissions 1.3
g/kWh above Phase 2 stds
with assumed 1.3 df)
200cc, 4.5 hp
(close in cc to a Class II
engine)
570cc, 13 hp
BSFC
(g/kWh)
493
447
465
Reference
SAE 910560
EMA/EPA Round
Robin Testing (avg
of 10 mfr's and 2
engines) ,1997
EMA/EPA Round
Robin Testing (avg
of 6 mfr's and 2
engines), 1997
There is no BSFC data in the EPA Phase 1 certification database.
Table 4-14
Fuel Consumption of SV Class II Engines
(Engine Meets Phase 1 Standards)
ENGINE
465cc, 6.7 hp
BSFC
(g/kWh)
520
Reference
Phase 1 RSD,
Table 1-11
There is no BSFC data in the EPA Phase 1 certification database.
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Chapter 4: Technology Market Mix and Cost Estimates
The values listed in Tables 4-15 contain the fuel consumption values
utilized to estimate fuel savings. These data were inputted into the NONROAD
model to calculate the fuel savings per year for all equipment types given
scrappage rates, growth, engine power, engine load factor, residential or
commercial usage and useful life. Additional calculations for number of barrels
reduced and resultant cost savings are presented in Chapter 7 on Aggregate
Costs and Economic Analysis.
Table 4-15
Phase 1 and Phase 2 Fuel Consumption Estimates Per Engine Per Class (g/kWh)
CLASS
I
II
SV
560
528
OHV
475
450
OTHER
475
450
Source: Small Engine Phase 1 RSD(Ref. 6)
4.5.2. Power
For Class I and II engines, power is expected to increase, however this is
partially influenced by market demands which the industry stated has been
asking for more powerful engines.
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Chapter 4: Technology Market Mix and Cost Estimates
Chapter 4: References
1. "Investigation and Analysis of Low Emitting Small Spark-Ignited Engine Designs
<19KW", Southwest Research Institute, SWRI Report 7633-807, October 1996,
EPA Air Docket A-93-29, Docket Item #II-A-03 .
2. ICF and Engine, Fuel and Emissions Engineering, Incorporated; "Cost Study For
Phase Two Small Engine Emission Regulations", Draft Final Report, October 25,
1996, EPA Air Docket A-93-29, Docket Item #II-A-04.
3. "Tier 1 Deterioration Factors for Small Nonroad Engines", Sept., 1996, a report by
Air Improvement Resources, available in EPA Air Docket A-96-55, Docket Item
II-D-11.
4. Power Systems Research, DELINK database, St. Paul, Minnesota, 1996.
5. ICF Incorporated, "Small Business Impact Analysis of New Emission Standards
for Small Spark-Ignition Nonroad engines and Equipment", Final report,
September 1997, EPA Air Docket A-96-55, Docket Item # II-A-01.
6. US EPA, "Regulatory Impact Analysis and Regulatory Support Document
Control of air Pollution; Emission Standards for New Nonroad Spark-Ignition
Engines At or Below 19 Kilowatts", May 1995, EPA Air Docket A-93-25, Docket
Item#V-B-01.
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Chapter 5: Compliance Program Costs
Chapters: Compliance Program Costs
The Phase 1 rule is a "certification only" rule in that the standards need
only be met at certification, prior to production, and the engine families are
subject to SEA. This final Phase 2 regulation brings the concepts of useful life
and emission deterioration to the emission regulation of small spark ignited
engines at or below 19kW. These program elements work to assure that actual
production engines meet standards throughout their useful lives.
The costs accounted for in this chapter are those costs that are incurred in
this rulemaking for certification and compliance. Appendix C contains the
detailed cost spreadsheet results for each compliance program. A summary of
the cost results for each program per engine class and the overall cost
methodology is included at the end of this chapter. Reductions in costs allowed
under the regulations for small volume engine manufacturers or small volume
engine families are not accounted for in this analysis.
5.1 Background
General assumptions and cost estimates for the various compliance
programs for nonhandheld engines are described herein.
5.1.1 Engine Families
The program costs are calculated on the number of engine families per
class. The number of engine families per class is obtained from the EPA's Phase
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Chapter 5: Compliance Program Costs
1 certification database as of September 1998 (Appendix C contains
nonconfidential database information). While this is a reliable source for the
number of engine families for the Phase 1 program, EPA expects that
manufacturers, during the years in which the Phase 2 program is implemented,
may reduce the number of engine families in response to the added cost of the
Phase 2 requirements, or increase the number of engine families in response to
new market opportunities. However, it is difficult to predict the change in the
number of engine families at this time. Consequently, this analysis makes no
assumption as to a different number of engine families per class from the Phase 1
database. The costs associated with record keeping requirements for each
program is included in the ICR submitted with this rulemaking.
5.1.2 Alternative Fueled Engine Families
EPA's Phase 1 database shows that there are several engine families of the
same engine displacement and technology that are certified on gasoline and
alternative fuels (LPG, CNG). Each of these engine families are accounted for in
all compliance programs. The alternative fuels often require specific fuel
metering systems and run leaner than gasoline, therefore new engine settings
and deterioration are likely different comparing engine families operating on
gasoline with those operating with alterantive fuel.
5.1.3 Assumed Costs
Each engine family must be bench aged to the chosen useful life.
Emission testing will be performed after initial break-in and at the end of the
engine aging. Costs used in this analysis are listed in Table 5-01. Small volume
engine families and engine families of small volume manufacturers may utilize
assigned deterioration factors for the specific engine design. This analysis
assumes that no small volume engine family or small volume engine
manufacturer uses an assigned df. Therefore, this analysis is a worst case
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Chapter 5: Compliance Program Costs
scenario that is based on over-compliaince with the regulations, rather than on
the minimum costs actually imposed by the rule.
Table 5-01
Common Costs Among Compliance Programs
TOPIC
Hours for break-in
Bench age ($/hour)
Emission test ($)
ESTIMATE
Class I - 4.4
Class II - 4.8
$15.00
$300.00
RESOURCE
Average from EPA Phase 1
certification database.
EMA/OPEI NPRM Comments
EPA estimate from "Cost Study for
Phase Two Small Engine Emission
Regulations", ICF and EF&EE,
October 25, 1996 (1).
5.2 Certification
The Phase 2 rule continues the fundamental certification program that
began in Phase 1. The most significant additional component to certification that
affects all engines under Phase 2 is the need to predict emissions for an engine
family to its full useful life. This can be done, for all engine classes, through
bench aging up to the chosen useful life hours. Aging an engine can also be done
on a piece of equipment operating in a normal in-use situation. A manufacturer
choosing to age its engine in such a manner might reduce the cost to the engine
manufacturer as the in-use evaluation could be coupled with other needs.
However, this potentially lower cost option is not analyzed here since the costs
to the manufacturer would vary greatly. A deterioration factor must also be
established for the engine family to be used in conducting the Production Line
Testing program, and, therefore, the engine must be tested two times. The first
time is just after break-in and the second is at the end of its useful life.
5.2.1 Cost Inputs and Methodology
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Chapter 5: Compliance Program Costs
The number of engine families chosen for the various useful lives was
determined through examination of EPA's Phase 1 certification database, as of
September 1998, and assumptions of each engine manufacturer's market
tendencies (see Tables 5-02 and 5-03). For the Class I 125 hour and Class II 250
hour categories, EPA included engine manufacturers who sold primarily to the
consumer market. For the Class I 500 and Class II 1000 hour categories, EPA
included primarily the engine manufacturers that sold to the commercial market
and/or were related to the automotive industry. The engine manufacturers that
were not related to the automotive industry and sold residential/commercial
type engines were included in the middle categories of 250 and 500 hours for
Class I and II, respectively. This analysis assumes carryover of certification after
the phase-in of the Phase 2 standards. Table 5-02 contains the estimates used in
this analysis.
EPA assumes that complete re-certification (i.e., not including carryover)
occurs once for all engine families and twice for a percentage of Class II engine
families. This is assumed due to two factors, 1) the presence of an averaging,
banking and trading program not available in Phase 1 requires all engine
families must be certified the first year to which they are applicable, whether or
not they are in their final Phase 2 configuration, and 2) Class II standards become
more stringent from 2001-2005 and not all engine families need be emission
improved in the first year of implementation. EPA has based the percentage of
recertified Class II engine families based on an analysis of each manufacturers'
Phase 1 certification information and some assumed engine df's. EPA assumes
carryover for certification will be used until the engines are updated.
Costs for the emission tests, break-in hours, and bench aging (on an
engine dynamometer) are listed in Table 5-01. A summary of the costs per year
(2001-2007) per class for certification requirements are listed in Table 5-04.
Certification costs are treated as fixed costs and are amortized at a rate of 7%
over 5 years.
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Chapter 5: Compliance Program Costs
Table 5-02
Number of Phase 1 Certification Families per Useful Life Category Assumptions
Nonhandheld
CURRENT
CLASS
I-SV
I-OHV
II-SV
I-OHV
USEFUL LIVES
125
16
11
250
2
11
13
20
500
0
18
13
73
1000
1
32
This analysis accounts for those SV engine families assumed to be
converted to OHV for Phase 2.
5.3 Averaging. Banking and Trading
Averaging, banking and trading (ABT) will enable manufacturers to
comply with the HC + NOx standard on a production-weighted average basis.
By essentially allowing a manufacturer to produce some engines that exceed the
standards when it can generate or obtain offsetting credits from engines that are
below the standards, the ABT program will reduce the capital costs of complying
with the Phase 2 standards. Manufacturers will be able to distribute capital
across engine families to obtain the most cost effective emission reductions, as
long as the ABT calculation is acceptable to prove compliance to the standards.
The optional ABT program adds no costs to the certification process, but does
necessitate limited tracking of engines for credit accounting purposes. Related
costs are addressed in the certification ICR's for this program. While the
program for ABT is optional for all engine manufacturers, this analysis assumes
that all engine manufacturers will utilize this option. The analysis also assumes
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Chapter 5: Compliance Program Costs
that manufacturers will work to optimize the number of engine families that will
need to be improved to meet the emission standards in this final rulemaking.
Optimization is achieved by choosing those engine families that have high
emission rates and high production volumes that will result in influencing the
manufacturers' production weighted average the most.
5.4 Production Line Testing
5.4.1 Rationale for Production Line Testing
The certification testing program is performed on prototype engines
selected to represent an engine family. A certificate of conformity indicates that
a manufacturer has demonstrated its ability to design engines that are capable of
meeting standards. Production line testing indicates whether a manufacturer is
able to translate those designs into actual mass production engines that meet
standards.
Manufacturer run Production Line Testing (Cum Sum) is a new program
to the EPA requirements for small engines. Therefore all of the costs are
allocated to the Phase 2 program. Note that engine manufacturers will be
conducting quality audit testing for CARB and the same data will be acceptable
EPA's PLT program30. However, it is likely that manufacturers do not sell all of
their product line for use in California and therefore will incur additional costs to
test their whole product line. Since the estimated volume per engine family per
manufacturer produced for sale in California is unknown, and likely varies
amongst engine manufacturers, no costs were subtracted for CARB quality audit
testing; therefore PLT program costs are likely an overestimation of the real costs
incurred under this rulemaking.
30 If the data are from 50 state engine families sold nationwide and if the test
engines are appropriately selected and tested.
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Chapter 5: Compliance Program Costs
5.4.2 Cost Inputs and Methodology
EPA's analysis assumes that all engine manufacturers will conduct PLT
for all engine families and that it is to be conducted on each engine family
certified to the standard each year.31 Testing will be performed on 2-30 engines.
A value of 7 tests per engine family are assumed for this analysis.32 PLT is
performed on new engines and therefore an initial engine break-in and emission
test is required.
For Class I engine families, all new engine families after August 1, 2003
are to meet the new standard and each manufacturer is to meet the standard by
2007, on average, for its entire Class I product line. This analysis assumes that
no new engine families will be certified between 2003 and 2007 and that all will
begin in 2007.33 Therefore, PLT begins in 2007 in this analysis for Class I engine
families; see Table 5-03.
For Class II engines, the PLT program begins in 2001 for all engine
families and all must be certified to Phase 2 standards, on average, in 2001 , see
Table 5-03. The Class II standard is tightened from the years 2001-2005. To meet
the decreasing standards, it is assumed that an equal number of Class II OHV
design engine families will increase as to the number of Class II SV design engine
families that will decrease. As explained in 5.1.1, this analysis assumes that the
31 The rule, however, allows some relief from PLT testing for families subjected to
in-use testing.
32 A number of 7 was chosen based on the fact that industry has been doing quality
audit data for California ARB and it is assumed that by the time this rulemaking is
in place that manufacturers will have made adjustments in their production for
meeting this requirement on the minimum number of engines possible. While 2 is
the minimum number, a number of 7 allows for some leeway.
33 Since the California ARB standardshas this provision beginning in 2002, it
is expected there will be very few new engine families near the 2003
timeframe.
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Chapter 5: Compliance Program Costs
overall number of engine families will stay the same as the number for Phase 1
certification (as of September 1998).
The average break-in hours for each engine per class, emission test costs
and break-in costs were utilized in this analysis as described in Table 5-01. A
summary of the costs per year (2001-2027) per class for the requirements in this
section are listed in Table 5-05.
Table 5-03
Assumed Engine Family Eligible for PLT Testing Per Class Per Year
YEAR
2001
2002
2003
2004
2005
2006
2007
I
58
II
152
152
152
152
152
152
152
PLT performed for each engine family, regardless if same engine certified with various fuel
specifications.
The number of engine families is obtained from EPA's Phase 1 certification database as of
September 1998.
5.5 Voluntary In-Use Testing
5.5.1 Rationale for Voluntary In-Use Testing
This rule does not include any required in-use testing on Phase 2 certified
engine families, however, it does include a provision for a percentage of
voluntary in-use testing in lieu of a percentage of mandatory PLT testing. Costs
for this program (engine selection, aging and emission testing) are not accounted
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Chapter 5: Compliance Program Costs
for in this analysis for several reasons. The first is that manufacturers have
claimed that in-use testing is very costly, especially when compared to a one time
new engine test as is done in PLT. Therefore, manufacturers would be reluctant
to conduct such a test unless it was in conjunction with other in-use evaluation.
If a manufacturer does decide to submit data from in-use testing, manufacturers
will likely take it from in-house durability test programs. This testing is no
additional cost to the manufacturer with the exception of one emission test,
which is already accounted for in this analysis under PLT. Since the amount of
emission testing reuqired under this voluntary in-use testing program would be
less than typically expected under the PLT program, manufacturers electing to
pursue this option would likely benefit from a lower program cost than
estimated here.
5.6 Summary Tables
5.6.1 Cost Methodology
The costs for each program were estimated in 1997. A 4% inflation rate is
included for each year to apply 1997 costs to future years34. Tables 5-04 to 5-05
present the estimated costs per compliance program as incurred through 2012
(see Appendix C for complete analysis to 2027 in the form of recovered costs).
The total estimated compliance program costs are presented in Table 5-06. The
administrative costs for these programs are included in the ICRs for this final
rulemaking.
Chapter 7 determines the uniform annualized cost and cost per engine for
this rulemaking (with costs as recovered).
34 Based on an average of the percentage change in consumer prices from
1984-1993. (Source: Statistical Abstract of the United States 1994,
September 1994 from the U.S. Department of Commerce)
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Chapter 5: Compliance Program Costs
Table 5-04
Resultant Fixed Certification Costs Per Class Per Year
As Incurred, With Inflation
CLASS I
$0
$0
$0
$0
$0
$0
$319964
CLASS II
$1,628,805
$5,168
$29,108
$63,383
$136,705
$0
$0
Table 5-05
Resultant Production Line Testing Costs
As Incurred, With Inflation
YEAR
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
901?
CLASS I
$0
$0
$0
$0
$0
$0
$312,500
$325,019
$338,003
$351,536
$365,597
$380 906
CLASS II
$583,733
$607,085
$631,334
$656,581
$682,877
$817,771
$850,464
$884,535
$919,871
$956,700
$994,966
$1 034 795
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Chapter 5: Compliance Program Costs
Table 5-06
Total Compliance Program Costs Per Class
As Recovered, With Inflation
Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Class I
$0
$0
$0
$0
$0
$0
$390,536
$403,055
$416,039
$429,572
$443,633
$380,206
Class II
$980,984
$1,004,335
$1,028,584
$1,053,832
$1,113,468
$851,112
$883,805
$917,876
$953,212
$956,700
$994,966
$1,034,725
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Chapter 5: Compliance Program Costs
Chapters: References
1. ICF and Engine, Fuel and Emissions Engineering, Incorporated; "Cost
Study For Phase Two Small Engine Emission Regulations", Draft Final
Report, October 25, 1996, EPA Air Docket A-93-29, Docket Item #II-A-04.
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Chapter 6: Environmental Benefit
Chapters: Environmental Benefit
This chapter presents the methodology used by EPA to quantify the
emission reduction benefits that would be realized through the adopted Phase 2
HC+ NOx in-use emission standards for small SI Nonhandheld (NHH) engines.
Benefits, in terms of HC+NOx emission reductions, are presented in the form of
aggregate benefits by engine class. These benefits are estimated in terms of
future 49-state emission reductions from affected small SI engines used in a
variety of equipment types. Estimated benefits illustrate the potential future
effect of the adopted standards on the emission inventory. Air quality benefits
are discussed qualitatively for all pollutants.
Many of the detailed results discussed below are presented in separate
tables included in Appendix F. EPA has replaced the model that it used in the
NPRM analysis with a new computer model called the NONROAD model, to
predict the emissions impact of the new standards that have been finalized.
Much of the information used in the new NONROAD model is the same as the
information used in the NSEEM model for the NPRM. The following sections
highlight areas where differences exist between modeling performed for the
proposal and that for the final rulemaking.
For a complete description of EPA's NONROAD model, the reader is
referred to the technical reports and program documentation prepared by EPA
in support of NONROAD model development. Copies of the technical reports
and model documentation are available at EPA's web site for nonroad
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Chapter 6: Environmental Benefit
modeling http:/www.epa.gov/omswww/nonrdmdl.htm.
6.1 Estimated Emissions Reductions
To estimate the average annual emissions at baseline (Phase 1), EPA
calculated the tons per year estimates based on revised Phase 1 Emission Factors.
The in-use factors have now been determined as a multiplicative rather than an
additive (as was the case for the Phase 1 rule-making) function of new engine
emission factors and a deterioration factor which is a function of engine hours of
use. As before, total emissions are calculated for each type of equipment using
the equation :
MASS =N xHP xLOADxHOURSxEF
In the above equation,
NJJ - nationwide population of ith equipment type using engine j
Hpij - average rated horsepower of engine j used in equipment
type i
LOADj - ratio (%) between average operational power output and
rated power for the ith equipment type
HOURSj - average annual hours of usage for the ith equipment type
EFjj - brake specific in-use emission rate (kilowatts/hr) for engine
type j used in equipment i
M ASSjj - annual nationwide emissions (grams) for the j th engine
type used in equipment i
For the benefits analysis described here, EPA performed separate
calculations for the major equipment categories, each one of which is equipped
with one or more of 6 different engine types with average power ratings as
displayed in Table F-01. Population and activity information used to construct
the inventories relied predominantly on data available in a commercially
available marketing research data base that includes most types of nonroad
equipment (1). This information is presented in Tables F-02 and F-03.
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Chapter 6: Environmental Benefit
6.1.1 Aggregate HC+NOx Reductions
The calculation of aggregate HC+ NOx reductions is described in this
section. The calculation takes into account U.S. population of small SI NHH
engine/equipment types, hours of use, average power rating and related
equipment scrappage rates as described below. Along with estimated values for
Phase I in-use engine emission rates and adopted Phase II in-use engine
emissions standards, EPA has determined nationwide annual emissions under
the baseline and controlled scenarios through calendar year 2027.
6.1.1.1 In-use Population --In order to estimate future emission totals,
some projections of future populations of Phase 1 and Phase 2 controlled engines
are needed. The NONROAD model has determined population estimates of
nonroad equipment covered by the adopted standards using certain growth
factors. For the base population estimates, the NONROAD model uses the 1996
population estimates from the Power Systems Research (PSR) PartsLink
database, with the exception of lawnmower engines. For this category of engines
a reality check was done using the certification database from Phase 1 production
estimates for 1998 lawnmowers. For this rule making, the population estimates
were adjusted to exclude engines that are covered by California's Small Off-Road
regulations.
6.1.1.2 Growth Estimates - The NONROAD model projects future
year (post-base year) equipment populations by applying a growth rate to the
base year equipment population. The determination of the growth rate uses a
methodology which is different from that used for the Phase 1 rule making. For
a detailed description of population growth in the various categories of
Nonhandheld Equipment the reader is referred to an AWMA paper presented by
EPA at the AWMA Emission Inventory Conference, New Orleans, LA on
12/9/98 titled "Geographic Allocation and Growth in EPA's Nonroad Emission
Inventory Model".
However, it should be recognized that, while national growth is measured
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Chapter 6: Environmental Benefit
at the level of the economy as a whole, growth in specific areas of the country is
likely to vary from area to area in response to the specific demographic and
commercial trends in those areas. These effects should be taken into account
in estimating growth at the local level.
6.1.1.3 Scrappage The NONROAD model uses a scrappage curve
to determine the proportion of equipment that has been scrapped as a function of
equipment age. The default scrappage curve used in the NONROAD model is
based on a cumulative Normal Distribution representing accumulated scrappage
at various ages. The scrappage curve is scaled to the average lifetime of the
equipment such that half of the units sold in a given year are scrapped by the
time those units reach the average expected life and that all units are scrapped at
twice the average life expectancy. The median life of the different Nonhandheld
equipment types are presented in Table F-03.
6.1.1.4 Emission Factors -The in-use emission factors for the
pre-control (Phase 1) scenario were recalculated based on revised new engine
values obtained from EPA 1998 Phase 1 Certification database. For the current
(Phase 2) scenario, the new engine emission factor values were back-calculated
using 1) the adopted in-use emission factors (Phase 2 standards) and 2) a
multiplicative deterioration factor determined from the AIR database as
described in sections 3.2.131 and 3.2.141.
The deterioration factors developed by AIR for Phase 1 engines were not
used in the NONROAD database for the Phase 2 rulemaking for they were based
on accelerated aging and not real world consumer usel. The deterioration
values for HC, NOx and CO were taken from the original Phase 1 rulemaking.
The ratio of maximum emission level and the new engine level, from Phase 1
engines in the Phase 1 rulemaking, was used as a multiplicative deterioration
factor in the NONROAD model. This value was used in the nonroad model DF
equation, see below, to equal "1+A". This methodologyfor determining
deterioration factors was applied to both Phase 1 and Phase 2 scenarios and was
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Chapter 6: Environmental Benefit
used only for HC and CO. Aall NOx deterioration factors were set to 1.0 based
on recent data, from AIR, which shows that NOx does not necessarily decrease
over time.
The exhaust emission factors for HC, NOx and CO along with those for
Fuel Consumption are displayed in Table F-04. The table also lists the value of
the constant A, the slope of the deterioration factor equation for all NHH
engines, which takes the form:
DF = 1 + A*(Agefactor)05 for agefactor<1.0
= 1+ A for agefactor >=1.0
For a detailed explanation of the deterioration factor function, the reader is
referred to EPA's technical report no. NR-011 , titled "Emission Deterioration
Factors for the NONROAD Emissions Model".
6.1.1.5 Emissions reductions EPA calculated baseline emissions
using revised in-use emission factors for Phase 1. To obtain average annual
emissions for engines controlled to the levels required to comply with EPA's final
Phase2 emission standards , emissions were recalculated using post-control
activity and in-use Phase 2 emission factors (Table F-04).
Table F-05 presents total annual nationwide emissions from engines
addressed in this rule under both the baseline (Phase 1) and the controlled (Phase
2) scenario. These are shown graphically in Figure 4-01 below.
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Chapter 6: Environmental Benefit
Figure 4-01
700,000
Total Exhaust HC+NOx (tpy)
1997 2002 2007 2012 2017
Inventory Year
2022
2027
In Figure 4-01, the annual benefit of the adopted regulation in terms of
reduction in total exhaust HC+NOx is indicated by the difference between the
upper and lower curves. The area between the curves represents the net benefit
of the regulation during the time required for the nonroad small SI NHH engine
and equipment fleet to completely turn over. The averaged results indicate that
the standards represent on average a 59.4% reduction in annual HC+NOx
emissions from NHH engines from Phase 1 levels to which the standards apply,
by year 2027.
In addition, the adopted rule is expected to reduce Fuel Consumption in
NHH engines by an additional 15% from Phase 1 levels by year 2027 . This will
have a beneficial impact on HC refueling losses.
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Chapter 6: Environmental Benefit
6.2 Air Quality Benefits
Air quality benefits associated with reduction in VOC emissions are
discussed in this section. Health and welfare effects of the pollutants as they
impact on ozone formation are described.
6.2.1 VOC
EPA expects that reducing VOC emissions from small nonroad spark
ignition engines will help to mitigate the health and welfare impacts of ambient
HC on urban and regional tropospheric ozone formation and transport.
6.2.1.1 Health and Welfare Effects of VOC Emissions--VOC is the
general term used to denote volatile organic compounds, a broad class of
pollutants encompassing hundreds of specific toxic compounds, primarily
Benzene and 1,3 Butadiene as well as aldehydes and gasoline vapors. As stated
previously, VOC is a precursor to ozone for which the EPA has established a
NAAQS. Measures to control VOC emissions should reduce emissions of
hazardous air pollutants (HAPs). However, the magnitude of reduction will
depend on whether the control technology reduces the individual HAPs in the
same proportion that total VOCs are reduced. Since nonroad engines have
significant VOC impacts , they are expected to have significant impacts on HAPs
as well.
At elevated concentrations, VOC, a precursor to ozone, can adversely
affect human health, agricultural production and environmental welfare. EPA is
examining new directions and long-term efforts toward VOC reductions as well
as approaches that are largely untried. One such step is the establishment of the
new national ambient air quality standards (NAAQS), promulgated on July 17,
1997 for ground-level ozone. EPA phased out and replaced the previous 1-hour
primary ozone standard (health-based) with a new 8-hour standard in order to
protect against longer exposure periods. The new 8-hour standard is set at 0.08
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Chapter 6: Environmental Benefit
parts per million(ppm) and is defined as a "concentration-based" form. EPA also
replaced the previous secondary standard (to protect the environment, including
agricultural crops, national parks, and forests) with a standard identical to the
new primary standard.
Nonroad sources contribute substantially to summertime VOC and NOx
emissions and winter CO emissions. The median contribution of total nonroad
emissions to VOC and NOx inventories in summer, and CO inventories in
winter, ranges from 7.4-12.6% VOC, 14.5-17.3% NOx, and 5.2-9.4% winter CO,
depending on the area [4]. The lawn and garden equipment category is a major
contributor to summertime VOC emissions, accounting for a median ranging
from 2.4% to 4.7% of the total VOC inventory in tons per summer day,
depending on the area.
6.2.2 Benzene
Benzene is a clear, colorless, aromatic hydrocarbon which has a
characteristic odor. It is both volatile and flammable. Benzene contains 92.3%
carbon and 7.7% hydrogen with the resulting chemical formula C6H6. Benzene
is present in both exhaust and evaporative emissions. Data show the benzene
level of gasoline to be about 1.5%. Some exhaust benzene is unburned fuel
benzene. Some benzene also forms from engine combustion of non-aromatic fuel
hydrocarbons. The fraction of benzene in the exhaust varies depending on
control technology and fuel composition and is generally about 3 to 5%. The
fraction of benzene in the evaporative emissions also depends on control
technology and fuel composition and is generally about 1%.
Mobile sources account for approximately 65% of the total benzene
emissions, of which 30% can be attributed to nonroad mobile sources (5). For
nonroad engines, benzene was estimated to be about 3.0% of VOC emissions
and 1.7% of evaporative VOC emissions. The split between exhaust and
evaporative benzene emissions was assumed to be 80% exhaust to 20%
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Chapter 6: Environmental Benefit
evaporative. Thus, the overall benzene fraction of nonroad VOC emissions
was estimated to be 2.7%.
6.2.2.1 Projected Benzene Emission Reductions-Nonroad engines
account for approximately 20% of the total benzene emissions with 45%
attributed to highway motor vehicles and 35% to stationary sources. Many of the
stationary sources attributed to benzene emissions are industries producing
benzene as a by-product or use benzene to produce other chemicals.
Since benzene levels generally decrease proportionally to overall HC
emissions, once newer emission control technology is applied, the amount of
benzene produced by new small SI engines should be reduced further from
Phase 1 after this new rule becomes effective.
6.2.2.2 Health Effects of Benzene EmissionsHealth effects caused by
benzene emission differ based on concentration and duration of exposure. EPA's
Total Exposure Assessment Methodology (TEAM) Study identified the major
sources of exposure to benzene for much of the U.S. population. These sources
turn out to be quite different from what had previously been considered as
important sources. The study results indicate that the main sources of human
exposure are associated with personal activities, not with the so-called "major
point sources". The results imply that personal activities or sources in the home
far outweigh the contribution of outdoor air to human exposure to benzene.
Since most of the traditional sources exert their effect through outdoor air, some
of the nonroad small SI engine sources could explain the increased personal
exposures observed. The TEAM Study is described in detail in a four-volume
EPA publication (6) and in several journal articles (7-8) .
The average ambient level of benzene ranges from 4.13 to 7.18 pg/m3,
based on urban air monitoring data. A crude estimate of ambient benzene
contributed by < 19kW SI engine sources can be calculated by multiplying the
total ambient concentration by the percentage of nonroad engine-produced
benzene. This figure must be adjusted then to reflect time spent indoors and in
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Chapter 6: Environmental Benefit
other micro environments by using the factor developed in the Motor-Vehicle-
Related Air Toxics Study. Applying the nonroad adjustment factor of .25 and
integrated adjustment factor of .622 to reflect only nonroad exposure to benzene,
the range becomes .642 to 1.12 pg/m3.
Based on data from EPA's NEVES (4), the exhaust and crankcase emissions
from a 2.9 kW (3.9 hp) lawnmower with a 4-stroke engine contain 3.5 grams of
benzene. A 2.9 kW (3.9 hp), 2-stroke lawnmower exhaust has 17 grams of
benzene. A small, 2.2 kW (3 hp) chainsaw emits 28.2 grams of benzene per hour,
compared to a large, 4.5 kW (6 hp) chainsaw that emits 40.8 grams per hour. No
study as yet has been conducted on the health effects of benzene emissions
specifically from small SI engines.
A separate study conducted at Southwest Research Institute (SWRI)
reported a 2-stroke, 4.5 kW(6hp) moped engine fueled with industry average
unleaded gasoline emitted 2,260 mg/hph of benzene. A 4-stroke walk-behind
mower powered by an overhead valve, 2.6 kW (3.5 hp) engine emitted 690
mg/hph of benzene when fueled with average unleaded gasoline.
Concentration and duration of exposure to benzene are especially
important to consider in the case of small SI engine applications, since the
operator is typically in the direct path of the exhaust given out by the engine.
Rate of dilution of the exhaust by the air surrounding the engine depends on
local weather conditions.
6.2.2.3 Carcinogenicity of Benzene and Unit Risk EstimatesThe
International Agency for Research on Cancer (IARC), classified benzene as a
Group I carcinogen . A Group I carcinogen is defined as an agent that is
carcinogenic to humans. IARC (1987) based this conclusion on the fact that
numerous case reports and follow-up studies have suggested a relationship
between exposure to benzene and the occurrence of various types of leukemia.
The leukemogenic (i.e., the ability to induce leukemia) effects of benzene
exposure were studied in 748 white males employed from 1940-1949 in the
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Chapter 6: Environmental Benefit
manufacturing of rubber products in a retrospective cohort mortality study (9).
Statistics were obtained through 1975. A statistically significant increase in the
incidence of leukemia was found by comparison to the general U.S. population.
The worker exposures to benzene were between 100 ppm and 10 ppm during the
years 1941-1945. There was no evidence of solvent exposure other than benzene.
In addition, numerous investigators have found significant increases in
chromosomal aberrations of bone marrow cells and peripheral lymphocytes from
workers with exposure to benzene (IARC 1982).
Exposure to benzene has also been linked with genetic changes in humans
and animals. EPA has concluded that benzene is a Group A, known human
carcinogen based on sufficient human epidemiologic evidence demonstrating an
increased incidence of nonlymphocytic leukemia from occupational inhalation
exposure. The supporting animal evidence showed an increased incidence of
neoplasia in rats and mice exposed by inhalation and gavage. EPA (10)
calculated a cancer unit risk factor for benzene of 8.3x106 (pg/m3) ~* based on the
results of the above human epidemiological studies in benzene-exposed workers
in which an increase of death due to nonlymphocytic leukemia was observed.
EPA's National Center for Environmental Assessment (NCEA) of the office of
Research and Development (ORD) has recently announced a Notice of Peer-
Review Workshop and Public Comment Period to review an external review
draft document titled, Carcinogenic Effects of Benzene: An update (EPA/600/P-
97/001 A). EPA will consider comments and recommendations from the workshop
and the public comment period in document revisions.
The California Department of Health Services (DHS, 1984), which
provides technical support to CARB, has also determined that there is sufficient
evidence to consider benzene a human carcinogen. CARB performed a risk
assessment of benzene that was very similar to EPA's risk assessment. The
CARB risk estimate is actually a range, with the number calculated by EPA
serving as the lower bound of cancer risk and a more conservative (ie., higher)
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Chapter 6: Environmental Benefit
number, based on animal data , serving as the upper bound of cancer risk. The
CARB potency estimate for benzene ranges from 8.3x106 to 5.2x105 pg/m3.
A number of adverse noncancer health effects have also been
associated with exposure to benzene. People with long-term exposure to
benzene at levels that generally exceed 50 ppm (162,500 pg/m3) may
experience harmful effects on the blood-forming tissues, especially the bone
marrow. These effects can disrupt normal blood production and cause a
decrease in important blood components, such as red blood cells and blood
platelets, leading to anemia and a reduced ability to clot. Exposure to benzene
at comparable or even lower levels can be harmful to the immune system,
increasing the chance for infection and perhaps lowering the body's defense
against tumors by altering the number and function of the body's white blood
cells. In studies using pregnant animals, inhalation exposure to benzene in the
range of 10-300 ppm (32,500-975,000 pg/m3) indicates adverse effects on the
developing fetus, including low birth weight, delayed bone formation, and bone
marrow damage.
6.2.3 1,3-Butadiene
1,3-Butadiene is a colorless, flammable gas at room temperature with a
pungent, aromatic odor, and a chemical formula C4H3. 1,3-Butadiene is insoluble
in water and because of its reactivity is estimated to have a short atmospheric
lifetime. The actual lifetime depends upon the conditions at the time of release,
such as the time of day, intensity of sunlight, temperature etc. 1,3-Butadiene is
formed in vehicle exhaust by the incomplete combustion of the fuel and is
assumed not to be present in vehicle evaporative and refueling emissions. The
contribution of 1,3 -butadiene from Nonroad Sources to Nationwide Toxic
Emissions Inventory is 21.2% (5).
6.2.3.1 Projected 1,3-Butadiene Emission Reductions-Current EPA
estimates (5) indicate that mobile sources account for approximately 68% of the
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Chapter 6: Environmental Benefit
total 1,3-butadiene emissions, out of which 31% can be attributed to nonroad
mobile sources. The remaining 1,3-butadiene emissions come from stationary
sources mainly related to industries producing 1,3-butadiene and those
industries that use 1,3-butadiene to produce other compounds. 1,3-Butadiene
emissions appear to increase roughly in proportion to exhaust hydrocarbon
emissions. Since hydrocarbons are decreased by the use of a catalyst on a motor
vehicle, 1,3-butadiene emissions are expected to decrease proportionally with the
use of any emission control technology that decreases total hydrocarbon
emission.
6.2.3.2 Health Effects of 1,3 - Butadiene ExposureThe annual average
ambient level of 1,3-butadiene ranges from 0.12 to 0.56 pg/m3. According to data
from EPA's NEVES, 1,3-Butadiene content in exhaust and crankcase from a 2.9
kW (3.9 hp), 4-stroke lawnmower is approximately 1.5 gms/hr of usage. For a
2.9 kW (3.9 hp), 2-stroke lawnmower, 1,3-butadiene content in exhaust is 7.0
grams per hour. Butadiene emitted from small, 2.2 kW (3hp) chainsaw is
approximately 12.2 grams per hour from a large 4.5 kW (6 hp) chainsaw.
A separate study conducted at SwRI revealed a 2-stroke, 4.5 kW (6 hp)
moped engine emitted 207 mg/kW-hr (154 mg/hp-hr) when fueled with
industry average unleaded gasoline. A 2.6 kW (3.5 hp) overhead valve, walk-
behind mower emitted 209 mg/kW-hr (156 mg/hp-hr) of 1,3-butadiene when
fueled with industry average unleaded gasoline. Since 1,3-butadiene levels
normally decrease proportional to overall hydrocarbons once emission control
technology is applied, 1,3-butadiene levels are expected to be less from new
small SI engines after this rule becomes effective . This, in turn, will reduce risk
of exposure to 1,3-butadiene produced by these sources.
Since the operator of a small SI NHH engine- equipped application is
typically near the equipment while it is in use, the concentration of toxic
pollutants in the exhaust and their health effects need to be investigated.
Although the air around the engine quickly dilutes the exhaust, the rate of
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Chapter 6: Environmental Benefit
dilution depends on the weather conditions.
6.2.3.3 Carcinogenicity of 1,3-ButadieneLong-term inhalation
exposure to 1,3-butadiene has been shown to cause tumors in several organs in
experimental animals. Epidemiologic studies of occupationally exposed workers
were inconclusive with respect to the carcinogenicity of 1,3-butadiene in humans.
Based on the inadequate human evidence and sufficient animal evidence, EPA
has concluded that 1,3-butadiene is a Group B2, probable human carcinogen.
IARC has classified 1,3-butadiene as a Group 2A, probable human carcinogen.
EPA calculated a cancer unit risk factor of 2.8X104 (pg/m3) ~* for 1,3-butadiene
based on the results of a study in mice in which an increase in the incidence of
tumors in the lung and blood vessels of the heart, as well as lymphomas were
observed. EPA's Office of Research and Development is currently in the process
of releasing an updated 1,3-butadiene risk assessment factor.
Exposure to 1,3-butadiene is also associated with adverse noncancer
health effects. Exposure to high levels (on the order of hundreds of thousands
ppm) of this chemical for short periods of time can cause irritation of the eyes,
nose, and throat, and exposure to very high levels can cause effects on the brain
leading to respiratory paralysis and death. Studies of rubber industry workers
who are chronically exposed to 1,3-butadiene suggest other possible harmful
effects including heart disease, blood disease, and lung disease. Studies in
animals indicate that 1,3-butadiene at exposure levels of greater than 1,000 ppm
(2.2X106 pg/m3) may adversely affect the blood-forming organs. Reproductive
and developmental toxicity has also been demonstrated in experimental animals
exposed to 1,3-butadiene at levels greater than 1,000 ppm.
6.2.4 CO
The Clean Air Act directs the Administrator of the EPA to establish
National Ambient Air Quality Standards (NAAQS) for several widespread air
pollutants, based on scientific criteria and allowing for an adequate margin of
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Chapter 6: Environmental Benefit
safety to protect public health. The current primary and secondary NAAQS for
CO are 35ppm for a 1-hour average and 9ppm for an 8-hour average.
According to the Nonroad Study, a 4-stroke, 2.9 kW (3.9 hp) lawnmower
engine emits 1051.1 g/hr CO while a 2-stroke, 2.9 kW (3.9 hp) engine meets
1188.4 g/hr CO. A separate study conducted at SwRI revealed that a 2-stroke
moped engine fueled with typical unleaded gasoline emits 184 g/Kw-hr (137
g/hp-hr) of CO. A 4-stroke, 2.6 kW overhead valve, walk-behind mower fueled
with typical unleaded gasoline emits 480 g/kW hr (358 g/hp-hr) of CO.
Although the final Phase 2 emission standards for nonhandheld small SI
engines does not include significantly more stringent standards for CO,
reductions in CO beyond Phase 1 levels, due to improved technology, is also to
be expected by year 2025.
6.2.4.1 Health and Welfare Effects of CO-The EPA has documented the
detrimental health effects that CO can have on populations (11). Carbon
monoxide is a colorless, odorless, tasteless and nonirritating gas and gives no
signs of its presence. It is readily absorbed from the lungs into the bloodstream,
there forming a slowly reversible complex with hemoglobin (Hb) known as
carboxyhemoglobin (COHb).
Blood COHb levels do not often exceed 0.5 to 0.7% in normal individuals
unless exogenous CO is breathed. Some individuals with high endogenous CO
production can have COHb levels of 1.0 to 1.5% (e.g. anemics). The presence of
COHb in the blood reduces the amount of oxygen available to vital tissues,
affecting primarily the cardiovascular and nervous systems. Although the
formation of COHb is reversible, the elimination half-time is quite long because
of the right binding between CO and Hb. This can lead to accumulation of
COHb, and extended exposures to even relatively low concentrations of CO may
produce substantially increased blood levels of COHb.
Health effects associated with exposure to CO include cardiovascular
system, central nervous system (CNS), and developmental toxicity effects, as
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Chapter 6: Environmental Benefit
well as effects of combined exposure to CO and other pollutants, drugs, and
environmental factors. Concerns about the potential health effects of exposure to
CO have been addressed in extensive studies with various animal species as
subjects. Under varied experimental protocols, considerable information has
been obtained on the toxicity of CO, its direct effects on the blood and other
tissues, and the manifestations of these effects in the form of changes in organ
function. Many of these studies, however have been conducted at extremely high
levels of CO (i.e., levels not found in ambient air). Although severe effects from
exposure to these high levels of CO are not directly germane to the problems
from exposure to current ambient levels of CO, they can provide valuable
information about potential effects of accidental exposure to CO, particularly
those exposures occurring indoors.
All gasoline-powered engines produce carbon monoxide. According to
the National Institute for Occupational Safety and Health (NIOSH), Americans
who use gasoline-powered pressure washer indoors are risking their lives. This
gas can rapidly build up in any indoor area, and individuals can be overcome
without even realizing that they are being exposed. Confusion, headache,
dizziness, fatigue, and weakness may set in too quickly for victims to save
themselves. According to NIOSH director, Dr. J. Donald Millar, " Carbon
monoxide strikes quickly, and it strikes without warning. Workers must be
aware of the hazard and prevent exposure to this potentially fatal gas." Each of
the victims interviewed by NIOSH expressed shock at how quickly they were
overcome. Carbon monoxide poisoning can cause permanent brain damage ,
including changes in personality and memory. Once inhaled, carbon monoxide
decreases the ability of the blood to carry oxygen to the brain and other vital
organs. Even low levels of carbon monoxide can set off chest pains and heart
attacks in people with coronary artery disease.
Although no studies measuring the human health effects of CO emanating
from small SI engine exhaust have been conducted, ample research results are
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Chapter 6: Environmental Benefit
available concerning general health effects of exposure to CO . The effects of
exposure to low concentrations-such as the levels found in ambient air - are far
more subtle and considerably less threatening than those occurring in direct
poisoning from high CO levels. Maximal exercise performance in healthy
individuals has been shown to be affected at COHb levels of 2.3% and greater.
Central nervous system effects, observed at peak COHb levels of 5% and greater,
include reduction in visual perception, manual dexterity, learning, driving
performance, and attention level. Of most concern, however, are adverse effects
observed in individuals with chronic heart disease at COHb levels of 3 to 6%. At
these levels, such individuals are likely to have reduced capacity for physical
activity because they experience chest pain (angina) sooner. Exercise-related
cardiac arrhythmias have also been observed in some people with chronic heart
disease at COHb levels of 6% or higher and may result in an increased risk of
sudden death from a heart attack .
The NAAQS set by EPA are intended to keep COHb levels below 2.1% in
order to protect the most sensitive members of the general population (i.e.,
individuals with chronic heart disease). However, elderly people, pregnant
women (due to possible fetal effects), small children, and people with anemia or
with diagnosed or undiagnosed pulmonary or cardiovascular disease are also
likely to be at increased risk for CO effects.
Since small SI engines are typically used in applications that require the
operator to be near, and perhaps in the direct path of the exhaust, the effects of
exhaust CO on the operator of the engine is a matter of concern. Although no
studies measuring the human health effects of CO emanating from small SI
engine exhaust have been conducted, laboratory animal studies reveal that CO
can adversely affect the cardiovascular system, depending on the laboratory
conditions utilized in these studies.
6.2.4.2 Developmental Toxicity and Other Systemic Effects of Carbon
monoxideStudies in laboratory animals of several species provide strong
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Chapter 6: Environmental Benefit
evidence that maternal CO exposures of 150 to 220 ppm, leading to
approximately 15 to 25% COHb, produce reductions in birth weight,
cardiomegaly, delays in behavioral development, and disruption in cognitive
function (12). The current data (13) from human children suggesting a link
between environmental CO exposures and sudden infant death syndrome are
weak. Human data from cases of accidental high CO exposures (14) are difficult
to use in identifying a low observed-effect level for CO because of the small
numbers of cases reviewed and problems in documenting levels of exposure.
Behaviors that require sustained attention or sustained performance are
most sensitive to disruption by COHb. The group of human studies (15) on
hand-eye coordination (compensatory tracking), detection of infrequent events
(vigilance), and continuous performance offer the most consistent and defensible
evidence of COHb effects on behavior at levels as low as 5%. These effects at low
CO-exposure concentrations, however, have been very small and somewhat
controversial. Nevertheless, the potential consequences of a lapse of
coordination, vigilance, and the continuous performance of critical tasks by
operators of machinery could be serious.
At higher levels of exposure, where COHb concentrations exceed 15 to
20%, there may be direct inhibitory effects of CO resulting in decreases in
xenobiotic metabolism , which might be important to individuals receiving
treatment with drugs. Inhalation of high levels of CO, leading to COHb
concentrations greater than 10 to 15%, have been reported to cause a number of
other systemic effects in laboratory animals as well as humans suffering from
acute CO poisoning. There are reports in the literature of effects on liver, kidney,
bone, and immune capacity in the lung and spleen (16). It generally is agreed that
these effects are caused by severe tissue damage occurring during acute CO
poisoning.
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Chapter 6: Environmental Benefit
Chapters: References
1. Power Systems Research, Engine Data and Parts Link Data bases, St.
Paul, Minnesota 1992.
2. Energy and Environmental Analysis, Emissions Inventory on Non-
Farm (MS-1), Farm(MS-2), and Lawn and Garden (Utility) (MS-3) Equipment -
Status Report, Arlington, VA, December 1983.
3. Jack Faucett Associates, Nonroad Mobile Source Sales and Attrition
Study : Identification and Evaluation of Available Data Sources - Final Report,
Bethesda, Maryland, February 1993, p.3-11
4. EPA, Nonroad Engine and Vehicle Emission Study, EPA Report
Number 21A-2001, Washington DC, November, 1991.
5. U.S.EPA., 1990 Emissions Inventory of Forty Section 112(k)
Pollutants: Supporting Data for EPA's Proposed Section 112(k) Regulatory
Strategy. External Review Draft, September 1, 1997.
6. EPA, The Total Exposure Assessment Methodology (TEAM) Study:
Summary and Analysis: Volume I, Office of Research and Development,
Washington D.C., EPA Report No. EPA/600/6-87/002a, June 1987.
7. Pellizzari, E.D., et al. Total Exposure Assessment Methodology
(TEAM) Study: Selected Communities in Northern and Southern California, Vol.
III. EPA 600/6-87/002c, NTIS PB 88-100086, U.S. EPA, Washington, DC 1987.
8. Wallace, L.A., et al. The TEAM study: personal exposures to toxic
substances in air, drinking water, and breath of 400 residents of New Jersey,
North Carolina, and North Dakota. Environ. Res. 43:290-307 (1987).
9. Infante, P.P.; Rinsky,R.A.; Wagoner,J.K.;etal. Leukemia in benzene
workers. Lancet, 2:76-78.
10. U.S.EPA, Interim quantitative cancer unit risk estimates due to
inhalation of benzene. Prepared by the Carcinogen Assessment Group, Office of
Research and Development, Washington DC. EPA/600/X-85-022, Feb. 15, 1985.
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11. U.S.EPA, Air Quality criteria for carbon monoxide. Research
Triangle park, NC: Office of Health and Environmental assessment,
Environmental Criteria and Assessment Office; EPA report no. EPA-600/8-90-
045F, Dec. 1991.
12. Singh, J. (1986) Early Behavioral alterations in mice following
prenatal carbon monoxide exposure. Neurotoxicology 7: 475-481.
13. Hoppenbrouwers, T.; Calub, M.; Arakawa,K; Hodgman, J.E. (1981)
Seasonal relationship of sudden infant death syndrome and environmental
pollutants. Am. J. Epidemiol. 113: 623-635.
14. Klees, M.; Heremans, M.; Dougan, S. (1985) Psychological sequelae
to carbon monocxide intoxication in the child. Sci. Total Environ. 44: 165-176.
15. Benignus, V.A.; Muller, K.E.; Smith, M. V.; Pieper, K.S.; Prah, J.D.
(1990) Compensatory tracking in humans with elevated carboxyhemoglobin.
Neurotoxicol. Teratol. 12: 105-110.
16. Zebro, T.; Wright, E.A.; Littleton, R.J.; Prentice, A.I.D. (1983) Bone
changes in mice after prolonged continuous exposure to a high concentration of
carbon monoxide. Exp. Pathol. 24; 51-67.
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Chapter 7: Cost Effectiveness
Chapter 7: Analysis of Aggregate Costs
This chapter develops the uniform annualized cost per class and the
average cost per equipment per class for this rulemaking. This chapter also
assesses the cost-effectiveness, in terms of dollars per ton of total emission
reductions. This analysis relies on cost information from Chapters 4 and 5 and
emissions information from the small engine model35 presented in Chapter 6.
Lastly, this chapter discusses possible economic effects of the regulation and
compares the cost effectiveness of the new provisions with the cost-effectiveness
of other HC+NOx control strategies from previous EPA rulemakings.
7.1 Aggregate Cost Analysis
The analysis examines total annual costs of the final standards for all
applicable engines36 from 2001-2027. The complete year-by-year stream of costs
over time that are summarized in this section can be found in Appendix E. The
uniform annualized cost per class and average cost per equipment per class are
calculated. Costs of variable hardware, production, research and development,
35 The nonroad small engine emission model accounts for factors including
various equipment types, consumer or professional usage, lifetime of the
equipment, scrappage, etc., see Chapter 6.
36 The analysis covers all engines sold in the United States except those sold
in California which are covered by rulemakings established by CARB.
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Chapter 7: Cost Effectiveness
and compliance programs are used and annualized where appropriate. Cost
savings due to reduced fuel consumption are also addressed, including the
valuation of the reduced fuel consumption to the consumer. Total costs to
society are presented as the aggregate costs to consumers with and without fuel
savings.
This analysis is based on cost estimates for variable and fixed costs from
the 1996 ICF and EF&EE cost study, comments to the NPRM and confidential
manufacturer data received in 1995. The 1995 and 1996 cost estimates are
adjusted by the GDP Implicit Price Deflators per year to 1998 and the following
analyses are all presented in 1998 dollars. The costs for the compliance program
were based on costs estimated in 1997 and these are also adjusted to 1998 dollars.
This analysis also accounts for estimates of the increased profits to
economic entities in the various levels of industry, including the engine
manufacturer, equipment manufacturer, and mass merchandiser. As
rationalized in Appendix E, full cost pass through and profitability on increased
costs are assumed. Table 7-01 summarizes the assumed profitability factors,
sometimes referred to as retail price equivalent factors, which were applied to
specific costs in this analysis, to estimate the price increase to the consumer.
Table 7-01
Profitability Factors
(Retail Price Equivalent Factors)
Level
Engine Manufacturer
Equipment Manufacturer
Retail Merchandiser
Factor
0.16
0.05
0.05
These factors were applied to the specific variable engine and equipment
manufacturer costs identified in this chapter. For example, EPA has estimated
some variable hardware costs and production costs specific to engines and
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Chapter 7: Cost Effectiveness
specific to equipment. From the consumer's point of view, the equipment
specific costs were marked up the cost 10% and the engine specific costs were
marked up 28%.
7.1.1 Uniform Annualized Costs
A uniform annualized cost is an expression of the equal annual payments
that would be equivalent to a given cash flow schedule for a known interest rate.
This expression of an annualized cost was chosen due to the variety of the
programs that makeup this Phase 2 regulation. The methodology used for
calculating the uniform annualized costs is as follows.
The EPA Phase 1 certification database was utilized to determine the
number of engines, and related number of models, that would likely be
improved during the course of the phase-in (see Tables E-01 to E-03). The costs
per engine (variable and fixed costs) for emission improvements were estimated,
as shown in Chapter 4. The variable costs per engine are then multiplied by the
number of engines in that year37 to incorporate that technology or set of
technologies. The fixed costs are amortized for five years for engine
manufacturers and ten years for equipment manufacturers starting in the phase-
in years in which they are calculated to be recovered.
In order to determine the uniform annualized costs, the annual costs were
discounted to the first year the Phase 2 standards are implemented for existing
engine families, 2001 for Class II and 2007 for Class I engines, at a rate of seven
The future sales growth estimates are based on the assumptions utilized in the nonroad
model for the main types of equipment. The production estimates for the
nonhandheld, Class I and II, categorized equipment are listed for each year from 2001 to
2027. A percentage increase from one year to the next is calculated and these factors are
then utilized with the 1998 sales projections, as the base, and the resultant sales estimates
for future years are developed. The resultant values for production of nonhandheld
equipment are then further split into classes and engine technology types (such as SV
and OHV). For the pre-Phase 2 split, the production was split by the proportions in the
1998 database. For the Phase 2 split, ABT calculations of each manufacturers situation
and assumptions on technology were utilized.
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Chapter 7: Cost Effectiveness
percent (the consumption rate of interest). The uniform annualized cost was
obtained by summing the discounted costs over the appropriate time period and
dividing by the appropriate present worth factor (at an interest rate of 7% over
the corresponding number of years). The sections below address each cost
category separately. Section 7.3. contains the full 20 year analysis of total cost of
the final standards.
7.1.1.1 Variable Costs Table 7-02 contains the uniform annualized
variable costs per class with consumer markup (see Table E-08 for costs per year
on which this table is based). The results are calculated to first year of
implementation which is 2001 for Class II and 2007 for Class I or existing engine
families.
Table 7-02
UNIFORM ANNUALIZED VARIABLE COST PER CLASS
WITH CONSUMER MARKUP
($Thousands, 1998$)
CLASS
I
II
ENGINE
$138,398
$26,462
EQUIPMENT
$0
$175
TOTAL
$138,398
$26,637
*Class I calculated to 2007, Class II calculated to 2001
7.1.1.2 Capital Costs Engine improvements, and thereby capital
expenditures, are assumed to be phased-in over time for Class II and incurred in
one year for Class I. The phase-in and number of models for each Class were
determined in Chapter 4. Capital costs are estimated to be recovered over 5
years for engine manufacturers and equipment manufacturers, at a 7 percent
interest rate. Costs incurred prior to the initial year of the Phase 2 rulemaking
were moved to the first year of the rulemaking (i.e., the first year in which costs
are recovered) using a 7 percent interest rate.
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Chapter 7: Cost Effectiveness
Potential capital cost increases include costs for development and
application of engine designs with reduced emissions and costs for production
facilities. EPA has accounted for some costs due to construction of production
facilities for Class I OHV engines due to the fact one major Class I SV engine
manufacturer has stated that it takes 4/3 of the time to make an OHV engine
compared to a SV engine and thereby additional facilities will be needed to fulfill
production quotas.
EPA has estimated the uniform annualized fixed costs as shown in Table
7-03. The results are calculated to first year of implementation which is 2001 for
Class II and 2007 for Class I. Appendix E contains the tables on which this table
is based.
Table 7-03
UNIFORM ANNUALIZED FIXED COST PER CLASS
(SThousands, 1998$)
CLASS
I
II
ENGINE
$21,233
$6,648
EQUIPMENT
$6,946
$2,044
TOTAL
$28,179
$8,692
*Class I calculated to 2007, Class II calculated to 2001
7.1.1.3 Compliance Costs - This rulemaking accounts for those costs
that are above and beyond those for the Phase 1 program. These costs are the
compliance program costs presented in Chapter 5. Compliance costs include
costs for certification and production line testing (PLT). Certification costs are
treated as fixed costs and production line testing costs are treated as variable
costs for this analysis. Appendix E and Chapter 5 contain details on the program
costs assumed for the compliance programs. The estimates for the
administrative burden for these programs are estimated in the supporting
statements for the Information Collection Requests submitted to OMB. These
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Chapter 7: Cost Effectiveness
supporting statements contain estimates of the testing, record keeping, and
reporting burden on industry due to the final regulations. These costs are not
included in this analysis for they were not yet available at the time of completion
of this document.
Table 7-04 contains the uniform annualized compliance costs for all
classes. The results are calculated to first year of implementation which is 2001
for Class II and 2007 for Class I.
Table 7-04
UNIFORM ANNUALIZED COMPLIANCE PROGRAMS
(SThousands, 1998$)
CLASS
I
II
COST
$233
$671
*Class I calculated to 2007, Class II calculated to 2001
The total uniform annualized costs for this rulemaking are presented in
Table 7-05. The total value is calculated with all costs to 2001.
Table 7-05
TOTAL UNIFORM ANNUALIZED COSTS
INCLUDING CONSUMER MARKUPS
($Thousands, 1998$)
Class
I
II
TOTAL
Cost
$167,810
$40,186
$207,996
All classes calculated to 2001
7.1.1.4 Fuel Savings As explained in Chapter 4, the technological
changes necessary to bring these engines into compliance with the emission
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Chapter 7: Cost Effectiveness
standards will cause a decrease in fuel consumption of approximately 15% for
nonhandheld Class I and II SV engines. The tons/year savings per class (see
Appendix E) are converted to gallons/year and then multiplied by $0.794/gallon
to determine the fuel savings38. Table 7-06 contains the uniform annualized fuel
savings for all equipment types in each class which have been discounted 7% to
the first year of implementation for each class. Table E-07 contains the yearly
fuel savings information on which this analysis is based.
Table 7-06
UNIFORM ANNUALIZED FUEL SAVINGS
and COMPARISON TO UNIFORM ANNUALIZED COST
($Thousands, 1998$)
CLASS
I
II
UNIFORM
ANNUALIZED
FUEL SAVINGS
$121,549
$177,191
UNIFORM
ANNUALIZED
COST
$167,810
$40,186
RESULTANT
COSTS
(SAVINGS)
$46,261
($137,005)
* Class II calculated to 2001, Class I calculated to 2007
7.1.2 Average Cost Per Equipment
The average cost per equipment changes over time due to the recovering
of capital costs and the increased production over which costs can be spread.
Therefore this analysis calculates a range of cost that is based on the uniform
annualized cost. Since the production of these engines is assumed to increase
over the years of this analysis, this section presents a range of cost per equipment
estimates. The uniform annualized cost is divided by the production in the first
38
The value of gasoline used in this analysis is $0.794 per gallon. This is
based on the average refinery price to enduser in 1995 from the Energy
Information Administration multiplied by the GDP Implicit Price
Deflators for 1996, 1997 and 1998.
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Chapter 7: Cost Effectiveness
full implementation year after use of flexibility provisions (2010) and the last
year (2027) accounted for in this analysis. Results are shown in Table 7-07. An
average of this range is also presented. Note that this table shows the costs and
savings spread across all equipment within each engine class and not only those
equipment whose engines will incorporate technology changes.
Table 7-07
AVERAGE COST PER EQUIPMENT PER ENGINE CLASS
BASED ON UNIFORM ANNUALIZED COST
(1998$)
I
II
2010
$19.59
$12.61
2027
$19.68
$12.67
Average
$19.63
$12.64
*Class I calculated to 2007, Class II calculated to 2001
7.1.2.1 Fuel Savings The resultant fuel savings per engine per class
is calculated in the same manner as the cost per equipment. The uniform
annualized fuel savings is divided by the production in the years 2010 and 2027
to yield a range of costs for this analysis. The resultant cost per engine is then
calculated by subtracting the fuel savings per engine from the total cost per
equipment. Both results are listed in Table 7-08 below.
7-8
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Chapter 7: Cost Effectiveness
Table 7-08
FUEL SAVINGS AND
RESULTANT COST PER EQUIPMENT
Based on Uniform Annualized Analysis
(1998$)
Class
I
II
Average Cost Per
Equipment
$19.63
$12.64
Average Savings
Per Equipment
$14.22
$55.72
Average
Resultant Cost
Per Equipment
$5.41
($43.08)
NOTE: This table shows the costs and savings spread across all equipment
within each engine class and not only those equipment whose engines will
incorporate technology changes.
For Class I and II engines, EPA assumes that there will be fuel savings as
SV engines are phased-out and replaced with more fuel efficient OHV engines.
The high savings per equipment in Class II are influenced by the fact that the
engines in this class are utilized for longer hours compared to the equipment in
Class I.
The overall increase in price per equipment per engine in Class I is not
insignificant compared to the selling price of the equipment in which small SI
engines are used. For Class I engines, the major selling equipment type is the
walk behind lawnmower. Some lawnmowers sell for as little as $150. The
increased cost estimate of $19.63 is 13% of this price. For Class II, the overall
increase in price per equipment is less significant for Class II equipment are
much higher in price and the common equipment types include garden tractors
and lawn tractors for both consumer and commercial use. These equipment sell
for approximately $1,000-$5,000 to the residential and professional respectively.
The increased cost estimate of $12.64 is 1% of the residential use price.
7-9
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Chapter 7: Cost Effectiveness
7.2 Cost Effectiveness
The following section describes the cost effectiveness of the final HC+NOx
standards for Class I and II small SI engines. These cost effectiveness numbers
are calculated by taking the net present value of the total costs per year
(including amortized capital and variable costs) over the 27 year time line,
discounted by 7%, and dividing it by the net present value of the HC+NOx
emission benefits discounted by 7%. Table 7-09 presents the resulting cost
effectiveness results.
Table 7-09
Cost Effectiveness of Phase 2 Rulemaking
(1998$)
Without Fuel Savings
With Fuel Savings
Cost Effectiveness ($/ton HC+NOx)
$852
($507)
In an effort to evaluate the cost-effectiveness of the new standards, EPA
has summarized the cost effectiveness results for several other recent EPA
mobile source rulemakings. Table 7-10 summarizes the cost effectiveness results
from the Small SI Engine Phase 1 rulemaking, the SI Marine OB/PWC Engine
rulemaking(2) and the recently final standards for nonroad compression ignition
(CI) engines (3).
7-10
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Chapter 7: Cost Effectiveness
Table 7-10
Cost Effectiveness of Other Like Rulemakings
With Fuel Savings
Rulemaking
Small SI Engine Phase 1
Marine
Nonroad CI Standards
Cost
Effectiveness
$217
$1000
$410-$650
Pollutants
HC+NOx
HC
HC+NOx
7.3 20-Year Analysis
7.3.1. Costs
Table 7-11 contains the year by year fleet wide costs and emission benefits
associated with the final small SI engine standards of the 20 year period from
2001-2020. Fuel savings are not included for they significantly dilute the costs to
the manufacturers. (The numbers presented in Table 7-11 are not discounted).
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Chapter 7: Cost Effectiveness
Table 7-11
Costs and Emission Benefits of the Final Phase 2 Nonhandheld
Small SI Engine Standards
(Fuel Savings Not Included)
(1998$)
Calendar Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Fleetwide Costs
$493,873
$13,747,162
$15,253,204
$35,909,481
$56,130,057
$57,885,875
$244,950,395
$244,645,797
$239,293,552
$227,653,144
$227,594,254
$176,199,997
$175,095,165
$175,302,969
$173,954,349
$171,804,120
$161,965,166
$161,919,588
$162,122,557
$161,840,135
Fleetwide Reductions
(short tons)
HC+NOx
17649
37,831
60,706
82,982
106,064
125,505
152,381
194,616
231,642
257,278
276,487
292,139
304,305
313,190
320,943
328,948
335,434
341,544
347,424
353,225
Table 7-12 contains the discounted year by year fleet wide costs and
emission benefits associated with the final small SI engine standards for the 20
year period from 2001 to 2020. The year by year results were discounted to 2001
and a discount rate of seven percent was assumed for the analysis.
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Chapter 7: Cost Effectiveness
Table 7-12
Discounted Costs and Emission Benefits of the Final Phase 2 Nonhandheld
Small SI Engine Standards
(Fuel Savings Not Included)
(1998$)
Calendar Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Fleetwide Costs
$493,873
$12,847,815
$13,322,739
$29,312,833
$42,821,352
$41,271,829
$163,220,791
$152,353,107
$139,271,026
$123,828,227
$115,697,378
$83,711,349
$77,744,347
$72,744,500
$67,462,496
$62,269,719
$54,863,205
$51,259,595
$47,966,215
$44.750.146
Fleetwide Reductions
(short tons)
HC+NOx
17,649
35,356
53,023
67,738
80,916
89,483
101,538
121,197
134,818
139,942
140,552
138,793
135,115
129,963
124,467
119,226
113,623
108,124
102,790
97.670
Summing the discounted annual costs and discounted emission
reductions over the twenty year period yields a 20-year fleet wide cost of $1.4
billion and 20-year emission reductions of 2.0 million tons of HC+NOx. The
resulting 20 year annualized fleet wide costs and emission reductions are $132
million per year and 194,000 tons per year of HC+NOx. The spreadsheets
prepared for this analysis are contained in Appendix E. The reader is directed to
the spreadsheets for a complete version of the analysis.
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Chapter 7: Cost Effectiveness
7.3.2. Fuel Savings
Table 7-13 contains the year by year fleet wide gallon and monetary fuel
savings associated with the final small SI engine standards of the 20 year period
from 2001-2020. (The numbers presented in Table 7-11 are not discounted).
Table 7-13
Fuel Savings of the Final Phase 2 Nonhandheld
Small SI Engine Standards
(1998$)
Calendar Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Fleetwide Savings
($26,802,859)
($52,730,450)
($80,308,880)
($107,335,002)
($135,128,973)
($156,853,874)
($181,605,469)
($213,358,273)
($237,225,474)
($253,850,183)
($266,821,935)
($277,249,091)
($285,760,487)
($292,701,784)
($299,061,284)
($306,036,749)
($311,788,945)
($317,342,216)
($322,774,260)
($328,154,584)
Fleetwide Savings
(gallons)
(33,756,749)
(66,411,146)
(101,144,685)
(135,182,623)
(170,187,624)
(197,548,959)
(217,267,808)
(232,509,159)
(244,793,317)
(254,774,619)
(263,377,096)
(270,489,628)
(276,926,307)
(282,897,875)
(288,525,768)
(295,042,617)
(300,448,566)
(305,772,281)
(311,040,878)
(316,266,442)
Table 7-14 contains the discounted year by year fleet wide gallon and
related monetary fuel savings associated with the final small SI engine standards
for the 20 year period from 2001 to 2020. The year by year results were
discounted to 2001 and a discount rate of seven percent was assumed for the
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Chapter 7: Cost Effectiveness
analysis.
Table 7-14
Discounted Fuel Savings of the Final Phase 2 Nonhandheld
Small SI Engine Standards
(1998$)
Calendar Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Fleetwide Savings
($26,802,859)
($49,280,794)
($70,144,886)
($87,617,335)
($103,089,247)
($111,834,644)
($121,011,392)
($132,868,809)
($138,067,385)
($138,077,680)
($135,638,742)
($131,719,046)
($126,881,074)
($121,460,834)
($115,981,122)
($110,921,802)
($105,613,703)
($100,462,419)
($95,497,257)
($90.737.477)
Fleetwide Savings
(gallons)
(33,756,749)
(62,066,491)
(88,343,685)
(110,349,288)
(129,835,323)
(140,849,678)
(144,774,714)
(144,795,019)
(142,471,939)
(138,580,512)
(133,887,560)
(128,507,674)
(122,958,592)
(117,392,560)
(111,895,267)
(106,937,022)
(101,772,324)
(96,799,674)
(92,025,772)
(87.450.307)
Summing the discounted gallon and related monetary fuel savings over
the twenty year period yields a 20-year fleet wide savings of $2.1 billion and 20-
year fuel savings of 2.2 billion gallons. The resulting 20 year annualized fleet
wide costs and emission reductions are $200 million per year and 2.1 million
gallons per year. The spreadsheets prepared for this analysis are contained in
Appendix E. The reader is directed to the spreadsheets for a complete version of
the analysis.
7-15
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Chapter 7: Cost Effectiveness
Chapter 7 References
1. ICF and Engine, Fuel and Emissions Engineering, Incorporated; "Cost
Study For Phase Two Small Engine Emission Regulations", Draft Final
Report, October 25, 1996, EPA Air Docket A-93-29, Docket Item #II-A-04.
2. "Air Pollution Control; Gasoline Spark-Ignition Marine engines; New
Nonroad Compression-Ignition and Spark-Ignition Engines, Exemptions;
Rule", US EPA, Federal Register, vol 61, No. 194, Friday October 4, 1996,
40 CFR parts 89, 90 and 91, pg 52100
3. "Control of Emissions of Air Pollution from Nonroad Diesel Engines;
Proposed Rule", US EPA, Federal Register, vol. 62, No 85, Wednesday,
September 24, 1997, page 50152.
4. "Principles of Engineering Economics, Applying Financial Concepts for
Effective Decision-Making", SAE Seminar Materials I.D.#95014, Kevin M.
Zielinski
7-16
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Chapter 8: Assessment of Impact on Small Entities
Chapter 8: Assessment of Impact on Small Entities
8.1 Introduction and Methodology
As part of the Notice of Proposed Rulemaking for Phase 2 emission
standards for small spark-ignition (SI) engines, EPA prepared a Draft Regulatory
Impact Analysis (RIA). The Draft RIA included an analysis of the types of
entities, including small entities, that would be subject to the rule, a deter-
mination of the potential degree of impact on the small entities, and a
determination as to whether a Regulatory Flexibility Analysis should be
conducted, based on the significance of the impact and the number of small
entities impacted. The Draft RIA focused primarily on the impact of the
proposed rule on the manufacturers of nonhandheld Class II side-valve (SV) and
Class III, IV, and V handheld engines and equipment, since the most stringent
standards were proposed for these engine classes. Manufacturers producing only
Class I engines or Class II overhead-valve (OHV) engines/equipment were
excluded from the analysis, since they were expected to only need relatively
minor internal modifications for compliance with the proposed standards; thus
impacts on them were expected to be minimal.
However, as noted in Chapter 3, in response to comments on the proposal
EPA has decided to increase the stringency of the emission standards for Class I
engines, compared to the standard upon which the small entity analysis in the
proposal was based. This increase in stringency was adopted in response to com-
8-1
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Chapter 8: Assessment of Impact on Small Entities
ments received which substantiated the technical and financial ability of the
Class I manufacturers to meet such standards if given enough lead time under
the time frame in which the Phase 2 rule will be implemented. These more
stringent standards for Class I engines will also result in harmonized
requirements with the similar California regulations for these engines.
EPA has also received comments containing information regarding
advances in 2-stroke emission control technology that may ultimately enable
handheld engines-Classes III, IV, and Vto meet emission standards that are
also substantially more stringent than were proposed. Because this technology is
new and manufacturers and other interested parties have not had an opportunity
to comment on its application, the Agency has decided to issue a Supplementary
Notice of Proposed Rulemaking for Class III, IV, and V engines. The emission
standards for handheld engines and equipment will thus be considered in a
separate rulemaking, and will not be included in this analysis.
Since the Draft RIA adequately addresses the impact on the Class II
engine and equipment manufacturers, and since handheld engines are excluded
from this rulemaking, this analysis will focus primarily on Class I engine and
equipment manufacturers. These more stringent standards for Class I engines
will require more effort on the part of the Class I engine manufacturers for
compliance, and will also impact the equipment manufacturers using these
engines.
8.1.1 RFA/SBREFA Requirements
Section 603 of the Regulatory Flexibility Act (RFA), 5 U.S.C. 601 etseq.,
requires EPA to assess the economic impact of proposed rules on small entities.
Sections 603 and 604 of the RFA generally require preparation of a Regulatory
Flexibility Analysis for any rule subject to notice and comment rulemaking
requirements, unless the agency certifies (pursuant to section 605 (b)), that the
rule "will not, if promulgated, have a significant economic impact on a substan-
8-2
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Chapter 8: Assessment of Impact on Small Entities
tial number of small entities." In 1996, the Regulatory Flexibility Act was
amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA),
P.L. 104-121, to strengthen the analytical and procedural requirements of the
RFA and to ensure that the small entities are adequately considered during rule
development. Small entities include small businesses, small not-for-profit
organizations, and small governmental jurisdictions. Small not-for-profit
organizations and small governmental jurisdictions are not expected to be
impacted by this rulemaking, thus both the Draft RIA and this analysis place
their primary focus on small businesses, specifically on the impact of this rule on
small engine and equipment manufacturers.
8.1.2 Methodology
The Draft RIA relied on information from a cost study and a small
business impact study, performed by ICF Incorporated under a contract with
EPA, to determine the economic impact of the proposed regulations on small
entities. (Ref. 1) (Ref. 2) The primary data sources for the small business impact
analysis included the EPA Phase 1 Certification Database, the Power Systems
Research (PSR) Database, and the Dun & Bradstreet (D&B) Market Identifiers
Online Database.
The cost study also relied on the PSR database for engine and sales data,
and incorporated the results of an engineering analysis that was performed to
analyze the costs of compliance with the Phase 2 emission standards. The
nonhandheld portion of this analysis was focused primarily on Class I engines,
but was also adapted to Class II engines. EPA will also rely on this latter study
and on the PSR and D&B databases for data on Class I engine and equipment
manufacturers.
To evaluate the impacts of the final rule on small entities, EPA's Interim
Guidance for Implementing SBREFA suggests a screening analysis using an
economic measure known as a "sales test", which measures compliance costs as a
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Chapter 8: Assessment of Impact on Small Entities
function of sales revenue. After determining the costs of compliance to the
manufacturers, these costs are annualized and expressed as a percentage of
annual sales revenue. Then, based on the percentage of small entities that are
affected by costs of compliance amounting to varying percentages of sales, the
SBREFA guidelines suggest some criteria for evaluating whether the potential
impacts represent a "significant economic impact on a substantial number of
small entities". Although the guidelines suggest criteria for making the
determination, each rule is unique so the criteria are just a starting point for an
evaluation that must be made on a rule-by-rule basis
The RFA specifies that the Small Business Administration (SBA)
definitions for small business should be used for the initial determination of a
small entity, however, EPA may use an alternative definition of small business
where appropriate, if it consults with SBA and follows certain procedures. The
SBA defines small business by category of business using Standard Industrial
Classification (SIC) codes, and in the case of manufacturing, generally defines
small business as a business having 500 employees or less. However, for engine
manufacturers (SIC code 3519) the cutoff is 1,000 employees and for construction
equipment (SIC code 3531), it is 750 employees. Table 8-1 shows the range of pri-
mary SIC codes listed for the engine and equipment manufacturers identified,
and the corresponding SBA small business cutoff, based on number of
employees.
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Chapter 8: Assessment of Impact on Small Entities
Table 8-1
Small Business Engine and Equipment Manufacturer Definitions
SIC Code
3519
3523
3524
3531
3561
3621
Applicable
Engine
Equipment
Equipment
Equipment
Equipment
Equipment
Title
Internal Combustion
Engines
Farm Machinery &
Equipment
Lawn & Garden Equipment
Construction Machinery
Pumps and Pumping
Equipment
Motors and Generators
Employees
1000
500
500
750
500
500
8.2 Impact on Engine Manufacturers
8.2.1 Identification of Manufacturers
The PSR database shows that there are 13 primary manufacturers of Class
I engines. The majority of these (9) are large businesses; the other four are small
entities as defined by the SB A. All but two of the 13 also manufacture Class II
engines. Both of the two Class I-only manufacturers are large-volume concerns,
one of which also manufactures the associated equipment in which these engines
are used. All four of the small business engine manufacturers were included in
the ICE study.
8.2.2 Expected Technologies/Costs
The cost of compliance for nonhandheld engines depends on the
technology employed by engine manufacturer to meet the emission standards.
EPA has become aware of potential advances in engine technology which may
allow Class I and II SV engines to achieve the Phase II standards with minimal
additional cost. However, because this technology is still undergoing
development, it will not be considered in this analysis. The Agency will
8-5
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Chapter 8: Assessment of Impact on Small Entities
conservatively assume that the standards will require conversion to OHV
technology for attainment. Based on the cost study and other information made
available to EPA, this could increase the average cost per engine by $31.67 for
Class I engines and $18.42 for Class II engines. As noted in Chapter 3, a
substantial number of manufacturers of Class II SV engines have already
converted all or portions of their product lines to OHV technology for other
reasons (desire of customers to have premium engines, increased efficiency of
OHV engines, etc.). Some Class I manufacturers have also begun this transition,
although the numbers of engines are less than for the Class II firms.
8.2.3 Expected Impact on Small Business Entities
To estimate impacts on engine manufacturers, specific compliance costs
were developed for each engine manufacturer based on the type of engine
modification needed and the level of engine production. The individualized
annualized compliance costs were then estimated for each small ultimate parent
company identified. Table 8-2 summarizes these costs. A more detailed
technology analysis is available Chapter 3 and in the ICF cost report.
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Chapter 8: Assessment of Impact on Small Entities
Table 8-2
Engine Modifications and Associated Costs
Engine
Class
I
II
Engine Modification
Conversion to OHV technology
Improve OHV - modified
combustion and intake
Improve OHV - piston/rings
Conversion to OHV technology
Improve OHV - modified
combustion and intake
Improve OHV - piston/rings
Fixed Cost
(Annualized)
$2,613,103
$84,850
$74,500
$2,873,322
$84,850
$74,500
Variable
Cost Per
Engine
$13.68
$3.05
$4.60
$22.00
$3.05
$4.60
Average
Master Die
Retirement
Costs
Not
determined
$59,602
$10,518
Not
determined
$59,602
$10,518
Source: U.S. Environmental Protection Agency, Cost Study for Phase Two Small Engine Emission Regulations,
prepared by ICF/Engine Fuel Emissions, October 1996
8.2.4 Sales Test for Engine Manufacturers
A compliance cost to sales ratio was calculated for each small ultimate
parent company for which D&B data were available. The Draft RIA concluded
that not more than one of the Class II small engine makers would be impacted
more than 1 percent of sales by the annualized costs of compliance. Of the four
small-volume Class I manufacturers, D&B data are available for two of the four.
One of these is also an equipment manufacturer which, if it has not already
converted to OHV technology, at least currently manufactures significant
numbers of OHV engines for use in its present product line. The other also
produces Class II engines which would be impacted considerably less than one
percent by the Class II standards. For these two manufacturers, the need to
convert 2 Class I families to OHV designs should not significantly increase the
economic impact of the regulations, certainly impacting less than amount equal
to 1 percent of sales income. Data on the other two small volume Class I engine
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Chapter 8: Assessment of Impact on Small Entities
manufacturers were insufficient to determine the impact of these rules. Thus, in
the worst case, the more stringent requirements for Class I engines could add at
most 2 additional small business entities to this total. EPA believes that even if
the two remaining engine manufacturers where impacted by more than one
percent, this does not constitute a "significant number" of small entities .
8.3 Impact on Equipment Manufacturers
8.3.1 Number of Small Manufacturers
Data for this analysis were taken from the PSR Database (for models and
sales), and from the D&B database for number of employees and for dollar value
of sales. The PSR data show that there are 220 Class I manufacturers with 1,036
total equipment lines. They produce approximately 7 million units per year. D&B
data are available for 150 manufacturers with a total production of about 3.8
million units. In addition, there were 70 manufacturers for which no D&B data
are available, with annual production of about 3.1 million units.
Of the firms for which financial data are available, 27 are large
manufacturers. These manufacturers produce approximately 3.4 million units
per year, or 89 percent of the total production for which D&B data are available.
The remaining 123 manufacturers are small businesses, producing approximately
460,000 units per year in 437 equipment lines.
No D&B data are available for 70 of the manufacturers. However PSR
production figures indicate that two of these firms account for 90 percent of the
3.1 million total production involved, and must be assumed to be large.
Although two other manufacturers account for 204,000 of the remaining 319,000
production units, EPA cannot assume with any certainty that these are large
firms. Therefore, all of the remaining 68 manufacturers are assumed to be small
business entities. In the absence of better information, EPA will assume that
these entities are affected in the same proportion as the small business entities for
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Chapter 8: Assessment of Impact on Small Entities
which financial data are available.
Of the 123 small manufacturers with financial sales data, some 66 of these
companies only manufacture Class I equipment, 40 produce both Class I and
Class II equipment, and nine also make handheld equipment. The PSR data show
that 10 of the 123 are California firms, which will presumably continue to market
in California, and will therefore be required to meet the identical California
standards well in advance of the Federal requirement. The California
manufacturers produce roughly 47,000 units per year. They will not be included
in this analysis, since they will already be meeting equivalent California
standards when the Federal requirements take effect.
8.3.2 Impact on Equipment Manufacturers
Conversion to OHV technology may require equipment modifications to
accommodate new engines. The ICF cost study provided estimates for Class II
manufacturers which should be similar to the ones required for Class I
equipment. Input from equipment manufacturers and other sources indicate that
the longer OHV engines may necessitate some changes in cowling, hoods, or
other components due to interference with some portion of the engine.
Modifying existing equipment lines could require significant investment for
tooling changes. Such costs are expected to vary, according to the type of
equipment in question. Some pieces of equipment, due to their open
configuration, could require little or no capital investment to make the
changeover to OHV technology. Some applications already use OHV engines, or
offer them as an option. The ICF cost study and the small business analysis took
these differences into consideration in providing general estimates for the costs
of modifying various types of equipment to accommodate OHV engines. EPA
has subsequently modified some of these estimates to reflect information
received from manufacturers and other sources. Table 8-3 summarizes the
current estimates for these costs.
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Chapter 8: Assessment of Impact on Small Entities
Table 8-3
Cost Estimates for Nonhandheld Equipment Manufacturers
Application
Lawn Mowers
Commercial Turf
12 hp
>12 and <16 hp
> 16 to 25 hp
Leaf Blower/Vacuum
Snow Blowers/Tillers
Generator Sets
Pumps
Roller, Concrete Saw
Other
Fixed Costs
(per line)
$70,000
$1,000
$600,000
$100,000
$50,000
$50,000
$100,000
$50,000
$50,000
$50,000
Variable Costs
(per unit)
$0
$0
$0
$12
$0
$0
$0
$0
$0
$0
8.3.3 Possibility of Cost Passthrough
Small equipment manufacturers have expressed concern that the cost
increases resulting from implementing the final standards could affect their sales.
Two types of cost increases are involved: (1) the increased cost of engines to the
equipment manufacturers and (2) costs involved in modifying equipment lines to
utilize the new engines. EPA has concurred with the assumption found in both
the ICF cost study and the small business analysis that the costs for new engines
would be passed along to the consumer, since this would be an industry-wide
impact. Costs for modifying equipment lines, on the other hand, could vary
considerably from manufacturer to manufacturer according to variations in types
of equipment made and existing equipment configurations. Such cost increases
could potentially affect product demand.
Cost increases for equipment could potentially decrease the demand for
new units in a number of ways: Customers might switch to another
manufacturer, although ultimately they would likely find little advantage in
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Chapter 8: Assessment of Impact on Small Entities
doing so, due to the industry-wide scope of the regulations. Customers might
also try to extend service life of older existing equipment. However, this strategy
soon reaches the point of diminishing returns due to decreased reliability and
increased maintenance costs, particularly for commercial applications with their
higher usage. Alternatively, consumers might switch to electric equipment.
However, this choice is limited by relatively low power and the inconvenience of
dealing with power cords or by the higher cost of cordless equipment. This
choice would likely be limited to less demanding applications, and again would
be unlikely to apply to commercial operators. Finally, increased costs to engine
manufacturers could lead them to drop low-production engine lines, which
could affect some small-volume equipment lines that depend on others for their
engines. The possible lack of availability of suitable engines could then force
some small manufacturers with limited product lines out of business. However,
again, EPA is providing flexibilities that should address these concerns and allow
these relatively few small entities to continue production of their equipment.
EPA does not believe that any price increases that may result from this
final rule will necessarily diminish the demand for these manufacturers'
products. The Agency believes that the need for the products will likely remain
even in the event of the cost increases contemplated by this rule-lawns will need
to be mowed, water pumped, construction will need to go on, etc. Then too, the
across-the-board nature of the increases for SI engines will ultimately impact all
equipment manufacturers equally so that no manufacturer should gain a
substantial competitive advantage. Individual small business equipment
manufacturers have also informed EPA of the likelihood they would pass most,
if not all, additional costs on to consumers. Many of these small business
equipment manufacturers also appear to cater to niche markets, which provides
a better opportunity for partial or even full cost passthrough. Finally, the ample
lead time being provided allows transition costs to be spread over a longer
period of time and for the necessary changes to be incorporated when other
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Chapter 8: Assessment of Impact on Small Entities
engine or equipment changes are made.
8.3.4 Other Considerations
Some existing OHV engines are manufactured with the same bolt pattern
as the SV engines they replace-no retooling would be required, provided the
equipment configuration presents no other clearance problems. Some
manufacturers in fact offer a choice of SV or OHV engines on otherwise identical
models. Then too, many product lines, particularly toward the high end of the
price scale, seem to be open configurations which will require minimal changes
to accommodate OHV engines. This could be due at least in part to purchase by
commercial operators who are less concerned with styling considerations and
more concerned with performance and reliability. The same could also be said
for many generators, pumps and pressure washers. The timing of the California
standards could also affect costs to equipment manufacturers. The California
standards become effective the 2000 model year (MY). Many manufacturers will
use the technology developed for their California engines to meet the Federal
standards. Such usage would decrease or eliminate costs for meeting the Federal
standards, at least for the 50 state equipment lines. Some manufacturers do not
market in California, however, or maintain only a limited market presence there,
and would thus not benefit from the development of California technology. EPA
has no way of knowing the exact percentages involved, and so will
conservatively assume that equipment models not produced in California will
not be marketed there.
8.4 Estimation of Impacts on Small-Volume Equipment Manufacturers:
8.4.1 Base Case-No Flexibilities
Cost estimates were calculated per equipment model for each
manufacturer. Each equipment model is assumed to correspond to an application
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Chapter 8: Assessment of Impact on Small Entities
with a specific horsepower rating. The fixed costs for each model were calculated
and then annualized, using a nine percent annual cost of capital over a ten year
period. The variable costs per unit were multiplied by the number of units
produced annually, yielding total annual variable costs. These costs were then
added to the annualized fixed costs to calculate the total annualized cost per
model. An annualized cost of compliance for each manufacturer was calculated
by summing the annualized costs per model for the number of equipment
models produced by that manufacturer. The results were then compared to total
value of sales for the manufacturer to determine the costs as a percentage of
sales. The base case presented here depicts a worst-case scenario, in which none
of the small-business equipment manufacturers take advantage of the flexibilities
provided for small volume manufacturers or small volume equipment lines
under the regulations.
Without the flexibilities, EPA estimates that the 113 small businesses for
which D&B data are available would be impacted as shown in Table 8-5.
Table 8-5
Base Case
Percent of Sales
Affected
<1 percent:
1-2 percent:
2-3 percent:
> 3 percent:
Companies With
D&B Data
66
13
13
21
Companies With
No D&B Data
39
8
8
13
Total Businesses
Affected
105
21
21
34
Percentage of
Total
(58 percent)
(1 2 percent)
(1 2 percent)
(18 percent)
The 68 small entities for which D&B information is not available must also
be factored into the analysis. Applying equivalent percentages, Table 8-5 shows
that 39 of these would be affected by less than one percent, 8 entities by one to
two percent, 8 by two to three percent, and 13 by more than three percent.
Adding these to the entities for which D&B data are available yields a total of 76
small entities that would be affected by more than one percent of sales by this
rule. Although the number is noteworthy, this figure will be greatly reduced if
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Chapter 8: Assessment of Impact on Small Entities
equipment manufacturers take advantage of the regulatory small volume
flexibilities described below.
8.4.2. Flexibilities Case
As noted above, EPA is finalizing a number of small-volume flexibilities
which ease the burden of regulatory compliance on the smallest entities. There
are two major small-volume flexibilities operating to benefit small equipment
manufacturers:
(1) Small volume equipment manufacturers are defined as those manufacturers
which produce less than 5,000 units per year for nonhandheld applications. Small
volume equipment manufacturers will be allowed to use Phase 1 engines for
three years beyond last date of standards phase in if they can demonstrate to
EPA that no suitable Phase 2 engine is available. Engine manufacturers are
allowed to continue production of the necessary engines to satisfy this demand.
(2) Small volume equipment models are defined as model lines consisting of
less than 500 units for nonhandheld equipment model lines. These small volume
models can use Phase 1 engines throughout the entire Phase 2 period if no
suitable Phase 2 engine is available. Again, engine manufacturers will be allowed
to continue production of the engines necessary to satisfy the demand.
These flexibilities would greatly decrease the impact of the Phase 2
standards as shown in Table 8-6.
Table 8-6
Flexibilities Case
Percent of
Sales Affected
<1 percent:
1-2 percent:
Companies With
D&B Data
113
0
Companies With
No D&B Data
66
2
Total Businesses
Affected
179
2
Percentage of
Total
(99+ percent)
( < 1 percent)
All but one of the companies for which D&B data are available would be
impacted by less than one percent. The affected company makes both handheld
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Chapter 8: Assessment of Impact on Small Entities
and nonhandheld equipment, and if only the nonhandheld portion of its
production is considered, it too is affected by less than one percent of sales.
Applying a comparable percentage to the manufacturers with no D&B data
would also result in none of the firms being affected by more than one percent of
sales. However, as a worst-case analysis, an alternative way of looking at the
effect on the manufacturers with no D&B data would be to see how many of their
product lines would benefit from the flexibilities. Some 56 of the 68
manufacturers with no D&B data, but who are likely to be small business
entities, would benefit from the small volume manufacturer and small volume
equipment model flexibilities for all of their product lines, and an additional six
manufacturers would gain partial benefit for about 70 percent of their total
product lines. This would leave a total of not more than six manufacturers which
could likely be impacted by more than one percent of sales. From sales data and
other information, EPA believes that not more than one or two of these would
actually be impacted by more than one percent of sales. In any event, the total
number impacted would not amount to a "substantial number of small entities."
8.5 Conclusions
Analysis of the current data shows that, in the worst case, the majority of
small Class I equipment manufacturing firms (58 percent) could be impacted by
less than 1 percent of sales, given the flexibilities provided. Some 24 percent
could be impacted between 1 and 3 percent of sales, and only 18 percent could be
impacted by more than 3 percent. If the small manufacturers take advantage of
the flexibilities offered, only a handful of firms would likely be affected by more
than 1 percent of sales and none would be impacted by more than three percent
of sales. Moreover, there are a number of mitigating factors which enter into the
cost equation. For example, manufacturers with significant California sales
would only incur costs on the portions of their product lines not originally sold
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Chapter 8: Assessment of Impact on Small Entities
in California. Also, many small manufacturers appear to be in niche markets, e.g,
catering to commercial lawn operators who are not as sensitive to price as
residential consumers. Many small manufacturers also produce high-end
consumer products which are also less sensitive to price increases than mass-
market products, and could thus pass much or all of any necessary cost increases
on to the ultimate customers. Some of these products also appear to be less costly
to convert to OHV technology because they are more open configurations , and
not as highly styled as mass-market products. Many of these manufacturers also
currently offer OHV engines as options or on major product lines for other
reasons.
The ABT provisions also provide opportunity to reduce the impact on
small entities. Under the ABT provisions, an engine manufacturer may be able to
continue producing SV engine designs and not have to undergo the cost of
converting to OHV technology if it can average the emission performance of the
SV design with emission credits either earned from sale of low emitting OHV
designs or purchase from other manufacturers. While it is presumed that a
manufacturer would do so if this would lower its cost of compliance (indeed we
expect such averaging will occur within a major manufacturer's product line), it
is unknown to what extent small entities will be able to benefit from these ABT
provisions. Therefore, no benefit is assumed in this analysis although EPA fully
expects at least some niche market engine families whose sales are targeted at
small equipment manufacturers will remain SV designs, thus causing no adverse
impact on the equipment manufacturer.
Finally, the inclusion of additional flexibilities, which will benefit both
small engine and equipment businesses, will further reduce impacts. For
example, EPA is finalizing a hardship provision, which will provide additional
relief to companies undergoing severe financial distress. Although this provision
was not considered in determining the number of small entities that would be
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Chapter 8: Assessment of Impact on Small Entities
affected for compliance with SBREFA guidelines, it would serve as a safety valve
to provide relief to a company in a state of poor financial health and facing
further cost impacts of compliance with the final rule.
8.6 Outreach Activities
In addition to the comments received on the NPRM, EPA has made other
outreach efforts. A number of small businesses were contacted to determine the
impact of the more stringent standards for Class I engines. In addition, the
Agency has been in contact with other small entities at their own request or at
the request of trade associations. Numerous meetings have been held with
industry and/or trade association representatives. Many of those who have
provided input believe that sufficient lead time can alleviate some of the
problems associated with a transition to OHV technology. Additional lead time
allows for a more orderly transition to OHV engines when other engine or
equipment changes are made. Many firms also expressed the belief that
harmonization with California regulations will greatly ease the transition. EPA
believes that this is a valid point, and has in fact increased the stringency of the
Class I standards in part to facilitate harmonization with the California
requirements.
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Chapter 8: Assessment of Impact on Small Entities
Chapter 8: References
1. "Small Business Impact Analysis of New Emission Standards for Small Spark-
Ignition Nonroad Engines and Equipment," prepared for EPA by ICF
Incorporated under EPA Contract 68-C.-0010, August 1998, available in Docket
A-96-55, Docket Item II-A-01.
2. "Cost Study for Small Engine Emission Regulations," prepared for EPA by ICF
Incorporated under EPA Contract 68-C.-0010, October, 1996, Docket A-96-55,
Docket Item II-A-04.
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Chapter 9: Useful Life and Flexibility Supporting Data
Chapters: Useful Life and Flexibility Supporting Data
9.1 Information on Useful Life
This Chapter contains information used by the Agency in the
development of the final useful life categories for Phase 2 nonhandheld small
engines.
During the development of the Phase 2 program, and during the
development of the Phase 1 regulation, EPA was aware that the nonroad SI
category of engines and equipment was comprised of a wide variety of
equipment with a wide range of usage patterns. Nonhandheld engines are
designed for many different types of applications, with each application having
specific design criteria, resulting in different expected lifetimes. The most
obvious example of these differences is the distinction between commercial (or
professional) operators and residential (or home) operators. In general,
commercial operators expect to accumulate high number of hours on equipment
on an annual basis, such as commercial lawn-care companies or rental
companies, while a residential operator expects to accumulate a relatively low
number of hours on an annual basis, such as a residential chain saw owner.
Several organizations have investigated the issues related to average life and
annual use of equipment powered by small SI engines, including industry
organizations, CARB, and the EPA. A brief summary of several of these reports
is presented in the remainder of this Chapter.
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Chapter 9: Useful Life and Flexibility Supporting Data
9.1.1 Nonhandheld Useful Life Estimates from CARB
In 1990, the California Air Resources Board (CARB) contracted for a report
from Booz, Allen and Hamilton which included estimates of usage rates and life
spans for several categories of nonroad equipment powered by small
engines. (Ref. 1) A summary of the information contained in the report is
presented in Table 9-02.
Table 9-02
Summary of Information on Useful Life
Available from Booz, Allen & Hamilton Report, Nov. 1990
(Res. = residential user, Com. = commercial user)
Product
Category
Walk Behind
Mowers
Riding Mower
(Frt. Eng.)
Riding Mower
(Rear Eng.)
Garden Tractor
Tillers
Snowthrowers
General Utility
Shredders/
Grinders
Specialized
Turf Care
4-cyc.
blowers/
vacuums
4-cyc. edgers/
trimmers
%of
Total
Sales,
Home
Use
88%
95%
95%
95%
60%
90%
25%
60%
0%
60%
60%
% of Total
Sales,
Commercia
lUse
12%
5%
5%
5%
40%
10%
75%
40%
100%
40%
40%
Res.
Implied
Avg.
Lifespan
(years)
7.04
7.04
7.04
7.04
7.04
5.41
7.04
7.04
N/A
7.04
7.04
Com.
Implied
Avg.
Lifespan
(years)
2.68
3.78
3.78
3.78
5.41
5.41
2.85
5.41
3.78
2.68
2.68
Res.
Annual
Hrs Use
per Year
20
38
38
56
18
10
5
17
N/A
10
10
Com.
Annual
Hrs Use
per
Year
320
380
380
180
72
60
96
190
800
190
190
Res.
Implied
Avg.
Lifespan
(hours)
141
268
268
394
127
54
35
120
N/A
70
70
Com.
Implied
Avg.
Lifespan
(hours)
858
1,436
1,436
680
390
325
274
1,028
3,024
509
509
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Chapter 9: Useful Life and Flexibility Supporting Data
This report also indicates there is a large disparity in average life-span
between equipment used by residential and commercial applications.
Residential equipment implied average lifespan estimates range from 35 to 394
hours, and commercial equipment implied average lifespan estimates range from
274 to 3024 hours.
9.1.2 Nonhandheld Useful Life Estimates from OPEI
A 1992 report from the Outdoor Power Equipment Institute (OPEI) report
studied the issue of usage rates for two types of nonhandheld equipment, a
summary of the report was provided in a subsequent memo from OPEI to EPA.
(Ref. 2) The OPEI report included a nationwide phone survey of over 6,000
households. A summary of the information on usage rates for consumer owned
walk-behind and ride-on mowers is presented in Table 9-03.
Table 9-03
Summary of OPEI 1992 Report on Residential Phone Survey
Equipment Type
Consumer Walk-
behind Mower
Consumer Ride-
on Mower
B-50 value
(years)
5
6
Median
Annual Use
(hours)
20.0
34.5
Median Hours Accumulated at
B-50 value (hours)
100
207
The term B-50 is used to denote the number of years at which 50 percent of the
equipment from a particular model year are no longer in service, i.e., for
consumer walk-behind mowers, after 5 years one-half of the mowers are no
longer in-use.
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Chapter 9: Useful Life and Flexibility Supporting Data
9.1.3 Small Engine Equipment Usage Estimates used by EPA
The Agency has also developed estimates related to average annual use
and equipment survival, many of these estimates are based on the usage
information in the previously cited reports. These estimates are presented in
Appendix F to this RIA which include Agency estimates of: average annual sales
by equipment type, splits between residential and consumer equipment, average
annual use by equipment, B-50 (number of years after which 50 percent of the
equipment have failed). Figures 9-01 through 9-02 are a series of bar graphs
summarizing the Agency's information regarding engine Classes and hours of
70% n
60%
50%
40%
30%
20%
10%
0%
0-100 101-200 201-400 401-600 601-900 >900
Estimated Average Accumulated Hours at B-50 Life
Figure 9-01: Summary of EPA Class 1 Engines Useful Life Estimates
use.
9-4
-------
35% n
30%
25%
20%
8
'
15%
10%
0%
Chapter 9: Useful Life and Flexibility Supporting Data
101-300
301-600
601-20
>200C
Estimated Average Accumulated Hours at B-50 Life
Figure 9-02: Summary of EPA Class 2 Engines Useful Life Estimates
Figures 9-01 thru 9-02 make it clear that small engines can accumulate
vastly different hours of use over the life of the equipment. Manufacturers are
able to design and build engines for various design lives which fit the type of
equipment the engine is likely to be produced for.
9.1.4 Final Phase 2 Nonhandheld Useful Life Categories
EPA is adopting several useful life categories for nonhandheld engines.
The final useful life categories are presented in Table 9-04. Based on the data
presented in Sections 9.1.1 through 9.1.4 the Agency believes these useful lives
9-5
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Chapter 9: Useful Life and Flexibility Supporting Data
are appropriate for regulatory purposes.
Table 9-04: Final Regulatory Useful Life Values for Phase 2 NHH Small SI Engines
Engine Class
Category
Useful Life
(hours)
I
C
125
B
250
A
500
II
C
250
B
500
A
1000
The Agency believes multiple useful life categories are appropriate
considering the wide range of useful life values for small SI engines. At the same
time, the Agency would like to keep the number of useful life categories small to
avoid confusion among consumers. The Agency believes the three categories for
nonhandheld engines and andheld engines fulfils the goal of having a small
number of useful life categories, and at the same time, adequately covering the
useful lives experienced by engines in actual use.
9.2 Background for Choice of Small Volume and Small Family Cutoffs
The Preamble for this rulemaking discusses a number of flexibilities the
regulation provides for small volume engine and equipment manufacturers as
well as small volume engine families and equipment models, (see Table 9-04 at
the end of this section). This section describes the methodology utilized to
develop these estimates. The main sources for this analysis include the EPA
Phase 1 certification database (engine manufacturers) and Power Systems
Research 1996 OE LINK database (equipment manufacturers) along with the
results from EPA's work to analyze the impact on small businesses which can be
found in Chapter 8.
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Chapter 9: Useful Life and Flexibility Supporting Data
9.2.1. Small Volume Engine Manufacturers
The work performed to determine the impacts on small businesses, as
described in Chapter 8 of this RIA, utilized the SB A definition of 1000 employees
as a cutoff for small volume engine manufacturers. An overview of the
companies that fall under this definition, for which all information was available,
showed that the companies varied in income and production volumes. Several
companies were clearly small with low number of employees and annual
revenue. However, several other companies produced 75,000 to 700,000 engines
and had very high annual income. The high annual income and the high volume
of engine production of some companies raised doubt about the use of the SBA
definition in this rulemaking. EPA consulted the September 1998 Phase 1
certification database for its basis of a new definition of small volume engine
manufacturer.
EPA reviewed the September 1998 Phase 1 certification database for the
range of engine manufacturers and their estimated annual production in Classes
I and II. EPA observed that there is a relatively clear break between large and
small volumes among the engine manufactures. The database shows that
thirteen manufacturers have sales under 10k, four have sales between 10k and
50k, three have sales between 50k and a half million and five have sales over a
half million. Based on this, the production cutoff selected is listed in Table 9-05.
Table 9-05
Production Cutoffs for Small Volume Engine Manufacturer
# Engines
10,000
Application of these cutoffs to the September 1998 EPA Phase 1 database
show that the nonhandheld definition will include 52% of the companies and
0.15% of the engine production.
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Chapter 9: Useful Life and Flexibility Supporting Data
9.2.2 Small Volume Engine Family
Data utilized to determine small engine families for the nonhandheld
sections of this industry were from the EPA Phase I certification database. The
number of engine families and family estimated production were utilized.
A value of 5000 is set for nonhandheld engine families as requested by
EMA in comments to the NPRM. Refer to the Summary and Analysis document
to this rulemaking for a discussion of the comments and EPA's response on this
issue.
Table 9-06
Small Engine Family Definition
# Engines
5,000
The result is that approximately 57% of the engine families will be
considered small engine families. While this may seem like a large number of
families, when one compares the number of engines represented by these
families and the total number of engines, only 1.16% of the annual production of
small engines will be included in this definition.
9.2.3 Small Volume Equipment Manufacturer
The 1996 Power Systems Research EO LINK database and information
from various equipment manufacturer associations were utilized to determine
the cutoffs for small volume equipment manufacturers.
For nonhandheld equipment manufacturers, it is estimated that there will
be an impact on equipment manufacturers currently using Class I and II SV
engines. It is also estimated that there will be no equipment impact for engines
using Class I or II OHV engines. The nonhandheld equipment industry is made
of a large number of small companies and some larger well established
companies. The basis for the cutoff is that this is the general point at which
production per equipment manufacturer increases exponentially. As shown in
Table 9-07, the cutoff for small volume equipment manufacturer is selected at
9-8
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Chapter 9: Useful Life and Flexibility Supporting Data
5,000 units. Based on PSR, this would affect only 1.61% of the equipment
production and 82% of the equipment manufacturers. However, this impact is
very likely to be less than that calculated with the data in the PSR database based
on the results from the work done to analyze the impacts of this rulemaking on
small businesses using Class II engines (see Chapter 8 of the RIA). The results
showed that many of the small39 volume equipment manufacturers have already
converted their products to utilize OHV engines. This is mainly due to market
competition or engine manufacturers already beginning to phase out Class II SV
engines.
Table 9-07
Small Volume Equipment Manufacturer
# Units
5,000
9.2.4 Small Volume Equipment Model
The analysis to determine the cutoff for small volume equipment models,
see Table 9-08, was based on the need by some equipment manufacturers to be
able to use Phase 1 engines for niche market applications. In addition, the cost
of adapting low volume equipment with new engines may result in the
elimination of that product from the marketplace. In order to set a reasonable
cutoff for small volume equipment models, the sales estimate data in the PSR
1996 OE LINK database and the 1998 Phase 1 certification database were used.
Based on review of the Phase 1 engine certification database, it is clear that there
are some manufacturers with engine families under 500 in sales. A number of
these are companies utilize clean OHV engines, but that must also meet the CO
39 The definition of small in the study was determined by the Small Business
Administration for the corresponding SIC codes. The definition was based on
employment of the ultimate parent. For this industry it was set at 500 employees
or less.
9-9
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Chapter 9: Useful Life and Flexibility Supporting Data
standard for OSHA indoor air quality that these are affected companies by EPA's
Phase 2 rulemaking for small SI engines in that the enleanment of the engine
raises them above the HC+NOx limit. The use of ABT will aid most
manufacturers, however there are a few which cannot use ABT effectively due to
the limited number of engine classes.
Based on the PSR 1996 DELINK database, a cutoff of 500 units will result
in approximately 1.14% of the equipment being allowed to utilize the flexibility
of using a Phase 1 engine throughout Phase 2. The result may be less for the
database for this analysis does not consider whether the equipment
manufacturer or engine manufacturer has or will have already converted the line
to be in compliance with California ARE standards.
There are a number of factors that will influence whether this definition is
put to use by equipment manufacturers. These include 1) the distribution system
for engines and equipment is complex and all engine fmailies may meet the
standards in order to have a nationwide engine program, 2) the inability for
engine manufacturers to pick who gets a "lower price enigne" over others, 3)
market pressure for a Phase 2 certified engine may result in less use of this
flexibility, 4) some technologies require little changes to the engine and therefore
the equipment changes are minor.
Table 9-08
Small Volume Equipment Model
# Units
1
9-10
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Chapter 9: Useful Life and Flexibility Supporting Data
Table 9-04
SUMMARY OF RULEMAKING FLEXIBILITIES
The table below lists the flexibilities adopted in the final rule.
SECTOR
CUTOFF
FLEXIBILITY
Small Volume
Engine
Manufacturer/
Small Volume
Engine Family
NHH:
10,000/5,000
1. Allowed to be "Phase 1" engines until 2010
model year. Excluded from ABT until model
year 2010
2. Can opt out of PLT; SEA still applicable.
3. Can certify using assigned deterioration
factors.
Class II SV
Engine Family
1000 and less
24 g/kW-hr HC+NOx standard throughout
Phase 2
Small Volume
Equipment
Manufacturer
NHH:5,000
Can use a Phase 1 engine, and manufacturer can
supply this engine if no Phase 2 engine is
available for existing equipment, for up to three
years beyond last date of phase-in of standard.
These dates are:
Class I: Aug 1,2010
Class II: 2008 MY
Small Volume
Equipment
Model
NHH: 500
Can use Phase 1 engines throughout Phase 2 if
they demonstrate no Phase 2 compliant engine
is available for existing model (if the equipment
is "significantly modified" then this exemption
ends)
Any Equipment
Manufacturer
ALL
Any equipment manufacturer which
demonstrates substantial economic impact if
required to use a Phase 2 engine may use a
Phase 1 engine for 1 year beyond last
implementation date of the applicable Phase 2
standard. These dates are:
Class I: Aug 1, 2008
Class II: 2006 MY
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Chapter 9: Useful Life and Flexibility Supporting Data
Chapters: References
1. "Utility Engine Emission Report", prepared by Booz, Allen & Hamilton Inc., for the
California Air Resources Board, November 20, 1990. This report is available in EPA Air
Docket A-93-25, Docket Item # II-I-02.
2. "Useful Life, Annual usage, and In-use Emissions of Consumer Utility Engines",
memo from the OPEI CAAC In-Use Working Group to Ms. Gay MacGregor, US EPA,
EPA Air Docket A-96-55, Docket Item # II-D-13.
9-12
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APPENDIX A
-------
Appendix A: Industry Characterization
This Appendix discusses the structure of the industries producing engines
and equipment affected by this FRM. The industry characterization presented
here is taken from a report prepared under a contract work assignment for EPA
by Jack Faucett Associates. (1) The purpose of the work assignment was to
prepare a report describing and analyzing the market structure, conduct, and
performance of the small nonroad engine and equipment industry and to assess
the technologies represented by the most common engines and equipment. The
following descriptions are excerpted from that report. Some sections which are
excerpted are specific to the Lawn and Garden Equipment Standard Industrial
Code (SIC) 3524, although 11 SIC code categories were analyzed in the report.
The reason this section is focusing on the lawn and garden equipment category is
that most of the engines and equipment covered by this regulation are in that
category.
[T]he small nonroad engine market is best described as a chain of
industries that: convert raw materials into components, engines, and equipment;
distribute the final product to end users; and, provide service and parts as
required. The establishment of regulation or alternative-market based
regulatory approaches will impact this chain of industries in a variety of ways.
The structure of this chain, and the characteristics of the industries that comprise
it, will influence how successful alternative control strategies will be in practice.
[The relationships and flow of goods for engine manufacturers are as
follows: 1) raw materials and components are purchased from suppliers.
Necessary raw materials include the steel and aluminum required to
manufacture engine parts. 2) The amounts and types of purchased components
will vary from one manufacturer to another. Some engine manufacturers make
their own parts, others purchase components. Die-cast molds are used to forge
parts. 3) The finished parts and components are assembled into engines on an
assembly line.
Complete engines are sent to one of three places: equipment
manufacturers, distributors, or export markets. A great deal of engines are sold
directly to equipment manufacturers. In cases where engine manufacturers are
vertically integrated, these sales would be recorded as intra-company transfers.
Direct sales to equipment manufacturers is particularly common for high
volume consumer equipment and for technically demanding equipment for the
commercial market. The large volume engine manufacturers such as Briggs &
Stratton and Tecumseh sell directly to mass merchandiser equipment
manufacturers such as Murray Ohio Manufacturing and American Yard
A-l
-------
Products. Price and economies of scale40 are the primary factors of competition
for engine sales to mass merchandisers. For direct sales to equipment
manufacturers producing mid-range and premium priced equipment,
engineering and design cooperation is essential. In these cases, the engine
manufacturers also work closely with the equipment manufacturers to develop
superior products.
For smaller equipment manufacturers, or for some of the cases where
there is no need for technical cooperation, it is usually not cost-effective for the
engine manufacturer to sell engines directly to the equipment manufacturer. In
those cases, engine manufacturers often ship engines to independent wholesale
distributors. As independent businesses, these distributors carry engines from
multiple manufacturers. The distributors then sell the engines to original
equipment manufacturers (OEM's) to be installed as product components.
Distributors also sell "loose" engines as replacement parts. Large-scale end-users
and dealers/retailers who provide service on used equipment are the most
frequent purchasers of replacement engines. Engines not sold to equipment
manufacturers or domestic distributors are shipped as exports.
In every segment of the utility industry, equipment manufacturers must
decide whether to use "two-tiered" distribution channels or to interface directly
with their dealer network. In a two-tiered distribution system, an independent
wholesale distributor acts as an interface between the equipment manufacturers
and the dealer network. Distributors add value by providing service to both the
equipment manufacturers and the dealer network. Distributors remove a great
deal of the inventory burden from dealers. Because dealers generally do not
have the facilities or financial strength to maintain large inventories, they must
frequently order parts for repair. Successful distributors can usually provide
parts within 24 hours. In the absence of a distributor, parts must be shipped
from the equipment manufacturers by package delivery services (such as UPS).
This can take several days or more, depending on manufacturer location and the
availability of the part. Furthermore, because many dealerships are small
businesses, they often rely on their distributors for bookkeeping and general
business support. Enhanced service provided by the distributors improves the
reputation of the equipment manufacturers. Also, distributors provide market
information to manufacturers because they are closer to the consumers and are
often able to identify emerging trends faster than the manufacturers themselves.
Despite the added value that distributors provide for both dealers and
manufacturers, they are declining in numbers and importance. This shift is
generally attributed to the ever increasing price competition in the consumer
marketplace. The value added by distributors must be offset by the profit
margin required by the additional tier in the distribution chain. Although
distributors will remain important, particularly for premium line equipment,
their impact on the market is projected to decline.
40 An economy of scale is said to exist when larger output is associated with lower
average cost.
A-2
-------
The distribution system for lawn and garden equipment manufacturers
is probably the most diverse and complex in the utility market. This is primarily
due to the different needs of the commercial and consumer markets. The bulk of
all lawn and garden unit sales go to consumer end-users.41 However,
commercial customers represent too large a market to ignore, and some
equipment manufacturers and members of the distribution chain focus strictly
on the commercial business. Balancing the commercial customers need for
performance and service with the consumer customers need for a low price is
the challenge facing manufacturers and the distribution channels they have
developed.
[The relationships and flow of goods from the viewpoint of the lawn
and garden equipment manufacturers are as follows: 1) the manufacturers
design and manufacture their own parts and/or purchase components, 2) the
finished parts and components are assembled into end-user equipment, 3)
finished goods are sent to one of three places: wholesale distribution dealers or
other retail establishments, or shipped for export.]
Some manufacturers use a direct (i.e., one-tier rather than two-tier)
distribution system, dealing directly with dealers or other retail establishments.
The larger the manufacturers and the larger the retail unit, the more likely that
this link will be direct. Mass merchandiser manufacturers deal directly with
mass merchant and discount retail outlets. Some manufacturers deal directly
with all types of retail outlets. The trend towards direct distribution is expected
to continue, as is the trend towards the mass merchandisers. These trends serve
to keep prices low, foster price based competition, and put a squeeze on
distributors and local dealers. The average service dealer makes $100,000 to
$250,000 in sales per year. There are 300 dealers that bring in over $1,000,000 in
revenues annually. There are also a great many dealers that have less than
$100,000 annual revenues. Dealers are extremely dependent on service revenue
to stay in business. Approximately 50 percent of the average dealers revenues
are realized through parts and repair work.42
As emission requirements force small nonroad engines to be more
complex, more will be expected of small engine technicians. The situation is
similar to automobile dealers who must perform vehicle emission compliance
work. Jeff Voelz, Marketing Director at Onan Corporation, noted that, "dealers
will have to get savvy and understand that this is their future."43 As in the
automotive industry, emission control advances are likely to reduce the user's
maintenance abilities and require an increase in small engine technician skills.
41 For example, OPEI estimates that 90% of walk behind lawnmower sales go to the
residential market.
42 North American Equipment Dealers Association.
43 Phone conversation on June 8, 1992.
A-3
-------
Although two-tier distribution is declining, it is still an important feature
of the distribution network. According to a survey of its members, OPEI found
that 41.4 percent of shipments were distributed through wholesale distributors
in 1988. Many manufacturers use two-tier distribution for virtually every type
of retail establishment, although distributors are generally bypassed when
shipments go to mass merchandisers and discounters. Because of fierce price
based competition, the pressure is on distributors to prove their ability to add
value in order to maintain their volumes of business in the future.
Most manufacturers choose to focus on either the consumer or
commercial market. These factors, in turn, influence their choice of distribution
channels. Manufacturers that focus strictly on the consumer market, especially
at lower end prices, generally retail exclusively through mass merchandisers.
Manufacturers that focus strictly on the commercial market, generally rely
exclusively on dealers. Mid-range manufacturers and other manufacturers that
wish to compete at the commercial or top-end consumer market and the low-end
consumer market face a difficult choice. It is tempting to use both mass
merchandisers (for sales volume) and dealers (for value added service).
However, this creates tremendous conflict within the channels, particularly for
the dealers. The dealers cannot match mass merchandisers on price, and
frequently end up as repair shops, merely servicing the equipment that they can
no longer sell. The solution to this situation that has been most successful is to
sell separate lines of products, restricting the mass merchandisers from selling
the higher quality product lines. McCullough has been able to do this
successfully. Toro tried to do this, but eventually withdrew from mass
merchandiser outlets. Toro is now trying the mass merchandisers again with its
Lawnboy subsidiary.
This discussion of lawn and garden manufacturer distribution channels
primarily addresses nonhandheld equipment manufacturers, although, in
general, it applies to handheld equipment manufacturers as well. There are,
however, some unique facets of the handheld manufacturers distribution
networks that have not been previously addressed. The major difference is that
the handheld manufacturers all make their own engines. This changes the
mixture of raw materials and components they purchase as well as their
manufacturing and design processes. A separate engine market would not
suffice for handheld manufacturers because of the size, performance, and design
restrictions placed on their products by the unique end-user requirements for
handheld equipment.
There are only a handful of nonhandheld equipment manufacturers that
are vertically integrated. ? of these, producing a broad line of premium engines
and products from its North Carolina plant. Kubota is also another example of a
major manufacturer of both engines and equipment. (2)
The Lawn and Garden Equipment Industry (SIC 3524) accounted for
0.11 percent of GDP in 1990. ... Constant dollar shipments have increased
sharply, with a 33.1 percent increase from 1984 to 1990. ... [R]oughly the same
A-4
-------
number of companies were responsible for the increased out, indicating that
new firms entering the industry may not have been responsible for higher
output. Value added as a percent of output for the industry in 1990 was 40.9
percent, roughly the same as the internal combustion engine industry.
This industry does not seem to be capital intensive, as assets were only
18.8 percent of output in 1990, less than the corresponding percentage for All
Manufacturing Industries. ... In addition, capital turnover rates are 15.6 years,
slightly above the average for All Manufacturing Industries. As a result, should
regulation result in new purchases of capital, the industry may not have as much
difficulty as other industries in adapting to regulatory actions.
Concentration in this industry is high, as the 8 largest companies control
71 percent of the market. These companies may have the ability to influence the
price of their products. Yet the industry does not seem to have excess capacity,
with a capacity utilization rate of 73 percent. This figure is slightly less than the
76 percent rate for All Manufacturing Industries. ...
Because the Statistics of Income Classification code relevant to the Farm
Machinery and Equipment industry includes both 4-digit SIC codes 3523 and
3524, the profitability analysis for the Farm Machinery and Equipment industry
also applies to the Lawn and Garden Equipment industry. For 1988, profitability
for this industry seemed quite good, with the average return on equity up to 17.9
percent, a 14.1 percent increase from 1990. The average debt to asset ratio,
however, is among the higher of the seven minor industries considered ... at 42
percent.
Constant dollar shipments are expected to grow at an annual rate of 2
percent over the next 5 years for the Lawn and Garden Equipment industry. The
U.S. Industrial Outlook attributes this increase to several factors, first among
them are demographic changes in the U.S. population. In particular, the fastest
growing age group, 44-54, will be near their maximum earning potential, which
should result in larger expenditures on lawn and garden equipment. The report
also notes that many of these consumers will be more inclined to upgrade their
current properties, which may entail landscaping. The removal of trade barriers
in Mexico and Canada as a result of the North American Free Trade Agreement
(NAFTA) should give companies in the three North American countries the
opportunity to expand their exports. In addition, the report mentions that
possible environmental standards may have an impact on sales, but the report
does not give a clear indication of whether or not these regulations will cause
sales to increase or decrease. (3)
[M]any of the eleven 4-digit SIC industries encompassing the small
nonroad engine and equipment industry are characterized by significant value
A-5
-------
added, fairly high concentration, growth in the value of shipments, capital
intense production processes, high capital turnover, and relatively efficient
capacity utilization. These basic industry trends determine the competitive
nature of the industry and condition the interactions of the firms that form these
industries with suppliers, consumers and each other. (4)
[T]he competitive features of the small nonroad engine and equipment
industry have been reviewed. These features include: channels of product
distribution, the levels of vertical and horizontal integration across engine and
equipment manufacturers supplying the nonroad engine and equipment
industry, the types and extent of barriers to entry that may exist in this industry,
the degree of market power inherent in the nonroad engine and equipment
industry at various levels of producer interactions, the availability and
importance of substitute power sources for ? engines, the global competitive
position of U.S. firms in this industry, and characteristics of end-users which
drive the demand for the various products that are sold in the small nonroad
equipment industry. Such a comprehensive description of this industry's
competitive features has revealed various interesting results which should be
summarized.
First, the level of vertical integration in the small nonroad engine and
equipment industry appears to be rather small. Where present, vertical
integration is concentrated in three areas of the industry: foreign lawn and
garden engine and equipment manufacturers, foreign recreational engine and
equipment manufacturers, and handheld lawn and garden engine and
equipment manufacturers. For example, Honda produces both the engine and
equipment components of their lawn and garden products... In fact, most of the
vertically integrated companies are foreign companies.
Horizontal integration, on the other hand, is common among engine
manufacturers in the small nonroad engine and equipment industry. This
follows directly from the fact that a single engine design is often used in many
small nonroad equipment applications. ...[T]ecumseh and Briggs & Stratton
engines, for example, are employed by various types of equipment including
lawn and garden equipment, light commercial and industrial equipment, light
agricultural equipment, and others.
Second, advertising and product differentiation, economies of scale, and
large capital requirements appear to be the only forms of barriers to entry that
may characterize the small nonroad engine and equipment industry. However,
the effectiveness of these phenomena is difficult to assess. Nevertheless,
advertising plays an important role in the lawn and garden equipment industry,
as shown by its relatively high advertising intensity ratio. Similarly, product
differentiation is important in this market as evidenced by the large number of
brands and product models that are offered for different equipment types, such
as lawnmowers or chainsaws...
Economies of scale and large capital requirements, on the other hand,
are likely to be more important at the engine manufacturing level of the
industry, since this level is capital intensive and characterized by few dominant
A-6
-------
sellers. It should also be noted that patents may play an important role in
deterring new entry as a result of Section 308 of the Clean Air Act. Ryobi, for
example, may clearly have a competitive advantage if its new 4-stroke CleanAir
Engine is protected through patent.
...[O]ne general characteristic of the industries that comprise the small
nonroad engine and equipment industry is high levels of seller concentration.
Empirically, high seller concentration has been shown to perpetuate product
pricing that is above the marginal cost of the products production. (5) ...[R]esults
that are characterized by this pricing outcome are economically inefficient, and
display the market power, of at least the market leaders, in the industry.
However, although the small nonroad engine and equipment industry is
generally characterized by seller concentration, ...the various relationships
between the economic agents operating in this industry are not characterized by
significant levels of market power. Much of the reasoning behind this
conclusion centers on the concept of contestable markets... The fact that the
small nonroad engine and equipment industry is not characterized by market
power implies that if regulatory actions increase the production costs of the
firms producing in this industry, then these incremental costs will likely be
passed on to consumers, or end-users, in the form of higher prices. Moreover,
the likelihood that market power is not prevalent in the small nonroad engine
and equipment industry implies that economic profits are not being accrued in
the long run. This in turn suggests that entry into the market is relatively free.
Although some aspects of barriers to entry may exist (such as product
differentiation, advertising, and economies of scale), their effectiveness at
deterring entry is not necessarily evident.
Fourth, the prevalence of substitute power sources and equipment that
displace equipment powered by internal combustion engines is most evident in
the lawn and garden equipment market where electrically powered machines
have been common for many years. However, the sale of electrified lawn and
garden equipment is hampered by various factors. For example, the long
extension cords necessary for the operation of electrified equipment are
cumbersome, while electrified lawn and garden equipment are generally not a
viable option for commercial users. However, use of battery packs could
potentially resolve some of the detrimental user oriented externalities associated
Appendix References
1. Jack Faucett Associates, Small Nonraod Engine and Equipment Industry
Study, JACKFAU-92-413-14, December 1992
2. ibid, pages 68-76
3. ibid, pages 57-58
A-7
-------
4. ibid, p. 67
NOTE: Graphs not included in this electronic version
A-8
-------
APPENDIX B
-------
Appendix B: Manufacturer and Product Summary
B.1 Introduction
This appendix summarizes information on the equipment related to the
category of engines regulated, nonroad 0-19 kilowatt spark-ignited engines. This
appendix summarizes the engine manufacturers and their products, the
technology used on these engines, and estimates the amount of these engines
consumed in the United States.
B.2 Engine Manufacturer Summary
There are a wide variety of engine manufacturers producing engine
products which will be regulated. Data on the manufacturers and their products
is provided from EPA's Phase 1 certification database44.
B.2.1. Listing of Known Engine Manufacturers
EPA has generated a listing of engine manufacturers from EPA database.
It appears that there are approximately 26 engine manufacturers selling
nonhandheld gasoline engines under 25 horsepower. Please refer to Table B-01,
which summarizes the manufacturers who produce nonhandheld engines.
B.2.2. Listing of Known Engine Models per Manufacturer
The EPA Phase 1 database contains the most extensive listing of
information at the engine model level. The data in this section is excerpted from
this database. Presented in Table B-01 are the number of engine models per
manufacturer and the estimated number of engine models in each standard
All engine models for production in the 1997 model year were to be certified by
September 1, 1997. The only exception are those models that are exempt from
CARB's Tier 1 program (Class V engines) which have until January 1, 1998.
CHECK!
B-l
-------
category.
B.2.2.1. Number of Engine Models- Table B-01 shows that there are 151
engine models in Classes I and II (nonhandheld). There are five nonhandheld
engine manufacturers of moderate diversity producing between 15 and 25
engine models for approximately 64%of the number of 4-stroke engine models.
The two most diverse engine manufacturers produce 32% of the engine models,
while the most diverse engine manufacturer produces 16.5% of the product
models. The data these conclusions are based on are summarized in Table B-01.
B.2.2.2. Engine Family and Emissions Per Engine Family Per
Class -- Table B-02 through B-06 contain information per engine family per
manufacturer on engine family, new engine emissions (HC, NOx, CO), emission
control technology, major applications and displacement.
Since the final Phase 2 regulation is an in-use set of standards, the new
engine values from the Phase 1 certification database have been deteriorated to
compare to the new engine standard. Deterioration factors were taken from data
submitted by industry and EPA's own analysis. Table B-07 lists the deterioration
factors applied to the corresponding engine families. EPA requests comment on
the accuracy of the information presented in all tables in this Appendix.
Table B-07
Deterioration Factors
CLASS
SV
OHV
2-
STROKE
I
HC+NOx
2.1
1.5
1.1
II
HC+NOx
1.6
1.4
B-2
-------
B.3 Estimate of Historical and Future Equipment Consumption
(Population)
EPA's NONROAD model was utilized to calculate HC, NOx and CO
inventories and fuel consumption by Class. The calculations in the NONROAD
model are based on the population of each equipment. The NONROAD model
uses national equipment population data from Power systems Research (PSR), a
company that tracks the sales and populations of all types of nonroad equipment
sold in the U.S. Nonroad engines were separated based on market sector and
fuel type. Individual applications in the PSR database were assigned to broad
market sectors. Eight market sector populations, segregated by fuel type, were
calculated for each year from 1989 through 1996. For future populations, EPA
extrapolates using a simple linear regression of the historical populations for
estimates of future populations.
The results from this work were reviewed by the small engine team prior
to inclusion in this FRM. The NPRM inventory and fuel consumption estimates
were based on the NSEEM model and the team compared the outputs from the
NONROAD model to those from the NSEEM model. Differences in the
inventories were identified and it was determined that the population of each
Class was the main source of the difference. The team then calculated expected
populations utilizing a reliable base for sales information, the Phase 1
certification database, to which all engine manufacturers had certified their
engine families and supplied confidential estimated sales for 1998. The
certification database allowed identification of sales for only four major
equipment types (lawnmowers, chainsaws, trimmers and blowers) for the
majority of engine families were identified to be used in several applications.
The sales values were converted to populations for using the NSEEM model45.
45 The 1998 sales for the noted applications were updated in the NSEEM
model, and sales were extrapolated from the last date of the industry
B-3
-------
The 1996 populations for the four applications were then compared with those in
NONROAD and the updated populations were passed onto the NONROAD
modeling group who then updated the base population estimate for the major
applications. The outputs from the NONROAD model were then agreed upon
and used by the team in this rulemaking.
known sales data for each application (see the Phase 1 RSD), and a 1996
population for each application was calculated.
B-4
-------
Table B-01
Engine Manufacturers and Engine Families Per Class and Engine Type
EPA Phase 1 Certification Database
Manufacturer
A.L. Cook
Briggs & Stratton
Daihatsu Motors
Flex Systems
Fuji Heavy Industries, Ltd.
Generac
Honda
Hydramaster
Kawasaki
Kohler Company
Kohler Company Generator
Division
Kubota
Lister- Petter
Mayville Engineering
Minute man
Mitsubishi Engine North
America, Inc
Onan
Pioneer/Eclipse Corp.
Spectrum Industrial Products
Inc.
Suzuki
Swiss Clean
Tecumseh
Toro
Westerbeke
Wis-con Total Power Corp.
Number of Engine Families
for Each Standard Category
I
SV
6
2
2
8
I
OHV
5
3
3
8
4
1
3
2
1
1
6
I
2-S
3
II
SV
6
2
1
3
5
7
3
II
OHV
3
11
3
1
6
8
10
1
11
17
9
5
3
1
3
3
3
4
3
2
2
6
1
6
TOTAL
3
28
3
1
13
11
20
1
16
21
9
8
3
1
3
5
8
4
4
6
2
27
1
6
3
B-5
-------
Yamaha Motor Company, Ltd.
TOTALS
18
3
40
3
27
3
125
6
213
APPENDIX C
-------
Table C-03
TOTAL COSTS
NOTES:
All costs are as incurred.
2001
2002
2003
2004
2005
2006
2007
2008
CERTIFICATION COSTS
PIT COSTS
TOTAL COSTS
$1 ,354,950
$498,960
$1,853,910
$4,354
$498,960
$503,314
$24,243
$498,960
$523,203
$52,841
$498,960
$551,801
$118,258
$498,960
$617,218
$0
$574,560
$574,560
$269,175
$785,680
$1 ,054,855
$0
$785,680
$785,680
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
CERTIFICATION COSTS
PIT COSTS
TOTAL COSTS
$0
$785,680
$785,680
$0
$785,680
$785,680
$0
$785,680
$785,680
$0
$785,680
$785,680
$0
$785,680
$785,680
$0
$785,680
$785,680
$0
$785,680
$785,680
$0
$785,680
$785,680
$0
$785,680
$785,680
$0
$785,680
$785,680
2019
2020
2021
2022
2023
2024
2025
2026
2027
CERTIFICATION COSTS
PLT COSTS
TOTAL COSTS
$0
$785,680
$785,680
$0
$785,680
$785,680
$0
$785,680
$785,680
$0
$785,680
$785,680
$0
$785,680
$785,680
$0
$785,680
$785,680
$0
$785,680
$785,680
$0
$785,680
$785,680
$0
$785,680
$785,680
-------
APPENDIX D
(Reserved)
-------
APPENDIX E
-------
Table E-05
Fuel Consumption
Price /gallon from Energy Information Administration
Average refinery price to enduser in 1995$ = $0.765
1998$= 0.794
1998$ obtained by multiplying $0.765 by the GDP Implicit Price Deflators for 1996, 1997, 1998
of 1.9%, 1.9%, 1.0% respectively
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
CLASS I
tons/yr
P/A Factor for 7% discount rate
discount rate 0.07
21 years 10.8355 Class I
27 years 11.9867 Class II
CLASS
tons/yr
ALL CLASSES
Total tons/yr
0
0
0
0
0
0
(38,862)
(122,831)
(183,138)
(220,311)
(246,553)
(266,977)
(281,508)
(290,908)
(298,988)
(306,684)
(312,922)
(318,589)
(323,925)
(329,186)
(334,446)
(339,702)
(344,965)
(350,219)
(355,482)
(361,512)
(366,804)
(114,528)
(225,316)
(343,158)
(458,640)
(577,403)
(670,233)
(737,134)
(788,844)
(830,521)
(864,385)
(893,571)
(917,702)
(939,540)
(959,800)
(978,894)
(1,001,004)
(1,019,345)
(1,037,407)
(1,055,282)
(1,073,011)
(1,090,598)
(1,108,138)
(1,125,619)
(1,143,095)
(1,160,559)
(1,181,948)
(1,199,816)
(114,528)
(225,316)
(343,158)
(458,640)
(577,403)
(670,233)
(775,996)
(911,675)
(1,013,659)
(1,084,696)
(1,140,124)
(1,184,679)
(1,221,048)
(1,250,708)
(1,277,882)
(1,307,688)
(1,332,267)
(1,355,996)
(1,379,207)
(1,402,197)
(1,425,044)
(1,447,840)
(1,470,584)
(1,493,314)
(1,516,041)
(1,543,460)
(1,566,620)
difference
$/yr
($26,802,859)
($52,730,450)
($80,308,880)
($107,335,002)
($135,128,973)
($156,853,874)
($181,605,469)
($213,358,273)
($237,225,474)
($253,850,183)
($266,821,935)
($277,249,091)
($285,760,487)
($292,701,784)
($299,061,284)
($306,036,749)
($311,788,945)
($317,342,216)
($322,774,260)
($328,154,584)
($333,501,442)
($338,836,364)
($344,159,116)
($349,478,593)
($354,797,367)
($361,214,205)
($366,634,313)
-------
APPENDIX F
-------
Table F-01
Average Power Rating (hp) of Nonhandheld Equipment by Engine Type*
Equipment Description
LAWN AND GARDEN EQUIP.(RES)
Leaf bl owers/Vacu u ms
Lawn & Garden Tractors
Lawn Mowers
Other Lawn &garden Equipment
Rotary Tillers < 6HP
Rear Engine Riding Mowers
Snowblowers
Shredders < 6 HP
Trimmers/Edgers/Brush Cutters
LAWN AND GARDEN EQUIP.(COM)
Commercial Turf Equip. (2&4-stroke)
Front Mowers
Leaf bl owers/Vacu u ms
Lawn & Garden Tractors
Lawn Mowers
Other Lawn &garden Equipment
Rotary Tillers < 6HP
Rear Engine Riding Mowers
Snowblowers
Shredders < 6 HP
Trimmers/Edgers/Brush Cutters
COMMERCIAL EQUIP.
Air Compressors
Generator Sets
Pumps
Pressure Washers
Welders ( 2 and 4-strokes)
LOGGING EQUIP
Shredders >6hp (4-stroke)
G2N1
NA
NA
NA
NA
NA
NA
NA
NA
NA
5.00
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
1.78
1.00
NA
5.98
NA
G2N2
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
2.29
NA
NA
NA
G4N1O
8.35
9.59
4.10
8.26
4.68
6.24
4.59
3.00
7.86
8.76
11.25
8.35
9.59
4.10
8.26
4.68
6.24
4.59
3.00
7.86
9.51
8.82
8.40
9.73
9.72
NA
G4N1S
3.42
5.50
2.55
4.81
4.68
4.10
4.59
3.00
3.30
5.17
11.25
3.42
5.50
2.55
4.81
4.68
4.10
4.59
3.00
3.30
5.00
4.59
4.69
4.78
9.41
NA
G4N2O
14.20
18.40
6.24
20.00
4.68
20.42
12.41
5.01
18.00
16.93
20.42
14.20
18.40
6.24
20.00
4.68
20.42
12.41
5.01
18.00
18.50
20.80
18.30
18.60
16.20
8.16
G4N2S
14.20
18.40
6.24
15.60
4.68
20.42
8.48
5.01
18.00
16.93
20.42
14.20
18.40
6.24
15.60
4.68
20.42
8.48
5.01
18.00
13.90
14.30
14.90
14.20
16.20
8.16
These power ratings were calculated from the Nonroad Model inputs by weighting power categories within
each equipment type by the equipment population values at baseline.
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