United States	Office of Airand Radiation	October 1994
Environmental Protection	(ANR-443)	ll-F-03
Agency	Washington, DC 20460
Air
		EPA-420-D-94-100
$ EPA Draft
Regulatory Impact Analysis
Control of Air Pollution Emission Standards
for New Nonroad Spark-ignition Marine
Engines

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DRAFT
REGULATORY IMPACT ANALYSIS
Control of Air Pollution;
Emission Standards for
New Nonroad Spark-Ignition
Marine Engines
October 1994
U.S. Environmental Protection Agency
Office of Mobile Sources
Certification Division
2565 Plymouth Road
Arm Arbor, MI 48105

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ACKNOWLEDGEMENTS
This Regulatory Support Document was authored by Mr. Bill Charmley, Ms. Deanne R.
North, Mr, Michael Samulski, Ms. Sujan Srivastava, and Mr. Ken Zerafa.
Members of the National Marine Manufacturers Association and many individual
manfufacturers have provided EPA with input on the technical and economic aspects of the
engines potentially impacted by the proposed emission standards. A number of manufacturers
provided essential test data, production engines for testing, or prototype engines for testing.
EPA sincerely appreciates the cooperation of industry in EPA's technical evaluation of these
engines and equipment.
1

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Introduction
This document presents the Regulatory Impact Analysis (RIA) for the
Notice of Proposed Rulemaking for the establishment of Emission Standards for
New Nonroad Spark-ignition Marine Engines, herein after referred to as the
nonroad marine NPRM or the Proposal.
This RIA is organized into chapters and appendices. Chapter 1 presents
the engineering evaluation EPA has undertaken to determine the possible
technical solutions for emission reductions from these engines and the specific
technology and the related cost of such solutions. Chapter 2 considers the
aggregate costs of the Proposal and analyzes economic impacts. Chapter 3
quantifies the emission reduction benefits of the Proposal and assesses impacts
on environmental and health effects of these emissions. Also, Chapter 3 presents
the schedule of emission reductions and costs of the Proposal and relates them to
one another in terms of cost-effectiveness. An appendix is provided which
contain supporting data.
1

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2

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DRAFT
Chapter 1: Technology Assessment
This chapter presents an assessment of various emission control
technology that may be applied to marine engines. The main focus of this
regulation is a large reduction in hydrocarbons (HC) with a minimum increase
in oxides of nitrogen (NOx). Standards will also be set for carbon monoxide
(CO) and, for compression-ignition marine engines, smoke and particulate
matter (PM). Emission control technology for each of these constituents will
be discussed in this chapter.
Both current and potential emission control technology are discussed in
detail along with the impact on pollutant level of each technology. Based on
these emission control technology options, the lowest feasible emission
standards are calculated. Engine modifications for emission reductions will
also affect engine performance and maintenance. These impacts are discussed
in this chapter as well as possible impacts on vessel design.
Standardized test procedures for exhaust emissions and durability are
required for setting an emission standard and for assessing the impacts of
emission control technology. Before the emission control technology options
are discussed, an understanding of the test procedures is required. Therefore,
this chapter begins with a discussion of the emission and durability test
1-1

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1-2	DRAFT
1.1. Adequacy of Proposed Test Procedures
In order for EPA to successfully regulate exhaust emissions from marine
engines, test procedures are required that can accurately measure emissions
from new and in-use marine engines. This section will discuss the feasibility
of existing test procedures to measure exhaust emissions for regulation and
EPA modifications to these test procedures. In addition, durability
demonstration program options will be discussed. These options include pre-
sale testing and recall testing.
1.1.1. Emission Test Procedures
The marine exhaust emission test procedures proposed by EPA are
based on test procedures developed by the marine industry and interested
governments. Before adopting any test procedure, EPA must investigate the
test procedure development and possible cases where the test procedures are
not representative of in-use operation. In addition, EPA must determine when
in-use representativeness must be compromised for test repeatability. The
process leading to the proposed test procedures is discussed here.
1.1.1.1. Known Marine Duty Cyclea-Two sets of test procedures have
been established for determining exhaust emission levels from recreational
marine engines. The duty cycles associated with each of these test procedures
are composed of steady-state modes. For each mode/ the speed and torque
relationship is based on an assumed propeller curve.
In 1993, emission regulations were enacted for marine engines operated
on Lake Constance in Europe(l). Lake Constance (also known as the
Bodensee) is a major source of drinking water for Austria, Germany, and
Switzerland. The purpose of these regulations is to protect water quality.
Hydrocarbons (HC), carbon monoxide (CO) and oxides of nitrogen
(NOx) are regulated by the Bodensee Shipping Regulations or Bodensee-

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DRAFT	1 -3
Schiffahrts-Ordnug (BSO). These emission levels are determined using the BSO
eight-mode steady-state test procedure. For the BSO regulations, spark-
ignition and compression-ignition marine engines are tested with the same
duty cycle and modal weightings.
The International Standards Organization (ISO) is developing test
procedures for determining emissions from several classes of nonroad engines.
For the ISO procedures, two separate five-mode duty cycles were developed
for spark-ignition and compression-ignition light-duty marine engines. These
duty cycles are known as the E4 and E5 cycles. ISO also developed an E3
cycle for heavy-duty marine engines.
The E4 duty cycle for spark-ignition marine engines was developed
from operational data collected from 33 boats with outboard marine engines
and three boats with sterndrive marine engines(2). Normalized speeds were
calculated, and a time distribution at 10% normalized speed intervals was
developed. This speed distribution was used to develop five operation modes
with accompanying weighting factors. In addition, an empirical relationship
was determined between speed and torque. This relationship was used to
determine the torque for each mode. This duty cycle has a power factor of
0.207.
The E5 duty cycle for compression-ignition marine engines was
developed from operational data collected from a combination of
manufacturer-owned pleasurecraft and a Norwegian government study of
commercial fishing boats. Using only data on engines with rated power of 370
KW or less from the Norwegian government study, thirteen different classes of
commercial fishing boats were represented. The average power factors for the
pleasurecraft and commercial fishing boats were 0.25 and 0.44 respectively,
with a simple average of 0.345. Higher power factors are the result of
displacement versus planing hulls on the vessels. Data from these engines
were used to develop five steady-state operational modes with the appropriate

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1-4
DRAFT
weighting factors.
ISO's E3 cycle is similar to the E5 cycle. The modes are the same except
that the higher power modes are more heavily weighted, and the idle mode is
removed. This results in a power factor of 0.68.
Test procedures have also been developed for large constant speed ship
engines. However, these engines are not within the scope of this proposal.
The duty cycles discussed in this section are presented in Table 1-01.
Table 1-01: Steady-State Marine Duty Cycles
Mode
1
• 2
3
4 j 5
6
7
8
BSO Cycle for S) and CI Marine Engines
Speed %
idle
40
50
60
70
80
90
100
Power %
0
10.1
17.7
27,9
41
57.2
76.8
100
Weight %
30
10
10
10
20
5
5
10
ISO E4 Cycle for SI Marine Engines
Speed %
100
80
60
40
idle



Power %
100
57.2
27.9
10.1
0



Weight %
6
14
15
25
40



ISO E5 Cycle tor CI Marine Engines
Speed %
100
91
80
63
idle



Power %
100
75
50
25
0



Weight %
8
13
17
32
30



ISO E3 Cycle for Heavy-Duty Marine Engines
Speed %
100
91
80
63




Power %
100
75
50
25




Weight %
20
50
15
15





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DRAFT	1-5
Compression-ignition marine engines will be required to demonstrate
compliance to smoke standards. EPA has applied the Federal on-highway
smoke test procedure to land-based nonroad CI engines{3). This smoke test
procedure consists of an idle mode followed by an acceleration and
deceleration, followed by another acceleration and an engine loading mode
down to peak torque. This simulates a truck starting from rest, performing a
gear shift, and then pulling a heavy load up a reasonably steep grade. EPA
does not consider this "lugging" mode to be representative of in-use marine
operation. Therefore, this smoke test procedure would have to be modified so
that the lugging mode will not be applied to marine propulsion engines.
The Engine Manufacturers Association (EMA) has offered to help
develop a smoke test procedure appropriate for marine engines. In addition,
EMA has requested that non-propulsion engines, such as generators, be tested
using the appropriate ISO duty cycles.
1.1.1.2.	Steady-State and Transient Test Options—A test procedure
should be capable of serving two purposes: First, a test procedure must be
repeatable so that useful results may be determined for comparing emission
control technologies and for regulating emissions. Second, a test procedure
must be representative of actual operation of the engine so that the emission
results may be used for air quality analysis. One concern with a steady-state
test procedure is that it overlooks transient operation that may be found in
actual marine engine use.
NMMA(4) and EFA{5) have both collected test data regarding the
sensitivity of transient operation on stemdrive marine engine exhaust
emissions. HC, CO, and fuel consumption tended to increase as the engine
experienced more transient operation while NOx tended to decrease under the
same conditions. Both NMMA and EPA simulated transience by running the
ISO E4 modes together in order, then in reverse order. The effects of increased

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1-6
DRAFT
transience were studied by increasing the cycle frequency in a given amount of
time. This cycle is presented in Figure 1-01.
The NMMA and EPA studies do not agree on the amount of transience
necessary to significantly affect emissions from the inboard marine engines.
However, EPA is continuing research on inboard marine engines. No data has
been collected on the effects of transient operation on emissions from outboard
or personal watercraft marine engines.
EPA has not yet collected any information on the amount of transience
seen in actual marine engine operation. Marine engines are used for diverse
applications. Personal watercraft would be expected to be highly transient
with their typical "stop and go" usage, while large commercial fishing vessels
would be expected to run fairly steady. This information would be necessary
to determine the need for and possibly develop a transient test procedure. In
Figure 1-01: Marine Transient Cycle

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DRAFT	1-7
any case, a steady-state test should be capable of characterizing emissions well
enough for a "technology-forcing" emission standard.
1.1.1.3 Emission Sampling and Test Set-Up Options-The most challenging
aspect of testing marine engines seems to be how to take the emission sample.
This difficulty rises as a result of water jacketing of the exhaust and actual
mixing of cooling water and exhaust within the drive package. Water
jacketing of the exhaust is required to meet Coast Guard surface temperature
regulations while the mixing of water and exhaust is used to muffle noise from
the engine.
The two established methods of sampling exhaust are raw and dilute.
For the purpose of this document, raw sampling refers to inserting a probe
into the exhaust stream and pulling out a portion of the exhaust during engine
operation. Dilute sampling refers to pulling the entire exhaust stream through
a critical flow venturi (CFV). Because the volume flow through the venturi
must be constant, dilution air is used to offset the changes in exhaust flow.
Dilute sampling requires one less measurement than raw sampling for
the calculation of exhaust emissions which results in less chance for
measurement error. When dilute sampling is employed, the mass flow of the
exhaust and dilution air is determined by the CFV; therefore, a single
concentration measurement may be made with an error within approximately
two percent.
For raw sampling only a small portion of the exhaust is sampled. The
fuel flow into the engine must be measured in order to calculate the total mass
flow. This method has the potential for larger additive errors especially at idle
where fuel flows are minimized and are harder to measure accurately. In
addition, because an exhaust stream may not be homogeneous, the exhaust
sample may not be representative of the total exhaust from the engine.
Although a transient test has not been developed for marine engines,

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1-8	DRAFT
EPA has not ruled out the possibility of converting to a transient test
procedure in the future. Raw sampling has not been proven to be acceptable
for transient testing due to the lag time between fuel flow and emission
measurements. A test facility using raw sampling would run the risk of
becoming obsolete in the future.
Due to the unique exhaust systems in most marine engines, raw
sampling does have one advantage to dilute sampling. For dilute sampling,
the cooling water must be routed so that it does not mix with the exhaust, For
raw sampling, the exhaust sample may be taken upstream of where the water
and exhaust mix. The advantage of raw sampling is that addition of a probe
should have smaller effects on the exhaust tuning than routing the cooling
water away from the exhaust. Especially for two-stroke engines, the engine
operation (power, fuel consumption, and emissions) is sensitive to the exhaust
tuning.
Tied into the exhaust sampling method is the actual set-up of the engine
in a test cell. Two major set-up options are crankshaft and propshaft testing.
Crankshaft testing refers to removing the drive unit and applying the load
directly to the crankshaft. Propshaft testing refers to applying the load to the
output shaft of the drive unit. The significance of the drive unit on testing is a
result of power losses in the gears and, more significantly, "tortuous" exhaust
passages within the drive unit.
Crankshaft testing allows the reported emission results to be purely
engine based. This way, the same engine used in both inboard and stemdrive
packages would not have to be tested for each drive unit. In addition, dilute
sampling is much simpler with crankshaft testing. Engine cooling water can
be routed so not to mix with the exhaust and the total exhaust can be collected
easily.
Propshaft testing is probably more representative of actual engine
operation because of the effects of the drive unit on engine performance.

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DRAFT	1-9
However, EPA has collected little data on the effects of the drive unit on
emissions. EPA expects that the effects of exhaust tuning on emissions would
be more significant for two-stroke engines than for four-stroke engines.
1.1.1.4 EPA Proposed Emission Test Procedurea-EPA proposes the ISO E4
duty cycle for measuring HC, CO, and NOx from SI marine engines. A
steady-state cycle was chosen over a transient cycle due to a lack of data on
the appropriateness of a transient cycle. Because of the large reductions in
hydrocarbons required by this regulation, EPA decided that any sensitivity of
transience on hydrocarbons would be small in comparison. The ISO E4 was
chosen over the BSO cycle because the extra three modes added by BSO to the
duty cycle have not been shown to provide significant additional control4.
EPA proposes the ISO E5 duty cycle for measuring HC, CO, NOx, and
PM from CI marine engines. At this time, EPA is not aware of how the E3
duty cycle was developed. Therefore, all CI marine engines not regulated by
IMO ship standards will be tested using the E5 duty cycle.
EPA believes that the modified (no "lugging" mode) Federal smoke
procedures are reasonable for marine CI engine smoke control within the
proposed timeline. While marine applications experience some differences in
operation compared to on-highway applications, EPA has determined that the
same technologies will be used to control smoke in nonroad applications as are
used in on-highway applications. Therefore, the differences in marine and on-
highway operation are not large enough to hold up this proposal for the
significant time period required to develop a new smoke test procedure.
Inboard, sterndrive, and personal watercraft engines are proposed to be
tested with a crankshaft set-up and dilute emission sampling. Crankshaft
testing allows the test results to be purely engine-based, and it is the easiest
way to collect a dilute sample. EPA considers dilute emission sampling to be
superior to raw sampling due to lower measurement error and capability of
sampling during a transient cycle. For CI engines, dilute sampling will be

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1-10	DRAFT
required in order to take a particulate sample.
Outboard marine engines have been reported to be significantly
sensitive to exhaust tuning. In addition, a given marine outboard engine will
be typically sold with a single drive unit. For these reasons, EPA proposes to
allow propshaft testing with a raw emission sample. Dilute sampling may be
necessary for CI outboard marine engines so that particulate and smoke testing
will be possible.
1.1.2. Durability Teat Procedures
When an engine is certified to meet a given set of emission standards,
the engine is expected to comply with these standards throughout its useful
life. Experience with on-highway engines has shown EPA that deterioration,
over time, of the engine and emission control equipment can have a significant
effect on emissions. Therefore, deterioration factors (DFs) must be developed
to account for changes in emission characteristics over the useful life of the
engine. EPA does not have sufficient data for determining the effects of
deterioration on marine engines or on the emission control technology
expected to be used to meet the requirements of this proposal. Therefore, a
demonstration of emission control durability is necessary during the
certification process.
1.1.2.1.	Engine and Emission Control System Deterioration Factors-For
spark-ignition marine engines, EPA is proposing a durability demonstration
program similar to that used for spark-ignition on-highway heavy-duty
engines. This program includes a requirement that for each engine family, the
manufacturer shall determine emission deterioration factors for each pollutant
based on testing of engines, subsystems, or components and/or sound
technical judgment. The deterioration factors would be submitted to EPA and
applied to the new engine emission results to determine compliance with the

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1-11
emission standards. The deterioration factors would be required to simulate
deterioration for 360 hours of use for all spark-ignition marine engines. These
factors would also be expected to simulate deterioration over a period of 10
years for all spark-ignition engines except personal watercraft, which would be
expected to simulate 5 years.
For compression-ignition marine engines, no submission of durability
demonstration test data or use of a deterioration factor will be necessary when
certifying engine families that do not employ aftertreatment. For on-highway
vehicle certification, EPA has found that NOx emissions from compression-
ignition engines experience very little, if any, increase over time. Because the
focus on CI engines is for NOx emissions, the requirement of durability
demonstrations and deterioration factors during certification would impose an
unnecessary cost burden on manufacturers.
Should a manufacturer choose to use exhaust aftertreatment to meet the
emission standards for any engine family, deterioration factors would have to
be determined and applied in the same manner as is currently done for on-
highway CI engine durability demonstration. However, no durability
demonstration or deterioration factors are required when an engine that was
certified without aftertreatment is later retrofitted with an aftertreatment
device or package. These retrofits are not designed to interfere with the
original design and, therefore, should not result in worse emissions than the
original design. Since the engine has already been demonstrated to be in
compliance without the aftertreatment device, demonstration of the durability
of a retrofitted aftertreatment device is not necessary.
1.1,2.2.	Durability Drnnonstration-Once the manufacturer determines
the form and the extent of engine and/or component selection and testing
methodologies, deterioration factors may be established for a given engine
family. These DFs would be applied to the new engine emission levels and

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1-12
DRAFT
the resulting emission levels would be required to comply with the emission
standards (or the family emission limits). The manufacture would also be
required to perform in-use testing for the recall program. EPA would use this
in-use data to confirm the methodology for establishing deterioration factors.
For example, if in-use testing indicates that an engine family's emission control
system is deteriorating at a faster rate than predicted by the manufacturer's
DF, EPA would challenge the use of the manufacturer's methodology for
determining DFs for other engine families. The manufacturer would have to
revise it's methodology for determining DFs or provide data and information
to support the use of the DF generation methodology for other engine families.
EPA believes that this approach will best ensure that marine emission
control systems will be designed and built to be durable. This program
requires manufacturers to assess deterioration of emission control before such
engines enter into commerce. Therefore, systems with inadequate durability
can be identified and corrected before they are used on the waterways. Abo,
this approach provides a means of determining the adequacy of the
deterioration factor methodology through actual in-use data.
1.1.2.3.	Representation of Available Fuel-Although the certification
fuel is representative of fuel sold for on-highway applications, marine engines
may come across fuel with different blends. The fuel found in most marinas is
not required to meet the same quality and environmental standards as fuel
supplied for use in on-highway applications. Finally, there is no guarantee
that all two-stroke oils will perform equally in marine engines.
Manufacturers have informed EPA of some of the problems associated
with non-certification fuels and oils. Fuel with too high of a volatiliy may
cause vapor lock. Old fuel may result in plugged injectors. On-highway
reformulated fuels may have detrimental effects on rubber or metal not
designed for use with alcohol. Low grade oil in an engine designed for TCW3
oil may result in unsatisfactory lubrication of the piston and gears. All of

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1-13
these conditions affect the durability of the marine engine.
EPA recommends that manufacturers specify the fuel and oil in the
engine owner's user manual that are required for the proper operation of the
engine. Whatever fuel is used by the boat owner will be considered typical of
in-use operation unless the manufacture has a strong argument to the contrary
for that particular engine. EPA expects the manufacturers to design their
engines to operate on fuels typically used in marine engine applications.
1.2 Emission Control Technology
This section describes in detail the current technology and the potential
emission control technologies as well as pollutant levels for each technology
for spark-ignition marine engines. For compression-ignition engines, EPA
refers the reader to the Regulatory Support Document entitled "Control of NOx
and Smoke Emissions From Nonroad Compression-Ignition Engines Greater
Than or Equal to 50 Horsepower (37.5 Kilowatts)" contained in Docket No. A-
91-24. Since EPA believes that marine compression-ignition engines are similar
in design to currently regulated nonroad compression-ignition engines, the
current technologies and potential emission control technologies described in
the > 50 horsepower nonroad RSD are expected to be reasonably applicable to
marine compression-ignition engines.
1.2.1. Current Technology
1.2.1.1.	Outboard and Personal Watercraft Spark-Ignition Engines—The
current technology for outboard and personal watercraft engines is
predominantly crankcase fuel/air/oil scavenged two-stroke. This technology
was used on the first outboard marine engines produced and continues to be
used today. After combustion of the air/fuel/oil mixture, the resulting
exhaust gases are "pushed" or "scavenged" from the cylinder by the crankcase
air/fuel/oil charge. Thus a portion of the air/fuel/oil charge exits the cylinder

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1-14
DRAFT
along with the exhaust gases resulting in extremely high hydrocarbon emission
levels. Up to 25-30 percent of the fuel consumed by such engines can exit the
cylinder unbumed.
Another technology used in the market today, although only making up
about 0.1 percent of the current market, is 4-stroke technology. Currently two
manufacturers produce 4-stroke outboard engines.
1,2.1.2 Sterndrive and Inboard Spark-ignition Engines—The current technology
used on nearly all spark-ignition marine sterndrive and inboard engines is 4-
stroke. Most of these engines are derived from marinizing truck or automobile
engine blocks. Marinizing often includes the addition of intake manifolds, fuel
systems, and water jacketed exhaust manifolds to automotive or truck engine
blocks.
Currently, the majority of sterndrive and inboard spark-ignition engine
utilize carbureted fuel systems. However, there is a trend toward the
increased application of electronic fuel injection (EFI) for these engines.
1.2.2. Potential Emission Control Technology
1.2.2.1. 4-stroke Technology-One relatively clean {that is, low
hydrocarbon emissions) technology that is feasible for outboard and personal
watercraft engines is 4-stroke technology. This technology eliminates the
exhaust gas scavenging by the crankcase air/fuel/oil mixture, thus
significantly reducing hydrocarbon emissions. Four-stroke technology has
been used for years for automotive applications as well as nonroad engine
applications such as sterndrive and inboard marine engines and lawn and
garden spark-ignition engines. However, 4-stroke technology will most likely
be limited to engines under about 100 hp since the weight increases from the
added components may be prohibitive for the larger outboard engines.

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DRAFT
1-15
1.2.2.2.	Direct Infection 2-Stroke Technology—Direct injection 2-stroke
technology is another potentially feasible technology for application on
outboard and personal watercraft engines to significantly reduce hydrocarbon
emissions. This cleaner type of 2-stroke technology directly injects the fuel into
the combustion chamber, thus avoiding the air/fuel/oil scavenging losses
inherent with current technology 2-stroke engines. For direct injection designs,
exhaust gases are pushed out, or scavenged from the combustion chamber
with the air/oil mixture from the crarikcase, not the air/fuel/oil crankcase
mixture that is used to scavenge current technology 2-strokes. This not only
results in significant hydrocarbon emissions reduction, but also improves fuel
economy. There are a number of different variations of direct injection
technologies. Two main grouping are those that use air assisted (pneumatic)
systems to inject fuel and those that are not air assisted that rely on mechanical
means to develop the necessary injection pressures. An example of an air
assisted system, developed by Orbital Corp. of Australia is discussed in more
detail in the following.
Orbital's Small Engine Fuel Injection System (SEFIS): This technology
consists of applying a Small Engine Fuel Injection System (SEFIS) consisting of
a Fuel and Oil Metering Pump (FOMP) and a Direct Cylinder Injector (DCI).
The FOMP controls the amount of fuel and oil delivered to the engine. The oil
is measured as a function of engine speed and fuel flow. Because the FOMP
injects oil into the air intake, fuel and oil are not mixed in the fuel tank. The
fuel injection is accomplished by an air assisted (pneumatic) fuel injector used
to achieve a stratified charge. The air and fuel are injected into the cylinder.
Electronic control of the injection timing is used to prevent scavenging losses
at high loads and excessive fuel dispersion at light loads (to control
hydrocarbons and stability).
A third technology that EPA believes to be potentially feasible for
reducing hydrocarbon emissions from outboards and personal watercraft is

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1-16
DRAFT
catalyst technology. Catalysts have been used for reducing emissions from
automobiles since the mid 1970's. Catalysts can also be used for marine
applications, but there are a number of technological hurdles that must be
overcome,
A main complication with the use of catalysts with marine engines is
that water is mixed with the exhaust for engine surface temperature reduction
to comply with U.S. Coast Guard regulations and for noise reduction purposes.
Catalysts would have to be designed to be located upstream of the point
where water is introduced into the exhaust system. Also, especially for
outboard and personal watercraft engines, severe packaging constraints make
the application of catalysts very challenging.	One last point is that
since these engines can often operate at wide open throttle for extended
periods of time, high catalyst temperatures limit the conversion efficiency
levels to which the catalysts can be designed. Catalysts along with the closed
loop electronic fuel injection systems used for automobile applications often
achieve greater than 90 percent hydrocarbon conversion efficiency. However,
automobiles do not operate for extended periods of time at wide open throttle
where catalysts temperatures can cause severe catalyst deactivation or safety
hazards. Therefore, for marine applications, catalyst conversion efficiency may
need to be limited to lower conversion efficiency levels (70-80 percent) due to
these temperature concerns.
EPA also considered a number of other emission control techniques to
reduce emissions from outboard and personal watercraft engines. These
include recalibration of current technology 2-stroke engines and electronic fuel
injection on current technology 2-strokes. These methods are expected to
achieve much less emission reduction (see the section "Control Technology-
Pollutant Levels" below) compared to the other technologies.

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DRAFT
1-17
1.2.3 Control Technology Pollutant Levels
1.2.3,1 Outboard and Personal Watercraft Engines—Several technologies were
considered for reduction of HC emissions from current two-stroke outboard
and personal watercraft engines: conversion to four-stroke, direct-injection
two-stroke, recalibration of current two-strokes, and the use of catalytic
converters. In determining the benefits from these technologies, EPA has
compared emissions rates (on a brake specific work basis) from current two-
stroke outboard and personal watercraft engines without these emission
control technologies to estimates and test data from engines with these
emission control technologies. Most of this data was received from the marine
engine manufacturers. EPA has also made independent estimates as well and
both are summarized in Table 1-02.
Table 1-02
EPA and Marine Engine Manufacturer Range of Estimates of Potential
Hydrocarbon Emission Reduction, per Engine, for Current Two-Stroke
Outboards and Personal Watercraft
Technology
HC Percent Reduction Estimate Ranges,
per Engine Mass Specific Emission Rate
(%)
Conversion to Four-Stroke
75-95
Two-stroke direct injection
75-90
Recalibration of current two-strokes
8-20
Catalytic converters on current two-strokes
65-75
Electronic Fuel Injection on current two-strokes
15-25
Electronic Fuel Injection wI Catalytic converter on current two-strokes
65-75
EPA's estimate for per engine mass emission rate reductions of carbon
monoxide (CO) for personal watercraft and outboards ranges between 8 and 45

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1-18
DRAFT
percent for most technologies, depending on the engine size. The direct
injection two-stroke technology is the one exception. Due to the lean-burn
nature of direct injection, EPA expects this technology to result in a per engine
reduction in the brake specific emission rate of CO to be between 40 and 80
percent, depending on the particular engine size.
One inherent result of current air-fuel crankcase scavenged two-stroke
engines is the low emission rate for oxides of nitrogen (NOx). The primary
source of NOx in spark-ignited engines is the oxidation of atmospheric
nitrogen. The chemical reactions for production of NOx have large activation
energies, therefore NOx formation is strongly dependent on temperature. In
addition, since NOx is formed by the oxidation of N2, NOx formation is also
dependent on the availability of oxygen, (excess oxygen results from lean air-
fuel ratios (A/F)). The condition at which the air-fuel ratio is chemically
balanced for full combustion is called stoichiometry. At a rich A/F, when
there is not enough oxygen present to fully bum the fuel, NOx formation will
be low relative to the same engine running under lean A/F, when there is
more oxygen than necessary to fully burn the fuel. The current state of the
marine outboard and personal watercraft industry has developed around the
two-stroke, crankcase-scavenged, spark-ignition power source. These engines
are run at A/Fs on the rich side of stoichiometry, resulting in relatively low
combustion temperature, incomplete combustion, and, therefore, low NOx
production.
However, the richness of the charge does not explain why current two-
stroke engines have lower mass emission rates of NOx than comparably
powered four-strokes running at the same A/F. The explanation lies in the
exhaust remaining in the combustion chamber of two-stroke engines from the
previous power stroke. This exhaust, which was not completely scavenged by
the air-fuel intake mixture, acts as internal exhaust gas recirculation (EGR).
EGR is a well documented technique used to lower NOx production in four-

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DRAFT
1-19
stroke spark-ignition engines. EGR acts as a diluent to the fresh charge in the
cylinder, reducing peak burned gas temperatures, and thereby reducing NOx
formation.
Currently unregulated two-stroke crankcase-scavenged outboard and
PWC engines have NOx emission rates which range from 0.5 g/kW-hr up to
4.0 g/kW-hr. EPA estimates that the two primary technologies which will be
used to meet the proposed standard, conversion to four-stroke engines and
two-stroke direct injection, will both result in an increase in the level of NOx
produced by outboard and PWC engines. In order to meet the proposed level
of hydrocarbon emissions, EPA estimates that manufacturers will need to
recalibrate their engines to run at leaner air-fuel ratios, resulting in higher
combustion temperatures, more complete combustion, and some increase in
NOx formation. In addition, four-stroke technology has little "internal EGR"
which could reduce NOx emission rates. On a per engine basis, depending on
the engine size and technology used to meet the proposed hydrocarbon
standard, the mass-specific emission rate of NOx will increase to values in the
range between 4 and 12 g/kW-hr. However, EPA estimates the overall
average NOx for outboard and personal watercraft engines to be 6 g/kW-hr
after HC standards are met. Some of this increase in NOx emissions can be
counter-balanced by use of forced EGR technology.
1.2.3.2. Stemdrivs and Inboard Engines—EPA has examined a range of
technologies for the control of exhaust emissions from sterndrive and inboard
spark-ignited engines. These technologies include the following; recalibration
of current carbureted and electronic fuel injection (EFI) engines for maximum
emission reduction benefit, conversion of current carbureted marine engines to
electronic port fuel injection, and the application of oxidizing (or three-way)
catalytic convertors to current four-stroke spark-ignited marine engines. Table

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1-20
DRAFT
1-03 shows the range of hydrocarbon reductions estimated by EPA and
industry on a per engine basis for the three technologies investigated by EPA.
Table 1-03
Range of Estimates of Potential Hydrocarbon Emission Reduction per
Engine, for Current Sterndrive and Inboard Engines
Technology
HC Percent Reduction Estimate Ranges,
per Engine Mass Specific Emission Rate
(%)
Recalibration of Current Engines
8-20
Electronic Fuel Injection
8-20
Application of Catalytic Converters
65-75
EPA has determined that recalibration of current engines is the most cost
effective approach.
1.2.4. Technology Costs-This section describes technology costs. The
results of the technology cost analysis is used with the pollutant levels
associated with the various technologies as presented in the previous section to
arrive at the presentation of marginal cost-effectiveness which will be
presented in section 1.2.5. Lowest Feasible Emission Standards.
1.2.4.1.	Industry Cost Data Submissions-For purposes of setting the
emission standard, EPA used cost estimates as submitted by industry. EPA
reviewed the data for reasonableness. EPA feels that the industry data is
reasonable and is likely to be a good estimate of the total extent of costs due to
regulation. Costs may be different for a number of reasons, including changes
in product offerings, consumer popularity of engines with emission control,
how supply and demand actually determine price, if maintenance costs are

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DRAFT
1-21
different than estimated, if the submitted data contained cost over- or under-
estimates based on uncertainty, or similar occurrences. Industry has indicated
uncertainty as to whether the costs submitted represent the total extent of costs
to be expected. Industry as a whole seems to be concerned that the cost of
bringing prototype engines into full production may be underestimated in
their submissions. Also, industry has not submitted cost estimates relating to
durability concerns. Overall, the extensive amount of data which was
submitted appears a fair estimate.
Industry submitted confidential data to National Economic Research
Associates, Inc., (NERA) for analysis and allowed EPA full access to the same
data. Information was submitted for over 90% of the sales in the market,
including sales of outboards, personal watercraft, and stemdrive/inboard
engines. Information was only submitted with respect to engine families
marketed in the U.S..
The following types of data were submitted.
•	identification of engine family and sales-weighted hp
•	1990 U.S. sales volume per outboard and stemdrive/inboard engine
family
•	1993 U.S. sales volume per personal watercraft engine family
•	uncontrolled emission rates (g/kw-hr) for HC, NOx, CO, and fuel
consumption at the rated power output
•	potential engine control technologies
•	controlled emission rates (g/kw-hr) by technology for HC, NOx, CO,
and fuel consumption at the rated power output
•	technology or generic costs associated with the development and
licensing of a new technology
•	changes in capital costs-incremental changes in emissions testing,
tooling, equipment, and research and development associated with each
HC control technology
•	changes in factory parts costs-estimates of specific and miscellaneous
costs, additions and subtractions associated with production costs,
include variable hardware costs
•	changes in other variable engine costs-royalty payments on a per piece
basis, additional emissions testing, added product support, and added
warranty. Combined with "changes in factory parts costs," these
represent all variable cost additions.

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1-22
DRAFT
The following are assumptions used in calculating costs.
•	All costs are reported in 1993 dollars.
•	Fixed costs to the manufacturers of emission control technology (capital
costs) are assumed to be recoverable over 10 years. These capital costs
are amortized at 7 percent.
•	The lifetime of outboard engines ranges from 28 to 54 years according to
power output. The lifetime of stemdrive and inboard engines is 40
years. Personal watercraft engines are assumed to last 20 years.
•	Outboards are used annually, on the average for 34.8 hours.
Sterndrive/inboards are used 47.6 average hours annually. For Personal
watercraft the average annual usage is 77.0 hours.
•	The discount rate for purposes of calculating present value is 3%.
•	Dealer costs are 24% of manufacturer costs.
•	Maintenance costs are relative to engine size and are based on
confidential data provided by Mercury Marine.
•	Fuel price is assumed to be $1.49 per gallon. This is based on $1.25 per
gallon for gasoline and $.24 per gallon for oil.
•	Fuel usage is 1.02 gallons per horsepower per year, based on Coast
Guard data on fuel consumption.
1.2.4.2. Technology Cost Per Engine Family-Due to the concern over
confidentiality, specific cost estimates for different technologies cannot be
presented. For several technologies, it is the case that it would be cost-
effective for only one manufacturer to introduce a technology and not cost-
effective for any other manufacturers. Further, for some technologies there is
only one manufacturer developing the technology. Therefore, to present either
costs or cost-effectiveness would seem likely to impinge on the confidentiality
of the information submitted. As EPA is required to keep confidential any
information pertaining to specific manufacturer's cost, EPA does not feel that
cost or cost-effectiveness information can be presented with respect to a
specific type of technology.
The technology cost estimates will only address technology costs to the
engine manufacturer. Clearly, the consumer will face additional cost
components. Dealer markup and maintenance costs are expected to increase,

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DRAFT	1 -23
yet consumers should realize decreases in fuel and oil expense due to the
control technologies in general. These costs which are not experienced by the
engine manufacturer are included in the aggregated cost estimate of the
rulemaking, the consumer cost estimate, and the program cost-effectiveness.
Only the engine manufacturer cost was used to evaluate marginal cost-
effectiveness. This implies that the costs not experienced by the engine
manufacturer (e.g., dealer markup, maintenance cost, fuel savings) do not
affect the relative product mix choices of engine manufacturers. It is probably
fair to make this assumption as manufacturers have indicated varying opinions
regarding the relative importance ratings of fuel savings and maintenance
increases on consumer purchase decisions. However, although EPA will not
use these non-manufacturer cost components to determine the lowest feasible
emission standard, one would expect that if fuel savings and maintenance cost
increases are important to consumers, then the manufacturers will factor these
costs into their product offering decisions.
If EPA were to include these non-manufacturer costs in the marginal
cost-effectiveness estimates, the result would be as follows. First, the inclusion
of dealer markup would not affect the relative ranking of marginal cost-
effectiveness or the judgement on the lowest feasible average emission
standard. Second, four-stroke technology should achieve slightly more fuel
savings than 2-stroke direct injection technology. Third, maintenance cost
increases generally tend to offset the fuel savings experienced. The result of
the effects of fuel savings and maintenance cost increases may be to change the
relative ranking of marginal cost-effectiveness slightly, may generaEy shift the
entire marginal cost-effectiveness curve up slightly, yet should not affect the
judgement on the lowest feasible emission standard as the shape of the
marginal cost-effectiveness curve should not change significantly.
Therefore, due to concerns over confidentiality of data and the costs
manufacturers will use to make product offering decisions, EPA will present

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1-24
DRAFT
an example of how manufacturer technology costs are calculated for a fictitious
engine family. The result of this type of calculation is used in an analysis of
cost-effectiveness per engine family which is presented in section 1.2.5.,
Lowest Feasible Emission Standard. This calculation is an estimate of the
increase in manufacturer cost expected to be incurred for all the engines sold
in the engine family in a given year of sales.
As exemplified in Table 1-04, capital costs are annualized as if the
manufacturer had to take out a loan to cover the increase at a 7% rate of
interest. It is assumed that the amortized capital costs are recovered over the
approximate ten year average production period for an engine family.
Essentially, this method assumes that the true cost of incurring capital
expenses is related to the earnings which the capital costs could have produced
if used differently than as an investment in emission reduction technology.
The variable costs were aggregated for the engine family according to the total
amount of sales.
Table 1-04
Sample Cost Calculation
(Fictitious Engine Family)

calculation
result
1 output (kW)

100
2 U.S. sales in model year

1,000
3 capital costs for engine family

$2,500,000
4 variable cost per engine unit

$100
S amortized capital cost to be
recovered over engine sales in
this model year
(3) x .14 = this year's payment on a loan
used to cover the increased capital cost
where the annual interest rate is 7% and
the production period of the engine
family is 10 years
1350,000
6 total annual increase in variable
engine costs
(4) x (2)
$100,000
7 manufacturer's total annualized
cost for this engine family
{55+ (6)
$450,000
8 total cost to the manufacturer per
engine
(7)1 (2)
$450

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DRAFT
1-25
Although EPA cannot present the actual technology costs specific to the
different control technologies in this document, it is acceptable to present the
overall costs without identifying which technologies or engine families those
costs apply to. In this way EPA can present the magnitude of the engine
family specific costs without revealing any confidential information. Presented
in Figure 1-02 is the marginal annualized engine manufacturer cost per engine
family. Marginal costs are appropriate when comparing several technologies
which could be applied to an engine family, each resulting in varying degrees
of emission control relative to baseline emission levels. For example,
technology A for an engine family may cost X dollars to apply yet only result
in a 25% decrease in emissions relative to the baseline level. Technology B
could be applied to the engine family costing X+Y dollars and resulting in a
80% decrease in emissions relative to the baseline level. Therefore, the
marginal cost for technology A for this engine family is X dollars. The
marginal cost for technology B for this engine family is (X+Y)-X dollars, or
simply Y dollars. According to this methodology, the actual manufacturer

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1-26
DRAFT

CTE BAR FOR EACH e*3hE RAMLYMO OQNTR3LTBCht«l£X^SUBMTTB3 BY INDUSTRY"
Figure 1-02
ACTUAL MARGINAL MANUFACTURER COSTS
marginal costs per engine family are ranked and presented in Figure 1-03.
Marginal costs do not imply that the technologies are additive. In other
words, it may not be the case that technology B can be added to an engine
which already has technology A. Technology B may be entirely different type
of engine, such as a 4-stroke engine whereas technology A may be 2-stroke
control technology. The main reason for calculating marginal costs is to
determine how much more cost would have to be incurred to produce a more
stringent control technology.
1.2.5. Lowest Feasible Emission Standards-The chosen standards structure
is that of averaging and trading of emission levels with respect to exceedances

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DRAFT
1-27
and shortfalls to an average emission standard. With this chosen standards
structure, EPA's goal is to set the average standard at the lowest feasible level
of emission reduction relative to baseline levels. Therefore, EPA set about
looking for the emission reduction level by means of a percentage emission
reduction from baseline levels beyond which further emission reduction are
not cost-effective. Essentially, this implies that the provisions for averaging
and trading of emission reductions are considered in setting the emission
standards.
In order to determine the degree of emission reduction which can be
achieved most cost-effectively from this source, it is most appropriate to
consider the marginal cost-effectiveness of achieving emission reductions on an
engine family basis for the entire sales fleet. This was done by rationing the
annualized marginal cost per engine family on a technology basis to the
relative emission reduction effectiveness of the technology over the useful lives
of the engines sold in one model year. The annualized marginal cost
methodology was presented in the previous section. The relative emission
reduction effectiveness calculation methodology was presented in section 1.2,3.
, Impacts on Pollutant Levels. The result of the rationing is the marginal cost-
effectiveness per engine family with respect to each technology, as presented in
Figure 1-03. The actual data submitted by manufacturers is used to develop
the curve presented in Figure 1-03.
Clearly, this graph shows that it would not be cost-effective to set an
average emission standard above an 85% emission reduction target, as this is
above the "elbow" of the curve, i.e., where the curve bends sharply upward.
Beyond the elbow of the curve, each additional increment of emission
reduction costs disproportionately more and more. In fact, this data indicates
that a 90% emission reduction is unachievable. On the other hand, the curve is
relatively flat below an 80% level of reduction. Based on the shape of this
curve alone, EPA is inclined to accept 80% as a good judgement for the target

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1-28
DRAFT
level of emission reduction from outboards and personal watercraft.
However, it must be acknowledged that the use of this curve to set an
emission standard implies perfect knowledge regarding costs and
corresponding effectiveness of control for different pollution control
technologies. Moreover, to achieve the emission standards set on the basis of
such a curve, the market for emission reduction credits is assumed to be
perfectly competitive. However, the market for marine engines is oligopolistic
and thus expectations that the emission market will be perfectly competitive
are perhaps not justified. If the emission reduction credit market is not
perfect, it is unlikely that the target reduction level would be precisely
achieved. Assuming industry compliance, the result could be in overcontrol of
emissions from the perspective of this marginal cost-effectiveness curve. With
overcontrol, costs would rise more quickly than would emission reductions. In
order to provide a "hedge" against this kind of unproductive overcontrol of
emissions, a 75% level of reduction appears to be the best choice for an
emission reduction target. Setting the emission reduction target at a 75% level
of reduction ensures that if small amounts of overcontrol of emissions occurs,
the overcontrol is not unduly cost-ineffective. Although EPA thinks that the
probability of overcontrol may be higher at 75% than 80% level of reduction,
the supply of credits should not be as tight at 75%. If the market does not
exhibit perfect trading, then at a 75% level of production it is still cost effective
for a manufacturer to produce additional controlled engine families to ease the
supply of credits to the market.

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DRAFT
1-29
10000

M

£ 8000

R


G


1 8000


N


A


1 7000


C


J5 6000


T


_ 5000


E
I
F
I
p 4000
I
E
j
C 3000
j
T
/
I 2000

V
c
						
N 1000
-—					
E
		—	
o •

b
] ! t 1 1 1 < 1 1
\ \
S 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 0

CUMULATIVE % HC REDUCTION

Figure 1-04
Per Engine Family Marginal Cost-Effectiveness Curve
Outboards and Personal Watercraft

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1-30
DRAFT
Table 1-05
Outboard Technology Market Mix
Technology
Before
Regulation
After Phase-In
2-stroke, closed crankcase, carbureted or
crankcase electronic fuel injection
99.0%
15.3%
4-stroke, closed crankcase, carbureted or
crankcase electronic fuel injection
1.0%
31.0%
2-stroke, closed crankcase, carbureted or
crankcase electronic fuel injection, ignition
changes
0.0%
1.3%
2-stroke, closed crankcase, carbureted or
crankcase electronic fuel injection, catalyst
0,0%
3.2%
2-stroke, closed crankcase, direct injection
air assisted
0.0%
20.3%
2-stroke, closed crankcase, direct injection,
not air assisted
0.0%
28.9%
Table 1-08
Personal Watercraft Technology Market Mix
Technology
Before
Regulation
After Phase-In
2-stroke, closed crankcase, carbureted or
crankcase electronic fuel injection
100.0%
2.3%
2-stroke, closed crankcase, carbureted or
crankcase electronic fuel injection, carburetor
changes
0.0%
3.1%
4-stroke, closed crankcase, carbureted or
electronic fuel injection
0.0%
94.6%

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DRAFT
1-31
Table 1-07
Sterndrlve and Inboard Technology Market Mix
Technology
Before
Regulation
After Phase-In
4-stroke, closed crankcase, carbureted or
electronic fuel injection
100.0%
0.0%
4-stroke, closed crankcase, carbureted or
electronic fuel injection, recalibration
0.0%
100.0%
1.2.6. Resultant Technology Market Mix—Upon setting the average emission
standard at a 75% level of reduction, the technology market mixes presented in
Tables 1-05, 1-06, and 1-07 result. These market mixes are derived directly
from the marginal cost-effectiveness curve presented in the preceding section.
1.3. Performance Impacts
1.3.1. Fuel Consumption-For outboard and personal watercraft engines,
the use of technologies that significantly reduce hydrocarbon levels should also
result in significant fuel savings. Current technology two-stroke crankcase
air/fuel/oil scavenged engines, which are very widely used for outboard and
personal watercraft applications, do not use fuel efficiently. An unburned
air/fuel/oil mixture is used to push out, or "scavenge" the exhaust gas from
the cylinder. As a result, a substantial portion of the unburned fuel and oil is
pushed out of the cylinder with the exhaust gases. This combustion
technology can result in wasting more than 25-35 percent of the fuel
consumed. These losses will be greatly alleviated by using direct injection
technology or 4-stroke technology to meet the hydrocarbon emission standards.
The regulations are likely to encourage the widespread use of 4-stroke
technology, direct injection technology, or other "clean" technologies to

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1-32
DRAFT
alleviate the problem. These technologies use a more complete combustion
process and do not use air/fuel scavenging of exhaust. As a result, more fuel
will be burned in the engine instead of being exhausted urtburned, and work
done per unit of fuel will be increased.
For example, based on manufacturer data from 1991, EPA estimates that
changing outboard engines from two-stroke to four-stroke technology will
result in an average decrease in fuel consumption of approximately 31.5
percent. EPA expects similar results from engines that use direct injection
technology. However, aftertreatment technologies, such as catalysts, used to
reduce hydrocarbon emissions are not expected to significantly impact fuel
consumption. So, to the extent that catalysts are used to meet the emission
standards, no fuel savings would be realized using this technology as an add-
on to current technology two-stroke engines.
1.3.2 Weight and Performance-The primary performance effect from the
conversion from two-stroke crankcase- scavenged engines to four-stroke
engines is the decrease in power to weight ratio. Based on information
available on currently marketed two- and four-stroke outboard engines, EPA
estimates the weight of the power unit for both outboards and PWC's will
increase between 23 and 35 percent for a given rated power. Power to weight
impacts resulting from the use of two-stroke direct injection technology should
be minimal. EPA estimates the additional weight increase from the added
components necessary for two-stroke direct injection technology will result in
power unit weight increases between 5 and 10 percent for a given rated power.
EPA considers the use of catalytic convenors (with limited conversion
efficiency) on two-stroke crankcase-scavenged engines as a technologically
feasible and cost effective control method for outboards and PWC. The
increase in packaging size will add some additional weight to the engine;
however, EPA does not believe this weight increase will be as great as is

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DRAFT
1-33
involved with the conversion to four-stroke engines. EPA does not believe
there will be any significant performance changes to engines with the
application of catalytic converters other than the decrease in power to weight
ratio.
1.3.3.	Noise-Although noise on engines with emission reduction
technologies has not been examined, the Agency expects no negative impact on
noise due to emission control technologies. Noise levels are expected to
remain the same as on current technology engines.
1.3.4.	Safety-The federal agency that regulates safety issues for marine
vessels is the U.S. Coast Guard. The regulations promulgated by the Coast
Guard fall into three general categories; ensuring the safety of passengers
(regulations for personal flotation devices, and so forth), reducing the risk of
fire hazards (regulations for electrical systems, fuels systems, and ventilation
systems), and, for larger vessels, ensuring vessel integrity (strength and
adequacy of design, construction, choice of materials for machinery, boilers,
pressure vessels, and safety valves and piping)1.
It is EPA's view that the proposed regulations do not violate or conflict
with Coast Guard safety mandates. The regulations proposed in this
rulemaking could be affected by two sets of Coast Guard regulations: (1)
compartment ventilation requirements and (2) fuel tank ventilation
requirements.
Coast Guard regulations require that boats with compartments not open
to the air and containing a permanently installed gasoline engine with a
cranking motor be equipped with power-assisted ventilation. This ventilation
system is necessary because gasoline fumes may accumulate in these
1 See Memorandum to the Docket regarding marine safety issues on recreational boats.

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1-34
DRAFT
compartments through evaporation./ posing a fire hazard when the engine is
started. The Coast Guard also mandates that compartments that contain: (1)
an enclosed engine, (2) openings between it and a compartment that requires
ventilation, (3) permanently installed fuel tanks, (4) a fuel tank with a vent that
opens into the compartment, or (5) a nonmetallic fuel tank be equipped with
natural ventilation to the exterior of the boat. The regulations proposed in this
rulemaking do not require any systems that would violate any of the Coast
Guard requirements. If EPA determines that evaporative emissions regulations
are necessary, EPA will work with the Coast Guard to ensure that safety is not
compromised.
Second, Coast Guard regulations mandate fuel tank vents on all fuel
tanks. Since fuel gauges are not well-calibrated on boats, in part because fuel
tanks come in so many sizes and shapes, and since boat operators want to be
sure they have a full tank when they leave the dock, refueling often continues
until some fuel spills out of the tank. The vent is to ensure that the spillage
does not fall in the boat, creating a fire hazard. However, fuel vents also
permit the release of evaporative emissions. Coast Guard representatives
expressed concern about closed fuel systems that could be mandated to reduce
these evaporative emissions. Closed fuel systems are not currently permitted
under Coast Guard regulations and could cause a potential safety hazard.
Again, the regulations proposed in this rulemaking do not require any systems
that would violate any of these requirements, since EPA has decided not to
regulate evaporative emissions at this time. However, EPA intends to continue
working with the Coast Guard and boat manufacturer groups to encourage
closure of this vent at most times and especially when fueling is completed.
At the same time, the proposed regulations give rise to a safety issue
that has not yet been considered by the Coast Guard. In discussions with
EPA, representatives of the Coast Guard expressed concern about the use of

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DRAFT
1-35
fuel injection systems on marine engines.2 In these systems, the fuel must be
under pressure in the fuel line. This is a potential safety hazard that could be
dangerous, especially when the craft is far from shore. Although the
regulations proposed in this preamble do not specifically call for fuel injection
systems, it is the case that marine engine manufacturers already include these
systems on some engines and may use them more in response to these
regulations. For this reason, it is important for EPA and the Coast Guard to
consider the safety issues relevant to fuel injection systems.
1.3.5. Maintenance-Section 1.2 details the emission control technologies
EPA believes will be used to reduce HC emissions from marine engines. For
outboard and personal watercraft engines, EPA believes manufacturers will
primarily use one of three control technologies; conversion to four-stroke,
direct injection two-stroke, or the application of catalytic convertors to current
engines. Any additional maintenance costs discussed qualitatively below have
been included in EPA's cost analysis for this rule, including training for service
dealership technicians. In general, EPA believes most end-users do not service
their own marine engines, engines are generally serviced by marine engine
service and repair shops. End users may do routine items such as spark plug
and air filter cleaning/replacing. EPA does not anticipate any of the
technologies used to meet the emission requirements of this rule will require a
change in the routine maintenance practices of the end-user. The one
exception would be the need for routine oil and oil filter changes for four-
stroke engines.
The conversion of crankcase-scavenged two-stroke to four-stroke
engines will require additional maintenance skills and tools for the repair shop
technicians. The added parts that make a four-stroke engine work, a valve
2
See Memorandum to the Docket, cited previously.

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1
1-36	DRAFT
train, cam shaft, oil pump, etc., will require additional knowledge lor
technicians. EPA does not anticipate that four-stroke marine engines will
require repairs on a more frequent basis than current crankcase-scavenged
two-stroke engines. In addition, many marine engine repair shops also sell
and repair other types of recreational or lawn and garden engines, such as all-
terrain vehicles, lawn mowers, motorcycles, etc. Many of these equipment
types are powered by four-stroke engines, so technicians may not need
additional training on the operation and maintenance practices for four-stroke
engines.
The application of direct injection two-strokes will be a new technology
for the marine maintenance and repair industry. The type of additional
training, diagnostic equipment, and repair tools necessary to work on DI two-
strokes will depend on the particular type of DI used by a given engine
manufacturer, but whatever the type of DI used, it will be a new technology
for the marine servicing dealer. EPA anticipates that marine engine
manufacturers will spend a considerable amount of funds in the retraining of
their serving dealers to handle the need for technicians who are knowledgeable
in the servicing of DI two-stroke engines. EPA does not anticipate that DI
two-stroke engines will require more frequent servicing than current
production crankcase-scavenged two-stroke engines.
The application of catalytic converters to crankcase- scavenged two-
stroke engines should not require any additional maintenance requirements for
the end user or servicing dealerships. EPA's experience with on-highway
applications using catalytic converters has shown that a well designed catalyst
does not require servicing or maintenance.

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DRAFT
1-37
The principle technology EPA anticipates will be used by sterndrive and
inboard engine manufacturers to meet the requirements of this rulemaking is
the recalibration of current engines. EPA does not expect recalibration will
require additional maintenance beyond current production sterndrive and
inboard engines.
1.4 Impacts on Vessel Design
EPA anticipates minimal impacts on marine vessel design due to this
rule. Currently marketed four-stroke outboard engines have essentially
identical packaging to currently marketed crankcase charge scavenged two-
stroke outboard engines. The only significant impact on vessel design
resulting from the use of four-stroke outboard engines is the lower power to
weight ratio. As discussed in Section 1.3.2, Weight and Performance, EPA
expects a to *35^ percent increase in engine weight for a given horsepower
with the conversion to four-stroke outboards. This increase in weight will
need to be taken into account when designing a vessel/engine package. This
will be particularly true for personnel watercraft vessels which utilize four-
stroke engines due to the very small size of the personnel watercraft hull.
EPA anticipates little or no impact to vessel design resulting from the
use of direct-injection two-stroke engines in either outboard engines or as
power unite for personnel watercraft. EPA also anticipates the application of
catalytic converters to crankcase charge scavenged two-stroke engines will
have minimal impacts on vessel design. EPA believes catalytic converters
would be built into the engine package, and would not be designed as part of
the vessel structure.
EPA believes the recalibration of sterndrive and inboard engines to meet
the emission requirements of this rule will have no impact on vessel design.

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DRAFT

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DRAFT
Chapter 1 - References
1.	International Bodensee Shipping Commission (IKSB), Article 13.11 of the
Bodensee Shipping Regulations (BSO): Exhaust Gas Regulations for Marine
Engines, June 4, 1991.
2.	Morgan, E., Lincoln, R., Duty Cycle for Recreational Marine Engines, SAE
Paper Number 901596.
3.	40 CFR Part 86, Subpart I.
4.	Michigan Automotive Research Corporation, A Comparison of Exhaust
Emissions on a Marine Engine Run on Steady State and Simulated Transient
Cycles, October 8, 1992, Prepared for National Marine Manufacturers
Association.
5.	Samulski, M., Sensitivity of Test Cycle and Fuel Type on a Crusader 350
Inboard Marine Engine; Test Results - 1992, NTIS Order Number PB 94-
128105, May 26, 1993.
1-39

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DRAFT

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DRAFT
Chapter 2: Aggregate Cost Analysis and Economic Impacts
This chapter describes the industry, presents aggregate costs, consumer
costs, and describes potential economic impacts.
2.1. Industry Description and Market Analysis
The spark-ignition marine industry is comprised of a small number of
engine manufacturers. Hie engine manufacturers noted in Table 2-01 make up
over 90% of the market. Table 2-01 also lists the major types of propulsion
systems: outboards, personal watercraft, and stemdrives & inboards.
Table 2-01
Engine Manufacturers
OUTBOARD
PERSONAL WATERCRAFT
STERNDRIVES & INBOARDS
OUTBOARD MARINE CORP.
YAMAHA
MERCURY MARINE
MERCURY MARINE
KAWASAKI
INDMAR
YAMAHA
ART CO.
VOLVO PENTA/OMC
SUZUKI
BOMBARDIER
CRUSADER
TOHATSU
SUZUKI
VARIOUS MARINIZERS
HONDA


NISSAN


The engine industry exhibits characteristics of an oligopolistic market
structure: a few engine manufacturers dominate market share with a high
degree of product differentiation.
EPA contracted for two market studies to gather information on the
2-1

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2-2
DRAFT
marine engine and vessel markets. The first study was performed by ICF
Incorporated and the second study was performed by Specialists in Business
Information. The following excerpts contain the points EPA thinks are most
relevant to the regulation of emissions from spark-ignition marine engines.
"Demographics of Boat Ownership: There are numerous ways to
report boating activity ownership patterns, including ownership registration,
and total and mean passenger hours of use. These measures are further
described according to such characteristics as geographic distribution, as well
as various socio-economic characteristics including age, household size, income,
gender, and race. National estimates of boat ownership vary depending upon
the data source. For example, although the [National Marine Manufacturers
Association] NMMA estimates that there are approximately 16 million
recreational boats owned in the U.S., estimates of number of boats registered is
closer to 11 million (in part because of the differences among states in
registration requirements as well as compliance by boat owners with
registration requirements), Five states (Michigan, California, Minnesota,
Florida, and Texas) account for 33.1 percent of U.S. boat registration. When
states are ranked according to boaters as a percentage of all U.S. boaters, the
five top states are California, Michigan, Texas, New York, and Illinois. Boaters
tend to fall into the 20-30 and 31-40 age groups, but analysis of data related to
intensity of use indicates that boating use is relatively constant among
population groups when adjusted for the number of individuals in each age
category. Also, at upper income levels, the percentage of total boaters tends to
be larger than the U.S. population for that income range. For all age groups,
the percentage of male boaters exceeds the corresponding U.S. census
percentage, as does the percentage of white boaters. With respect to the
characteristics of the boats, the average age of the fleet is increasing. In
particular, between 1976 and 1989 the average age for speedboats, cabin
sailboats, and cabin cruisers increased from 8.6 years to 10.5 years, 8.5 years to
11.9 years, and 9.7 years to 11 years, respectively.
Overall Size of the Marine Industry; Trends for marine industry retail
expenditures reflect those for the economy as a whole, showing prosperity
during the mid-1980s, peaking in 1988, and decreasing since 1988. As a
percentage of the GDP, marine industry retail expenditures exhibit the same
pattern over the period. Although there is no conclusive explanation for these
trends, it appears likely that the economy as a whole and the January 1991
luxury tax exacerbated trends for the marine industry. Both the tax and the
uncertainty associated with speculation that it would be repealed may have
caused consumers to delay purchases. Not surprisingly, the top ten states
include those states with extensive coastal area, large populations, and
relatively high per capita income. These data correspond to boat registration
by state data presented elsewhere in this report.
The total number of people employed in boat building and repairing
increased steadily from 1982 to 1987 (except for 1985). The number of people
employed in engine manufacturing and in ship building have generally
decreased since 1981.

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DRAFT
The marine industry is concentrated in relatively few states: four states
account for 56 percent of marinas, eight states account for nearly half of ail
boat dealers, and 10 states account for almost two-thirds of all boat
manufacturers.
The value added by manufacturing in the marine industry was more
than $12 billion in 1987, a 30 percent increase form the approximately $8 billion
in 1982. Value added in boat building nearly doubled, while value added in
ship building and engine manufacturing increased less rapidly and uniformly.
Structure of the Pleasure Boating Industry: The pleasure craft industry
is extremely complicated, with numerous distribution channels, large numbers
of highly specialized manufacturers, and a smaller number of well-diversified
manufacturers. For example, even though a small number of engine
manufacturers dominate the industry in terms of overall market share, there
are relatively large numbers of manufacturers willing to compete in the
industry, and overall levels of competition are high. As discussed in Chapter
6, this study identified more than 40 engine manufacturers producing more
than 1,200 distinct engines. The vessel industry has a large number of distinct
product categories thai cater to very specific boating needs. Although a few
major manufacturers have a significant overall market share, the specialization
has supported a large number of individual manufacturers of all sizes. The
major manufacturers themselves are internally organized to produce boats
under numerous distinct, often competing brand names.
Similarly, distribution channels are complicated. As relatively high
dollar value consumer items, much like automobiles, manufacturers of
individual engines and vessels (and especially smaller vessel manufacturers)
frequently deal directly with their customers, rather than through chains of
intermediaries. Even so, some lines of boats and engines are marketed to
dealers through distributorships; distributorships and dealers can be either
independent or owned by manufacturers.
Boat construction is geographically dispersed. Although only four
states account for half of all establishments, 29 other states have some level of
boat building and repairing. Similarly, 24 states have active shipyards.
One measure of the complexity of the industry is the number of
distinct product classes and classification schemes. Sources that are primarily
directed towards establishing the value of specific boats (e.g., the new and used
boat guides published by BUC Research, Inc.) use very narrow categories to
allow analysis within very discrete subsets of vessel types. Sources that focus
on major industry market segments (e.g., Boating Industry magazine) rely on
relatively broad categories of engine type and material of construction. The
American Red Cross, which is primarily interested in safety concerns,
categorizes boats in terms of factors that affect operation of the craft. The
Bureau of the Census uses categories that appear to relate to differences in
overall design factors that may affect methods of production. Because of the
wide differences in the classification schemes used, it is virtually impossible to
correlate the data from these different sources.
Industry Trends in 1992: The marine industry has experienced several
changes over the last decade. First, there has been an increasing level of
vertical integration between the engine and vessel manufacturing sectors, as
reflected primarily in the efforts of Mercury Marine (Brunswick Corporation)
and OMC to purchase boat manufacturers as captive companies to guarantee

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2-4
DRAFT
outlets for their products, build brand loyalty, and capture potential economies
of scale in design, production and distribution. Although this trend may have
been abated somewhat by the recession, during which both Brunswick and
OMC have suffered from reduced flexibility, the prospects that integration
offers for high volume, standardized designs should continue to be enticing in
the long run.
Second, foreign manufacturers have played an increasing role in the
engine sector of the industry. Such innovations as Yamaha's counter-rotating
engines (to smooth the ride of twin engine boats) and Kawasaki's personal
watercraft have opened market niches and increased consumer acceptance of
foreign engine manufacturers that did not exist in the early 1980s. Foreign
manufacturers that have developed reputations for quality in other engine
markets (e.g., Honda) may be able to use those reputations to compete in the
marine industry as well, further crowding the market. This effect may be
mitigated by the increasing development of foreign markets for pleasure craft.
US-made boats are highly regarded in world markets, and the overall size of
foreign markets appears likely to increase as levels of awareness of boating-as-
recreation increase and as disposable income increases. To the extent that
competition in foreign markets requires more sophistication, however, the
increasing levels of imports and exports may further encourage the trend
towards consolidation and integration.
Third, the significance of product innovations appears to have slowed
recently. The enhancements to the reliability and durability of both engines
and vessels made from the early 1970s through the mid-1980s may have
encouraged boat buyers to purchase the newer, better boats rather than older
vessels. Many of the recent innovations, such as improved navigation and
communication, may not require the purchase of new vessels. Consequently,
consumers may be more willing than before to purchase used boats rather than
new boats, leading to a relatively softer market for new boats and continued
intense competition.
In addition to shifts in the structure of the industry, there have been
shifts in the nature of the consuming population. First, as a consequence of
improved boats and vessels, consumers may be more likely to consider used
boats as viable alternatives to new boats. The increased durability of fiberglass
boats relative to wooden boats means that buyers need be less concerned about
upkeep costs and remaining lifetimes. Thus, builders of new boats must
compete not only with other builders, but also with the increasingly large
resale market. Second, the domestic industry faces increased competition from
other spending alternatives. U.S. consumers may weigh boating against a
wider array of alternatives. Consequently, the domestic marine industry must
compete not only within itself, but also with other luxury and vacation
industries.
Third, the overall demographics of the population are shifting. In the
near-term, the aging of the "baby boomer" generation should extend recent
trends towards larger, more luxurious new boats. ... [T]he segment which has
increased most rapidly in size since 1983 has been boats with engines larger
than 100 horsepower. Average boating levels, in terms of boating hours per
capita, remain relatively constant from the ages of about 20 to 50. Thus, as the
population continues to age, there will be continuing shifts in the proportion of
older boaters, with commensurate shifts in purchasing patterns. Over the
longer term, as the population ages beyond 50 (when levels of boating
participation tend to decrease), actual boating levels and boating demand may

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DRAFT
decrease. The extent of the decrease will depend on the extent of boating by
the generation of baby-boomers' children.
The effects of the luxury tax are not easily analyzed. The apparent
influence of the surcharge in terms of reductions in the number of vessels sold
appears may have been exacerbated by three factors: increases in the average
vessel size and price (which may have led to disproportionate concentration on
the larger boats subject to the tax), other consumer confidence issues such as
the Persian Gulf War, and widely publicized efforts to repeal the tax. The
long-term effects of the luxury tax are difficult to foresee. "(1)
"Market Profile Highlights: The U.S. pleasure boat industry is
recovering from the severe 1990-1991 recession due to stronger personal
income gains, lower interest rates and the repeal of the luxury tax. However,
industry growth has entered a more mature period due to changing
demographic patterns and rising saturation levels. As a result, U.S.
manufacturers and marketers must resort to innovative new products and boat
designs to stimulate demand. Producers should also strengthen foreign
distribution channels to take advantage of emerging world boat markets.
U.S. factory shipments of pleasure boats are estimated to have
increased at a 9.8% annual average compound rate over the past three years.
This compares to a 17% annual decline during the previous three year period.
The recovery was primarily driven by a rebound in personal income, lower
interest rates, and declining gasoline costs.
So far, the recovery has been led by low cost product lines such as
personal watercraft and canoes. Unit sales of personal watercraft increased by
some 41% between 1992 and 1994. This compares to a 20% rise in total retail
boat sales over this period. The growing popularity of low cost watercraft
reflects the sluggish nature of personal income gains and consumer
cautiousness during the current recovery.
Boat demand, however, could shift up-market in 1994 as the August
1993 repeal of the luxury tax boosts sales of luxury boats and yachts. Stronger
personal income gains in 1994 could also lead to the breakout of pent-up
demand for higher end product lines.
The recovery has also resulted in improved plant profit margins.
Gross plant profit margins are estimated to reach 21.8% during 1994. This
compares to 17.5% in 1991. The increase in operating efficiency reflects
moderating material costs, rising labor productivity, and an expanding
industry capital spending effort. The industry's desire to maximize plant
efficiency is imperative in the face of rising foreign competition. Imports could
capture 14% of the total U.S. market sales during 1994, versus 7% in 1990.
Domestic manufacturers and marketers must also increase spending on
new products in order to remain competitive in a rapidly maturing market
structure. Future industry growth is forecast to remain below long term trends
over the next decade due to the aging of the baby boom population and the
decline in the potential number of first-time boat purchasers.
Boat producers will be marketing increasingly to an aging boating
population, who generally cut back on boating spending as they enter the 45 to
54 year old age group. The leading edge of the huge baby boom population,
which helped boost boat demand dramatically during the 1980's, is now
entering this age cohort. The boating industry must target new boat designs
and amenities to this important boating population. At the same time, the
number of potential first time buyers is drying up as the population of 25 to 44

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DRAFT
year olds declines.
New designs and innovations must also be used as a marketing tool to
entice the relatively large base of existing owners to trade in existing
watercraft. This reflects the doubling of existing boat-owning families over the
past twenty-five years.
In order to offset maturing domestic demand, manufacturers must seek
out growth opportunities in foreign markets. Producers should seek out
growing marketing opportunities in relatively untapped markets, such as
Eastern Europe, Mexico and the emerging Asian economies. U.S.
manufacturers should exploit their competitive advantage of developed
distribution channels and other economies of scale that come from supplying
the world's largest domestic market. As a result, export shipments are seen
leading the recovery for the remainder of the 1990 s.
Market Sector Analysis, Summary of Major Findings:
1.	U.S. factory shipments of outboard motorboats could reach $1 billion
during 1994, a 12.3% annual average gain over the past two years.
This reverses most of the decline in shipments that occurred between
1987 and 1992. Runabouts and bass boats dominate this sector of the
pleasure boat industry, however, cabin cruisers have made inroads
since the late 1970's.
2.	Inboard motor sales also experienced a rebound in shipments over the
past two years. This is important to this industry, since inboard boats
is the largest sector of the U.S. pleasure boat industry on a dollar basis.
Cabin cruisers account for over 60% of inboard motorboat sales,
however, runabouts have outpaced sector shipment trends since the
late 1960s.
3.	Inboard-outdrive boats have been the most adversely affected by the
past recessionary period and the relatively sluggish recovery. Dollar
factory shipments could reach $975 million during 1994, however, this
remains 34% below 1987 levels.
4.	Sailboat shipments also remain weak Dollar factory sales are
estimated to reach $125 million during 1994 or 2.9% of total U.S.
pleasure boat shipments. This compares to 4.2% of total shipments
during 19S7, and 11.8% in 1982.
5.	On the other hand, a relatively strong growing nonpowered line on a
unit basis is canoes and kayaks. The popularity of these watercraft
reflects their inexpensive price and portability, and that they are seen
as environmentally friendly. There is also growing interest in battery
powered boats since internal combustion engines are prohibited from a
growing number of lakes.
6.	However, the strongest growing market sector is personal watercraft.
... Kawasaki, Yamaha, and Bombardier are the largest manufacturers.
However, in 1993, a number of traditional boat manufacturers such as
Sea Ray and Boston Whaler began producing personal watercraft.
7.	Over the past five years, prices have been strongest for inboard
motorboats and rubber boats.
Economic Structure of Domestic Boat Builders and Repair Services, Highlights:
1. The U.S. pleasure boat industry continues to be dominated by
relatively small boat builders despite a consolidation in the number of
players since the mid-1980s. However, industry sales are increasingly

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DRAFT
concentrated among the top U.S. boat producers who
manufacture pleasure boats in larger and integrated operations
that benefit from economies of scale. During 1992, the top four
companies captured 39% of total U.S. factory sales. This
compares to only 14% in 1982.
The industry also experienced an improvement in plant profit margins
as U.S. pleasure boat demand began to recover from the past recession.
Gross plant profit margins are estimated to reach 21.8% during 1994.
This compares to 17.5% in 1991. The increase in operating plant
efficiency reflects moderating material costs and a surge labor
productivity.
The major competitors, Brunswick and OMC, are also increasing their
capital expenditures to boost plant efficiency.
Key producing states include Florida, California, Tennessee, Louisiana,
Michigan, Washington, Texas, and Indiana. (2)

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2-8
DRAFT
400
1906	2006	201S
yem	j
O lul^LuOST +. FDCDCOSTVARIABLE uueilj	J
	'	|
Figure 2-01
Aggregate Cost Estimate
2.2. Aggregate Cost Estimate
EPA's aggregate cost estimate to meet proposed standards is presented
in Figure 2-01 and Table 2-01. The annualized costs of this rulemaking exceed
$300 million in 2006. Variable hardware costs required to reduce emissions
from the controlled engine families contribute the largest portion of total costs.
It should be noted that the magnitude of these costs can be put in
perspective by comparing them to the total retail expenditures on outboards
and personal watercraft for 1993 as given in Table 2-02. In 2006, total
annualized costs due to this regulation are roughly 7% of projected retail
expenditures in that year. Additionally, it should be recognized that the
increased costs for these engines are typically financed by consumers.

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DRAFT
2-9
Table 2-01
Total Annualized Cost Estimate
YEAR
TOTAL COST
1998
$13,569,031
1999
$26,604,903
2000
$46,366,647
2001
$99,408,847
2002
$120,445,320
2003
$161,116,451
2004
$210,386,008
2005
$252,179,474
2006
$312,019,471
2007
$314,174,299
2008
$307,005,227
2009
$295,299,615
2010
$291,878,517
2011
$280,974,958
2012
$275,161,349
2013
$264,846,545
2014
$252,522,690
2015
$253,902,306
2016
$257,251,826
2017
$264,262,031
2018
$271,863,912
2019
$280,199,621
2020
$287,199,617
2021
$294,322,422
2022
$301,166,993
2023
$306,885,911
2024
$282,224,916
2025
$285,576,662
2026
$286,562,440
2027
$288,456,757
2028
$289,259,155
2029
$290,863,455
2030
$291,986,910
2031
$292,935,130
2032
$293,925,822
2033
$294,948,785
2034
$295,517,324
2035
$296,885,139
2036
$297,829,470
2037
$298,842,772
2038
$299,209,900
2039
$300,392,654
2040
$301,242,063
2041
$302,156,302
2042
$302,867,541
2043
$304,590,964
2044
$305,745,835
2045
$306,320,636
2046
$307,406,089
2047
$308,925,983
2048
$309,654,001
2049
$310,810,772
2050
$311,854,920
2051
$313,126,017

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2-10
DRAFT
Table 2-02
1993 Retail Expenditures


1993

OUTBOARDS
$1,364,000,000

PERSONAL WATERCRAFT
$618,000,000
2.3
Consumer Cost Summary
EPA cannot present specific consumer costs with respect to different
control technologies due to concerns over confidentiality of manufacturer data.
However, it seems clear that no confidential information could be gleaned by
presenting the overall sales-weighted average per-engine cost increase for
outboards and personal watercraft.
The following average per-engine cost estimates reflect costs averaged
across all engine families for outboards and personal watercraft. It should be
noted that actual prices and costs in the market will differ from the
information presented here for a number of potential reasons. First, not all
costs of control will average across all engine families if the market for
emission reduction credits does not work well. Second, prices of engines are
set by the market forces of supply and demand. Even if the market for
emission reduction credits worked well, prices could be different than expected
if people were willing to pay more or less titan the changes in the cost to
supply engines. For example, if people value most highly the engines with the
lowest emissions and those people are willing to pay a lot more than the
engines cost to produce, one would expect the engine price to reflect consumer
willingness to pay. On the other hand, if people demand more of the clean
engines than predicted, the price may fall due to economies of scale or
increased competition in the market from entry of competing engine families.
Third, consumer willingness to pay is most likely linked to engine output.
Therefore, a $100 increase in price for a 10 kW engine will likely have a
different effect on sales than a $100 increase in price for a 100 kW engine.
These effects will be played out in the market and the market price may be
different than expected.

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DRAFT	2-11
Table 2-04
Estimated Per Engine Consumer Cost Increase
Year
Variable
Fixed
Dealer
Fuel
Maintenance
Admin.
Total

Cost
Cost
Cost
Savings
Cost
Cost
Cost
1998
$12
$21
$5
($76)
$57
$13
$32
1999
$24
$42
$10
($152)
$129
$8
$62
2000
$35
CO
$23
($186)
$159
$8
$137
2001
$56
$178
$41
($241)
$214
$8
$257
2002
$64
$231
$53
($280)
$228
$8
$305
2003
$83
$279
$64
($343)
$297
$8
$389
2004
$102
$350
$81
{$400)
$354
$8
$495
2005
$115
$410
$94
($442)
$389
$8
$575
2006
$126
$495
$114
($499)
$453
$8
$698
750
ocan
-250
-750
_l	L
J	|_
FCprsi	DLftjweng	MAINT-pvori	toapsrflng
NMJpermg	FU&rpwang	atrtr>fw«u
Figure 2-04
Average Consumer Cost Components Per Engine

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2-12
DRAFT
800
m—Ek,
"~13»
'~Ek.
B 600
'13-
-S-c

•E- Q	e-S"Q -B-Q

m
200



19B6 2D00 2DQ2 2DW 20C6 20B 2J10 2?12 2DU 3CM6 2D18 2D2D ZE2 2034 2Q2B
mqcb.\e*r
Figure 2-04
Estimated Average Price Increase
With these qualifications in mind, the estimated per engine cost estimate
is presented in Table 2-03. Figures 2-02 and 2-03 graphically present the
relative cost components and cost estimates over time.
2.3. Incremental Economic Impacts
2.3.1. Capital-Impacts on capital as a result of this rule are the result of
increased investment by manufacturers in order to make their engines comply
with the average emission standards proposed. These costs become part of the
cost of manufacturing and are recaptured in price increases. As a result,
private capital investment is unlikely to be displaced. All expenditures related
to this rule can be expected to be borne from consumer savings or consumer
credit markets, not from private capital markets. As shown in the aggregate
cost section, the capital costs are the lesser costs of this rulemaking. In the
year 2006, the peak year for costs, the capital costs are approximately $55
million.

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DRAFT	2-13
2.3.2. Sales arid Employment-Impacts on sales and
employment are difficult to assess for this rulemaking. EPA considered
impacts on engine manufacturers, boat manufacturers, boat dealerships, and
manufacturers of other recreational marine products such as accessories.
EPA does expect sales to be affected by the price increases which will
result from this rulemaking. See the benefits chapter for the specific sales
estimates EPA has projected. Although sales will decline from projected
baseline levels, overall sales of outboard engines under the controlled scenario
are expected to return to 1997 levels by the year 2011 while sales of personal
watercraft and stemdrive & inboard boats are expected to continue to increase
past 1997.
Engine manufacturers have indicated to EPA that any sales decrease
due to this regulation may be made up by exports. If this is the case,
employment may not be affected by a sales decrease. Several manufacturers
have indicated that employment may increase for engine and boat
manufacturers due to the broadening of product lines expected as a result of
this regulation. Manufacturers of engines will carry controlled engines for sale
to the U.S. market and uncontrolled engines for sale to the world market.
However, it is difficult to assess exactly what might be the increased
employment. Employment increases will depend on individual manufacturers
specific types of production lines.
EPA expects that if any decreases in employment do occur, it is most
likely that they will occur in boat dealerships and in companies who make
accessory products. These effects would be due to decreased sales of outboard
engines and to reduced consumer budgets for consumers who purchase new
outboard or personal watercraft engines.
Boat dealerships have been in poor financial shape in the past 5 years.
The number of boat dealers has fallen as demand for pleasure craft has
decreased and the competitive market has greatly intensified. Boat dealers,
boat builders, and industry service sectors, such as marinas, have all

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2-14	DRAFT
experienced decreased demand. ...50 percent of the boat dealers in the U.S. are
behind in interest payments, and at least 30 percent of all retailers have failed
since 1989.(3) Although sales of pleasure boats are dramatically increased this
year3 making up for recent downturns, any potential sales decrease in the
future may adversely affect the boat dealership sector which is very sensitive
to changes in the economy. Further, sales decreases may affect boat dealers'
employment more than engine or boat manufacturers since boat dealers do not
participate in the expanding world markets. However, EPA is only in a
position to recognize this potential effect and does not have any certainty over
the potential extent of the effect.
Reduced outboard and personal watercraft sales and increased prices of
remaining sales might mean that consumers have less money to purchase other
marine accessory products. If this is the case, then employment may be
affected for those manufacturers who produce accessory marine products,
assuming that consumers total budgets for all marine products do not change.
Quantification of these kinds of potential effects was not performed and would
be uncertain at best.
In summary, EPA is uncertain as to the exact employment effects due to
this rulemaking. EPA requests comment on what those effects may be.
2.3.3. Energy—Reduced energy consumption will be the result of the
proposed emission standards. Resultant increases in fuel economy of these
engines mean demand for energy will decrease marginally in the U.S. The
resultant impact on the U.S. balance of trade is approximately $250 million per
year. The estimate of gasoline savings is presented in Figure 2-04.
3 The Wall Street Journal reported on September 15,1994, page A1, that sales of new pleasure boats
were up 22% from 1993 to the highest level since 1989 as reported by the Boat Owners Association of the
U.S. The group sees double-digit gains for '95, too.

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DRAFT
2-15
I I
jjj 2
aosD
Figure 2-04
Expected Gasoline Savings

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DRAFT

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DRAFT
Chapter 2: References
1.	ICF Incorporated, "Marine Industry Characterization Report," March 25,
1993, pages ES-1..ES-5.
2.	Specialists in Business Information, Incorporated, "The SBI Market Profile
on Pleasure Boats, Profile No. R-716," May 1994.
3.	ICF Incorporated, "Marine Industry Characterization Report," March 25,
1993, page 4-6.
2-17

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DRAFT

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DRAFT
Chapter 3: Environmental Benefit
This chapter presents the methodology used by EPA to quantify the
emission benefits that would be realized through the proposed HC and NOx
emission standards for SI marine engines. Since the standards are based both
on technology and the power rating of the specific engine, for purposes of
calculating aggregate emissions , the technologies relevant to an application
are grouped together. In all, 16 technology types distributed over 9 kilowatt-
based niche categories have been considered for the analysis.
Benefits, in terms of HC emission reductions and NOx increments , are
presented in two forms: per-engine benefits and aggregate source benefits.
"Per-engine" benefits are the emission reductions expected to occur during the
life of an engine whose emissions are controlled in response to the proposed
standard. "Aggregate Source" benefits are the estimated, future nationwide
application-specific emission reductions from affected engines. Estimated
"aggregate source" benefits illustrate the potential future effect of the proposed
standard on the emission inventory of the source. Air quality benefits are
discussed qualitatively for HC standards.
3-1

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3-2	DRAFT
Many of the detailed results discussed below are presented in separate
tables included in Appendix A - Supplementary Tables.
3.1, Estimated HC Emissions Reduction
To estimate the average annual emissions per current nonroad SI
marine engine, EPA used data provided by NMMA (National Marine
Manufacturers Association) and confidential data provided by individual
manufacturers on sales, kW ratings, and average load factor. Data from the
Price Waterhouse study(l) was used in arriving at average annual hours of
application-specific engine usage. Table A-01 of the Appendix presents
average Kw-ratings for each of nine niche categories as they apply to
technology types.
Average annual emissions calculated for each valid niche category are
based on in-service population of engines, an activity factor and a technology
-based sales-weighted emission factor . The technology types include current
and manufacturer-proposed future cleaner technologies that are expected to
replace current ones in order to meet the proposed standards. Each of the
technology types, by definition, is mutually exclusive in the sense that each
one is associated with one and only one of the three source types - outboard
(OB) , personal watercraft (PWC) and inboard/sterndrive (IB/SD). For each of
these sources, the emission inventory is calculated separately using the
following equation:
INS/,, - N. xHPj .* L OA Dm HO URSx EF,}
*fj	*i/	'1/	J	J	*i/

-------
*
DRAFT
3-3
where
N(j	- nationwide in-use population of engines that belong to
niche category i and application type j.
kWjj	- average rated power in kilowatts, for category i and
application j.
LOADj - rated ratio (%) between average operational power output
and rated power for application j
HOURSj - average annual hours of engine usage for application j
EFij	- brake specific emission rate (grams/kilowatt-hr) for
category i and application j
INVy	- annual nationwide emissions inventory in tons per year
(tpy) for engines that belong to niche category i and
application type j
In-service population and activity information used to construct the
inventory relied predominantly on data provided by NMMA and the
individual manufacturers. Table 3-01 presents data used in calculating the
activity rate per niche for the three application types. The Average Load Factor
is assumed to be 0.207 for every engine irrespective of Kw rating and
technology class.

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3-4
DRAFT
Table 3-01
Average Annual Hours of Use by
Niche Category and Technology Class

		—Technology Class*—		
Outboard Personal Watercraft Inboard/Stemdrive
(OB) (PWC) (IB/SD)
Niche
Category
Power Interval
T1.T4-T9.T15
T2.T13,T 14
T3.T10-T12,T 16
1
0-2,91
34.8


2
2.98-7.38
34.8


3
7.46-22.29
34.8


4
22.37-37.21
34.8
77.3

5
37.28-55.85
34.8
77.3

6
55.92-74.49
34.8


7
74.56-111.77
34.8

47.6
8
111.84-149.05
34.8

47.6
9
149.12+
34.8

47.6
* The Technology Classes are referenced by the letter T.
3.1.1. Per-Engine HC Emissions Reduction
This section describes the calculation of the per-engine emission reductions
which are expected to occur during the life of an engine whose emissions are
controlled in response to the proposed standards. EPA calculated average
annual per-engine
emissions from source i using the equation
INVavgtHC-llNViHC*lNi
where the summations are taken over all engines specific to a source/
application. The average annual per-engine HC emissions per source is then
given by INVavgJiC, which is calculated both for the baseline and control

-------
DRAFT	3-5
scenarios. The results of the calculation are summarized in Table 3-02 below
for Outboard engines by niche category.
3.1.2. Aggregate Estimated Annual HC Reduction
The calculation of aggregate HC reductions is described in this section. The
calculation takes into account U.S sales by model year, engine survival rates
and average annual rates of usage. Estimates of technology-based sales-
weighted average emission rate for each niche is calculated , using which EPA
derived projected nationwide aggregate annual HC emissions through 2051,
the year of complete fleet turnover . Here the "fleet" refers to fleet of all
engines independent of application. It should be noted that the outboards have
the longest useful life and therefore contributes to the long fleet turnover time.
3.1.2.1. Sates Projections-To estimate future emission levels, some
projection of the future population of uncontrolled and controlled engines is
needed. Because engines are introduced into the field through sales, estimates
are needed not only of sales prior to the standard, but also of sales after the
standard goes into effect. The proposed standard would begin to take effect
starting 1998 and would involve a 9-year phase-in period ending in year 2006.
Beginning in 1998, an appropriate fraction of engines sold are assumed to
comply with the proposed standards based on EPA's calculation of marginal
cost-effectiveness.
Projection of future outboard engine sales was done in two steps. In the
first step a regression curve was fitted to historical sales data, available for

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3-6	DRAFT
the period 1961 through 1993. The functional form assumed is:
Sy =	CIaRbPc[exp kB,,Jd
where Sy =	Per capita Outboard sales in year y
I =	Per capita income adjusted for CPI
R =	Real interest rate
P =	Outboard price adjusted for CPI
=	Total boat population in the previous year
C,a,b,c and d are constants determined from the regression.
The sales projection for 1994 through 2051 assumes that all economic variables
remain constant except for a steady 1.25% growth per year in human
population and a steady increase in price of outboards over the nine-year
phase-in period ending in year 2006. As for inboards , the same equation is
used to project sales, except that engine price remains constant over the phase-
in vears and bevond. For PWCs, sales projections S., for the phase-in vears and
beyond -upto year 2015, are made using the equation :
Sy	=	(l+,04*(y-1997))* Sy.,* (Py/P93)-20 where
y	=	calendar year
Sy-,	-	sales in previous year
Py /P93	-	current year sales compared to base year(1993) sales
For years 2016-2051, the projections are based on the equation:
Sy	=	(l+.005*(y-2015))* Sy/ (Py/P*,)""
where y	=	calendar year
Sy.t	=	sales in previous year
Py /P93	=	current year sales compared to base year (1993) sales
(The above is based on what EPA thinks the future growth rate of PWCs will
be, and hence is open to comments.)

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DRAFT
3-7
However, it should be recognized that, while national growth is
measured 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
EPA distinguished between sales of controlled and uncontrolled
engines in each future year starting in 1998, when an appropriate proportion of
engines manufactured and sold are assumed to comply with the proposed
standards. Although the proposed averaging and trading provisions allow for
engines to emit at rates above the standard, they must be balanced by cleaner
(i.e., below the standard) engines. Consequently, starting in year 2007, every
new engine sold should emit at or below the proposed standard . Tables A-02
and A-03 present estimated sales of pre- and post-control engines by niche
category for model years 1994-2051.
3.1.1.2.	Survival Probabilitles-In calculating the emission reductions that are
expected to occur during the life of an engine, whose emissions are controlled
in response to the proposed standard, EPA relied on estimates of average
useful life provided by manufacturers. For outboard engines the average
useful life (>i) is determined to be a function of the kilowatt rating and is of the
form:
]i = 41.27*(l/.075kW)"°204 , where kW is the kilowatt rating of
the engine.
Also the life distribution of marine engines in the field is assumed to be a 2-
parameter Weibull distribution function of the form:
F = 1-exp -(t/0)b
where
F
b
0
cumulative fraction of engines failed
age of the engine or time to failure
scale parameter or characteristic life
shape parameter or slope

-------
3-8	DRAFT
The characteristic life 8 is related to the mean life n and slope b through the
equation
p = br(0 +1/0)
Based on information obtained from reliable source, EPA assumed the shape
parameter for the Weibull-based life distribution of marine engines to be 4.0.
Hence 0 for each outboard niche category is computed as displayed in Table
A-04. As for personal watercraft and inboard/sterndrive engines the average
usefule life was assumed to be 10 and 20 years respectively and are
independent of kilowatt ratings.
3.1.1.3. In-Service Population—By coupling the estimated sales projections
given in Table A-02 with the engine survival function described above, EPA
calculated the estimated in-service populations for calendar years 1990 to 2051
for engines in each niche category of an application. In doing so, EPA
distinguished between controlled and uncontrolled engines, so that the effect
of the standards could be ascertained. Table A-05 shows the resulting
population projections for 1990-2051 for un-controlled and controlled engines
used in all three application types. These projections are represented
graphically in Figure 3-01.

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DRAFT
3-9
7Q	I I II ! I I I I I ! I I I I I I I I I I I I I I I I I I I I M i I I I I I I ¦ I ; I I I I I I ! I 1 ; I i t 1 : I ¦ i
im im zmzmzmzaaxBzwzmzmzB)
ltWSECfiLB£M\&R
i -a BASSMS ~ cowl
I 	
Figure 3-01
In-Use Engine Population by Calendar Year
3.1.1.4. Aggregate Source Emissions Inventory-EPA projected future
annual nationwide HC and NOx emissions from engines addressed in this
proposal under the baseline (no controls applied) and controlled scenarios.
This was accomplished using the equation:
t, iSALESfSyXlNV^cj)
J-v- 44
In this equation,
y	- inventory year (same as calendar year)
j	- model year of engine (new model year is assumed
to begin on October 1 of the calendar year)
SALESj - engine sales in year j
S j	- fraction of engines sold in year j that survive
through yr. y
INVm HCj - average annual per-engine HC emissions of engines sold
in yearj
For each inventory year between 1990-2051, the calculation is carried out
for all niches within an application type. The grand total over all niches and

-------
3-10	DRAFT
application types yields the total inventory of emissions from sources
addressed by the current proposal. The controlled and uncontrolled scenario
differences were accounted for by INVavgHCI< while all other parameters
remained tha same in both scenarios. NOx emissions inventory is calculated in
a similar fashion.
Table A-07 presents total annual nationwide HC and NOx emissions
from engines addressed in this proposal under the baseline scenario , and
Table A-Q8 presents results for the controlled scenario. These are shown
graphically in Figure 3-02.
In Figure 3-02, the annual benefit of the proposed regulation is
indicated by the difference between the upper and lower curves. The area
between the curves represents the net benefit of the proposed regulation
during the time required for the marine SI fleet to completely turn over. The
stream of benefits projected for year 2051 yields a reduction of 642,211 tons in
HC emissions which translates to 74.2 % reduction.

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DRAFT
3-11
1000
800
z
600

s
200
2X0	2D10	2CED	2030	2MO	ZED
1990
iMefltRnew
a HG-amic # hC-OCKIHX 4 hCK-BASBJrC o NOMXNTFO^
Figure 3-02
Marine Spark-ignition Projected Inventories
3.1.2. Cost-Effectiveness
EPA has calculated the program cost-effectiveness for this rule as the
ratio of the net present value of the projected stream of costs given in Table 2-
01 divided by the net present value of the projected stream of emission
reductions from projected baseline levels. The ratio is $718 per ton of HC
emissions reduced. According to EPA guidance, the discount rate used for
purposes of calculating net present value was 3%. Alternatively, the Office of
Management and Budget recommends a default discount rate of 7% for the
purposes of calculating net present value. Using 7%, the cost-effectiveness for
the program would be $994 per ton of HC emission reduced. EPA has
decided to use the ratio $718 per ton of HC reduced as the official program
cost-effectiveness for this NPRM as it applies to gasoline marine engines.
3.2 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 also described.

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3-12
DRAFT
3.2.1.	Volatile Organic Compounds (VOC)
EPA expects that reducing VOC emissions from spark ignition marine engines
will help to mitigate the health and welfare impacts of ambient VOC's as well
as urban and regional tropospheric ozone formation and transport.
3.2.1.1.	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, including
benzene, 1,3 butadiene, formaldehyde, acetaldehyde, and gasoline vapors. As
stated previously, VOC is a criteria pollutant for which the EPA has
established a NAAQS. Measures to control VOC emissions should reduce
emissions of air toxics. However, the magnitude of reduction will depend on
whether the control technology reduces the individual toxics in the same
proportion that total VOC are reduced. Spark ignition marine engines do have
significant VOC impacts, and it is suspected they may have significant air
toxics impacts as well.
At elevated concentrations, VOC, a precursor to ozone, can adversely
affect human health, agricultural production and environmental welfare.
Nonroad sources contribute substantially to summertime VOC
emissions. The median contribution of total nonroad emissions to
nonattainment VOC inventories in summer ranges from 7.4-12.6 percent,
depending on the area(2). In EPA's 1991 Nonroad Engine and Vehicle
Emission Study (NEVES), the recreational marine category, made up primarily
of spark-ignition marine engines, was estimated to be a major contributor to
summertime VOC emissions, accounting for a median ranging from 3.4 percent
to 4.0 percent of the total VOC inventory in tons per summer day , depending
on the area.
3.2.2.	Benzene
Benzene is a clear, colorless, aromatic hydrocarbon which has a
characteristic odor. It is both volatile and flammable. Benzene is present in
both gasoline fuel and it is formed during the incomplete combustion of
gasoline. The benzene level of typical unleaded gasoline sold today is

-------
DRAFT	3-13
approximately 1.5 percent. The fraction of benzene in the exhaust varies
depending on cycle type, control technology and fuel composition. For on-
highway motor vehicles, benzene is typically 3 to 5 percent of the exhaust
tailpipe total organic gases emitted. It has been found for on-highway motor
vehicles that benzene generally represents 1 percent of evaporative emissions,
depending on the control technology and fuel composition.
Mobile sources account for approximately 85 percent of the total
benzene emissions, of which approximately 30 percent can be attributed to
nonroad mobile sources. These estimates were obtained from EPA's NEVES
report. In the NEVES report, benzene was estimated to be about 3.0 percent of
VOC emissions and 1.7 percent of evaporative VOC emissions for nonroad
equipment. The split between exhaust and evaporative benzene emissions
was assumed to be 80 percent exhaust to 20 percent evaporative. Thus, the
overall benzene fraction of nonroad VOC emissions was estimated to be 2.74
percent.
However, the NEVES study did not distinguish between crankcase
fuel/air scavenged (CS) two-stroke and four-stroke engines. An examination of
the air toxic data used in support of the NEVES study(3), along with two
additional reports from SouthWest Research Institute(4)(5) indicates a
significant difference in air toxics as a percentage of total VOC emissions
between crankcase scavenged two-stroke and four-stroke spark ignition
gasoline engines. The data set consisted of nine unregulated, spark-ignition
engines. The data set includes two new CS two-stroke engines, two used CS
two-stroke engines, two new four-stroke engines, and three used four-stroke
engines, all engines were used in equipment for the lawn and garden industry.
A summary of air toxics as a percentage of total hydrocarbons from this data
set is given below in Table 4-01

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3-14
DRAFT
Table 3-02
Air Toxics as a Percentage of Total Hydrocarbons;
Mean Values for Small Nonroad Spark-Ignited Engines
Engine Cycle Type
benzene
1,3 butadiene
formaldehyde
acetaldetiyde
CS Two-Strokes (four engines)
1.2%
0.16%
0.36%
0.08%
Four-Strokes (five engines)
4.0%
0.55%
0.62%
0,11%
The primary difference in air toxics as a percentage of total hydrocarbons
between CS two-strokes and four-stroke engines are the high scavenging losses
inherent in the CS two-stroke engine. Typically 80 to 95 percent of the
exhaust hydrocarbons emitted from a CS two-stroke engine are from the
imbumt fuel which escapes during the scavenging of the exhaust products
with fresh charge. Though unbumt fuel does contain benzene, incomplete
combustion of non-benzene aromatics can contribute significantly to an engines
benzene emission rate. Therefore, when presented in terms of a percentage of
total hydrocarbons emitted, a four-stroke engine has a higher percentage than
a CS two-stroke because the CS two-stroke's mass emission rate of benzene is
being diluted by unbumt fuel which contains a small amount of benzene. Fuel
analysis done by SouthWest Research for the engine tests results shown in
Table 3-02. above indicated a fuel benzene content of approximately 1.0
percent by volume.
3.2.2.1 Projected Benzene Emission Reductions—The data set summarized in
Table 3-02. above is the only publicly available air toxics data on nonroad
spark-ignition engines. EPA is not aware of any data which is available on air
toxic emissions from spark-ignition marine engines. EPA has estimated this
marine rule will result in a 74 percent (642,211 tons/year) reduction in VOCs
from spark-ignition marine engines. It would be inappropriate to assume that
this rule would result in a 74 percent reduction in benzene emissions. As
stated earlier, there is a very small data set available on air toxic emissions
from nonroad engines, and no data exists on marine engines or direct-injection
(DI) two-strokes. EPA expects manufacturers to meet the proposed emission
standards through a mix of technologies, primarily the conversion of CS two-

-------
DRAFT	3-15
strokes to either four-strokes or DI two-strokes engines. EPA is unaware of
any air toxics data on DI two-strokes. If the assumption is made that as a
percentage of total hydrocarbons, DI two-strokes will be similar to four-stroke
engines with respect to air toxics, and that marine CS two-strokes and future
marine four-strokes will emit air toxics as percentage of total hydrocarbons
similar to the nonroad engines tested by SouthWest Research Institute, the
following estimate can be made. Using a benzene emission factor for CS two-
strokes of 1.2 percent of total VOC's, and a value of 4.0 percent for both four-
stroke and DI two-stroke engines, this rule making will result in approximately
a 20 percent (2,300 tons/year) annual decrease in benzene emissions from
spark-ignition marine engines. This assumes evaporative VOC emissions, and
therefore evaporative benzene emissions, remain unchanged. It should be
stressed that this estimate is based on a very limited data set of noruroad spark-
ignition small engines, not on actual marine engine data, and that no data is
available on direct-injection two-stroke engines. In order to produce an
accurate estimate of benzene, and other air toxins, reduction from marine
engines, additional testing would need to be performed both on baseline and
controlled engines.
3.2.2.2 Health and Welfare Effects of Benzene Emissions-Health 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 the 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).
The International Agency for Research on Cancer (IARC), classified

-------
3-16	DRAFT
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 leukemogenie {i.e., the ability to induce leukemia) effects of
benzene exposure were studied in 748 white males employed from 1940-1949
in the manufacturing of rubber products in a retrospective cohort mortality
study (Infante et al. 1977a,b). 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 (Rinsky
et al. 1981; Ott et al. 1978; Wong et al. 1983) demonstrating an increased
incidence of nonlymphocytic leukemia from occupational inhalation exposure.
The supporting animal evidence (Goldstein 1980; NTP 1986; Maltoni et al.,
1983) showed an increased incidence of neoplasia in rats and mice exposed by
inhalation and gavage. EPA calculated a cancer unit risk factor for benzene of
8.3x10* (pg/m3)1 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 office of Research and
Development (ORD) has recently started the process to review and update the
benzene risk assessment.
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

-------
DRAFT	3-17
EPA serving as the lower bound of cancer risk and a more conservative (ie.,
higher) number, based on animal data , serving as the upper bound of cancer
risk. The CARB potency estimate for benzene ranges from 8.3X10"6 to 5.2xl0'5
(lug/m3)"1.
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 }ig/m3) indicates adverse effects on the developing fetus,
including low birth weight, delayed bone formation, and bone marrow
damage.
3.2.3. 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 a t 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.
1,3- Butadiene emissions appears to increase roughly in proportion to
exhaust hydrocarbon emissions for a given engine design. However, when
comparing crankcase air /fuel scavenged (CS) two-stroke engines with either
four-stroke or direct injection (DI) two-stroke gasoline engines, a decrease in
VOC would not be directly proportional to the decrease in 1,3 butadiene. As

-------
3-18	DRAFT
discussed in section 4.2.2, generally 80 to 95 percent of a CS two-stroke engines
exhaust VOC emissions is unburnt fuel lost during the scavenging process.
This unbumt fuel does not contain 1,3 butadiene, therefore a reduction in
scavenging losses will not reduce 1,3 butadiene. Table 3-02 indicates that for
nonroad CS two-stroke engines, approximately 0,16 percent of exhaust VOC is
1,3 butadiene, while approximately 0.55 percent of nonroad four-stroke VOC is
1,3 butadiene.
3.2.3.1	Projected 1,3-Butadlene Emission Reductions—Current EPA estimates
indicate that mobile sources account for approximately 94 percent of the total
1,3-butadiene emissions, out of which 41 percent 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. Using the
emission factors from Table 4-01, and assuming that controlled marine four-
strokes and DI two-strokes will emit the same percentage of 1,3 butadiene with
respect to total VOC, the proposed EPA marine rule will result approximately
a 20 percent (280 tons/year) reduction in 1,3 butadiene emissions.
3.2.3.2	Health and Welfare Effects of 1,3 • Butadiene Exposure-The annual
average ambient level of 1,3-butadiene ranges from 0.12 to 0.56 jjg/m3.
Long-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 2.8X10"4 (jag/m3)'1 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 has recently started the process of updating the
1,3-butadiene risk assessment.

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DRAFT	3-19
Exposure to 1,3-butadiene is also associated with adverse noricartcer
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, arid lung disease.
Studies in animals indicate that 1,3-butadiene at exposure levels of greater than
1,000 ppm (2.2xl06 jag/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.
3,2.4 Formaldehyde
Formaldehyde is formed as a result of incomplete combustion of
gasoline in internal combustion engines. Formaldehyde is not a component of
gasoline, and therefore it is not a component of evaporative emissions. For
typical on-highway motor vehicles, 1-4 percent of tailpipe exhaust VOC is
formaldehyde. The EPA NEVES study estimated that approximately 13
percent of atmospheric formaldehyde comes from nonroad mobile sources.
Formaldehyde exhibits a very complex atmospheric behavior. Approximately
70 percent of the formaldehyde in the atmosphere is "secondary" formaldehyde
formed from reaction of other VOC gases.
3.2.4.1.	Projected Formaldehyde Emission Reductions-Using the same
arguments from section 4.2.3.1, the reduction of formaldehyde from this rule
will not be as great as the total VOC reduction. EPA has estimated a VOC
reduction of 642,211 tons/year, 74 percent from the uncontrolled scenario.
Using the emission factors from Table 3-02 for formaldehyde, 0.36 percent of
VOC for crankcase fuel/air scavenged two-strokes (uncontrolled case), and
0.62 percent of VOC for both four-stroke and direct injection two-stroke marine
engines (controlled case), EPA estimates approximately a 55 percent reduction
(1760 tons/year) in formaldehyde emissions. It should be stressed that this

-------
3-20	DRAFT
estimate is based on nine engines used in the lawn and garden industry. Air
toxics data from controlled and uncontrolled marine engines would need to be
gathered to substantiate this reduction claim.
3.2.4.2.	Health and Welfare Effects of Formaldehyde-Based on
laboratory studies involving rats, EPA has classified formaldehyde as a group
Bl toxic, probable human carcinogen. EPA has calculated a unit risk factor of
13xlO"5 (pg/m3)"1 for formaldehyde. It should be noted that because this risk
factor is based on animal data, it should be treated as an upper bound..
Formaldehyde is a known human irritant for the eyes, nose and upper
respiratory system.
3.2.4 Acetaldehyde
Acetaldehyde is formed in internal combustion engines from the
incomplete combustion of gasoline. Acetaldehyde is not found in evaporative
emissions. For on-highway mobile sources, acetaldehyde is typically between
0.4 and 1.0 percent of exhaust tailpipe VOC. The nonroad engines and vehicle,
including marine engines, contribution to the national inventory of
acetaldehyde contains both primary and secondary emissions. It is estimated
that approximately 39% of the national acetaldehyde inventory comes from
motor vehicles. No attempts have been made to estimate the contribution of
nonroad sources, including marine engines, to the national acetaldehyde
inventory.
3.2.4.1.	Projected Acetaldehyde Emission Reductions-Based on the data
collected by SouthWest Research Institute shown in Table 4-01, acetaldehyde
emissions from nonroad crankcase fuel/air scavenged small two-stroke engines
is approximately 0.08 percent of total exhaust hydrocarbon emissions and a
nonroad four-stroke small engines acetaldehyde emission rate is approximately
0.11 percent of total exhaust hydrocarbon emissions. As described in Section
4.2.2, the percentage emission reduction from marine engines for VOC will be
greater than the reduction in acetaldehyde, primarily due to the nature of the
VOC emissions coming from crankcase fuel/air scavenged two-stroke engines.
Using the emission factors for acetaldehyde from Table 2-01, a very rough

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DRAFT	3-21
estimate of acetaldehyde reduction of 65 percent (450 tons/year) can be
calculated for this rule. Air toxics data from controlled and uncontrolled
marine engines would need to be gathered to substantiate this reduction claim.
3.2.4.2.	Health arid Welfare Effects of Acetaldehyde—EPA has classified
acetaldehyde as a group B2 toxic, probable human carcinogen. EPA has
calculated a cancer unit risk factor of 2.2X10"6 (pg/m3)"1. This risk factor is
based on animal experiments and should be considered an upper bound.
Noncancer effects include irritation of the eyes, skin, ad respitory tract.
Respitory paralysis and death have occurred at extremely high concentrations.
3.2.4 Carbon Monoxide (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
safety to protect public health. The current primary and secondary NAAQS
for CO are 9ppm for a 1-hour average and 35 ppm for an 8-hour average, in
the EPA NEVES study, the recreational marine category's median contribution
to winter time CO was 0.1 percent. Because of the very small contribution to
the national CO inventory coming from marine engines, CO reductions were
not a primary focus of this rulemaking. However, to meet the VOC standards
in this rale, EPA does expect a modest CO reduction from marine engines.
The CO emission standard set in this rale is a cap, meant to eliminate very
high CO emitting engines, which generally are far above the CO emission
levels of most engines sold. Most of the NAAQS nonattainment episodes for
CO occur in the winter, while most boating activity in the U.S. occurs during
the summer months, when CO air quality standards are rarely in
nonattainment. High episodes of CO for the boat user is generally a
combination of both a high CO emitting engine and boat design . High levels
of CO can have severe impacts on the health of users of such engines and in

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3-22	DRAFT
these cases boat design must be taken into account. The information given
below is a description of the adverse health effects of CO, however, no
research has been done concerning the health effects from marine spark-
ignition engine.
3.2.4.1.	Health and Welfare Effects of CO—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 percent 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 percent (e.g.
anemic). 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
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,

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DRAFT	3-23
particularly those exposures occurring indoors.
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 marine spark-ignition gasoline engines have been conducted,
ample research results are 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 percent and greater. Central nervous system
effects, observed at peak COHb levels of 5 percent 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 percent. 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 percent 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
percent 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 to CO effects.

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DRAFT

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DRAFT
Chapter 3 : References
1.	Price Waterhouse Study, National Recreational Boating Survey, Final Report,
prepared for U. S. Fish and Wildlife Service and the United States Coast
Guard, Contract # 14-16-0009-90-006, June 30, 1992.
2.	EPA, Nonroad Engine and Vehicle Emission Study, EPA Report 21A-2G01,
Washington, D.C., November 1991, pg. xii, Table ES-04.
3.	Carroll, J., SouthWest Research Institute, Emission tests of in-use small utility
engines, SwRI Report No. 3426-006, completed for the U.S. Environmental
Protection Agency, Contract No. 68-CO-0014, Work Assignment No. 0-6, Task 3,
September 1991.
4.	Hare, C. and White, J., SouthWest Research Institute, Toward the
Environmentally-Friendly Small Engine: Fuel, Lubricant, and Emission
Measurement Issues, Society of Automotive Engineers Paper No. 911222,
October 1991.
5.	Hare, C. and Carroll, J., SouthWest Research Institute, Speciation of organic
emissions to study fuel dependence of small engine exhaust photochemical
reactivity, SwRI Report No. 9702, July 1993.
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.
3-25

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DRAFT

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DRAFT
Appendix A: Supplementary Tables
D-1

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D-2
DRAFT
Table A-01
Average Sales Weighted Kilowatt (Kw) Ratings
Technology Class 		 		 -
Niche
Category
Power
Interval
T1
T2
T3
T4
T5
T6
T7
T8
T9
T10
T11
T12
T13
T14
T15
T16
1
0-2.91
2.23
0
0
2.23
2.2
2.23
2.23
2.23
2.23
0
0
0
0
0
2.23
2.23
2
2.98-7 38
3.97
0
0
3.97
4
3.97
3.97
3.97
3.97
0
0
0
0
0
3,97
3.97
3
7.46-22.29
13.2
0
0
13.2
13
13.2
13.2
13.2
13.2
0
0
0
0
0
13.2
13.2
4
22.37-37,21
32.1
35.1
0
32.1
32
32.1
32.1
32.1
32.1
0
0
0
35.1
35.1
32.1
32.1
5
37.28-55.85
45.93
43.5
0
45.93
46
45.93
45.93
45.93
45.93
0
0
0
43.5
43.5
45.93
45.93
6
55.92-74.49
65.3
0
0
65.3
65
65.3
65.3
653
65.3
0
0
0
0
0
65 3
65.3
7
74.56 -111.77
87.3
0
89.8
87.3
87.3
87.3
87.3
87.3
87.3
89.8
89.8
89.8
0
0
87.3
87.3
8
111.84-149.05
127.9
0
122.9
128
128
128
127.9
127.9
127,9
123
123
122.9
0
0
127.9
127.9
9
149.12 +
161.3
0
195.8
161.3
161
161.3
161.3
161.3
161.3
196
196
195.8
0
0
161.3
161.3

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DRAFT	D-3
Table A-04
Average Useful Life and Attrition Constants
Outboard Engines
Inboard Engines
PWCs
Niche
Category
Useful Life
Theta
b
Useful Life
Theta
b
Useful Life
Theta
b
0-2.91
27.0
29.8
4.0
20.0
22.1
4.0
10.0
11.0
4.0
2.98-7.38
27.0
29.8
4.0
20.0
22.1
4.0
10.0
11.0
4.0
7.46-22.29
22.0
24.3
4.0
20.0
22.1
4.0
10.0
11.0
4.0
22.37-37.21
19.0
21.0
4.0
20.0
22.1
4.0
10.0
11.0
4.0
37.28-55.85
17.5
19.3
4.0
20.0
22.1
4.0
10.0
11.0
4.0
55.92-74,49
16.5
18.2
4.0
20.0
22.1
4.0
10.0
11.0
4.0
74.56 -111.77
15.5
17.1
4.0
20.0
22.1
4.0
10.0
11.0
4.0
111.84-149.05
14.5
16.0
4.0
20.0
22.1
4.0
10.0
11.0
4.0
149.12 +
14.0
15.5
4.0
20.0
22.1
4.0
10.0
11.0
4.0

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Table A-05
Total Engine Population by Calendar Year
Year
Baseline
Control
1993
12,127,303
12,127,303
1994
12,003,980
12,003,980
1995
11,907,729
11,907,729
1996
11,832,587
11,832,587
1997
11,768,167
11,768,167
1998
11,872,627
11,870,183
1999
11,830,237
11,824,210
2000
11,778,681
11,776,501
2001
11,706,141
11,690,501
2002
11,629,131
11,582,137
2003
11,544,291
11,433,020
2004
11,439,758
11,357,253
2005
11,421,722
11,213,739
2006
11,422,809
11,062,002
2007
11,424,591
10,944,380
2008
11,471,525
10,895,324
2009
11,432,905
10,793,151
2010
11,470,180
10,711,223
2011
11,553,633
10,624,177
2012
11,601,218
10,612,829
2013
11,658,609
10,604,748
2014
11,760,265
10,626,218
2015
11,832,207
10,700,670
2016
11,949,769
10,692,492
2017
12,052,633
10,765,578
2018
12,157,258
10,777,936

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Table A-05
D-5
2019
12,247,744
10,858,907
2020
12,339,222
10,887,386
2021
12,432,410
10,946,615
2022
12,536,746
11,014,314
2023
12,610,770
11,078,289
2024
12,690,183
11,139,733
2025
12,757,242
11,227,745
2026
12,818,730
11,266,014
2027
12,875,499
11,331,085
2028
12,924,804
11,390,182
2029
12,970,973
11,487,195
2030
13,018,985
11,533,361
2031
13,040,842
11,600,876
2032
13,086,792
11,662,949
2033
13,160,953
11,736,568
2034
13,202,975
11,749,464
2035
13,244,647
11,798,006
2036
13,286,235
11,878,279
2037
13,327,935
11,926,649
2038
13,369,896
11,950,652
2039
13,412,236
12,021,190
2040
13,455,049
12,064,246
2041
13,498,384
12,114,489
2042
13,540,945
12,150,855
2043
13,586,702
12,186,105
2044
13,631,549
12,234,368
2045
13,661,937
12,247,849
2046
13,703,271
12,305,310
2047
13,770,133
12,334,362

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Table A-05
2048
13,816,016
12,364,420
2049
13,858,233
12,416,944
2050
13,899,730
12,475,925
2051
13,954,429
12,515,615

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