EPA-420-R-98-104
Summary and Analysis of Comments:
Control of Emissions from
Nonroad Diesel Engines
ŁEPA
U.S. Environmental Protection Agency
Office of Air and Radiation
Office of Mobile Sources
Engine Programs and Compliance Division
August 1998

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Table of Contents
1.	Health, Welfare and Air Quality
2.	Standards
a.	Form and Level of the Emission Standards
b.	Leadtime
c.	Feasibility Review
3.	Durability
a.	Useful Life
b.	Warranty Period
c.	Deterioration Factors
d.	Allowable Maintenance Intervals
e.	Critical Emission-Related Components
f.	Rebuild Requirements
g.	Marine Concerns - In-Use and Recall
4.	Equipment Manufacturer Flexibility Program
a.	The Need For Flexibility
b.	Percent-of-Production Allowance Equity
c.	One-Model Restriction for the Small Volume Allowance
d.	Aggregating Exemptions Over Time
e.	Expanded Allowances
f.	Transfer of Exemptions Across Power Categories
g.	Purchase of ABT Credits
h.	Hardship Relief
i.	Design Freeze Concepts
j.	Early Compliance Credits
k.	Recordkeeping and Reporting Requirements
1.	Application of Exemption Provisions
m.	Manufacturers Who Resell New Equipment
n.	Existing Inventories and Replacement Engines
o.	Flexibility For Post-Manufacture Marinizers
5.	Averaging, Banking and Trading
a.	General Need for and Effects of the Proposed ABT Program
b.	Credit Life/Use of Tier 1 NOx Credits beyond Tier 2
c.	Adjustment of NOx Credits from Engines Meeting the Existing Tier 1 Standards
d.	Use of Average Power instead of Min/Max Power in Calculating Credits

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e.	Discounting Tier 2 and Tier 3 Credits
f.	NOx Credit Surcharge
g.	Availability of PM Credits
h.	PM Credit Trading Restrictions
i.	Multi-Year Averaging Program for Engines Below 37 kW
j.	Credits from Engines Below 37 kW
k.	Indirect Injection Engine Credit Trading Restrictions
1.	Marine Engines
m.	Prohibition on Credit Generation and Use by the Same Engine
n.	Inclusion of California Engines in the ABT Program
o.	FEL Upper Limits
p.	Credits from Engines Certified with Special Test Procedures
q.	Credit Calculations
r.	Reporting Requirements
s.	Averaging Sets
t.	Use of "Credit Shortfall" Terminology in the Regulations
u.	ABT and the 2001 Technology Review
6.	Technological Feasibility and Projected Costs
a.	Technological Feasibility and Technology Transfer
b.	Projected Deployment of Various Technologies
c.	Cost Projections for Individual Technologies
d.	Costing Methodology
e.	Small Volume Product Lines
f.	Cost of Redesigning Equipment
g.	NERA Cost Study
h.	Small Business Impacts
7.	Voluntary Low-Emission Standards
a.	Level of the Standard
b.	Test Cycle
c.	Incentives To Introduce Low-Emitting Engines
8.	Other Certification Issues
a.
Crankcase Emissions
b.
Test Fuel
c.
Test Cycles
d.
Smoke Testing
e.
Rated and Intermediate Speed Definitions
f.
Marine Engines
g-
Incorporation By Reference of ISO Test Procedures
h.
Nonmethane Hydrocarbon Measurement

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i. Engine Family Definition
j. Conversion of Horsepower Ratings to Kilowatt Ratings
k. Technical Amendments
9.	Other Regulatory Issues
a.	Nonroad Statement of Principles
b.	Hobby Engines
10.	Emissions Modeling
a.	General Comments
b.	Growth Rates
11.	Cost Effectiveness
a.	Discount Rate
b.	Emission Reductions Attributable to Other Factors

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1. Health, Welfare and Air Quality
Summary of the Issue
The emission standards being promulgated in the final rule are intended to be a major step in
reducing the human health and environmental impacts of ground-level ozone and particulate
matter (PM). In the Notice of Proposed Rulemaking (NPRM), the Environmental Protection
Agency (EPA) described the need for reductions in emissions of PM and ozone-forming
pollutants, and also discussed the contribution of nonroad engines to these emissions.
Comments
State organizations agreed with EPA's assessment of air quality and emission inventory
trends and the need for oxides of nitrogen (NOx) and PM reductions. The State and Territorial
Air Pollution Program Administrators / Association of Local Air Pollution Control Officials
(STAPPA/ALAPCO) described EPA's strategy as "appropriate" and the Ozone Transport
Commission stated that the proposal would be a significant step toward meeting air quality goals
in the Ozone Transport Region. STAPPA/ALAPCO commented that diesel particles are
classified by EPA as a probable human carcinogen and smoke is a source of nuisance complaints.
Environmental organizations stated that EPA should be going further in its attempts to
regulate nonroad diesels. They stated that, in the United States, nonroad diesel engines
contribute at least 13 percent of all NOx emissions and 20 percent of all PM emissions, and that
in the Northeast, nonroad sources will exceed 72 percent of total annual NOx and 60 percent of
total annual PM by 2010. They also stated that the new National Ambient Air Quality Standards
(NAAQS) for ozone and PM highlight the need for continued reductions from major sources
including nonroad diesels, and that diesel exhaust is also a significant source of airborne toxic
emissions, noting that EPA has proposed to identify diesel exhaust as a "probable human
carcinogen".
Engine manufacturers expressed their belief that EPA's emissions estimates were too high
due to overly optimistic sales growth estimates in the farming and construction industries. They
also stated that, to the extent that EPA's assumptions are found in the future to be unsupported by
the relevant data, the Agency must consider the impact of those results on the stringency of the
final standards. Finally, they expressed the view that links between expected human exposures
to diesel exhaust and cancer are not conclusive.
Analysis
The NOx and PM emission estimates presented by the environmental organizations, like the
estimates presented by EPA in the NPRM, show a very large contribution by nonroad diesel
engines to total emissions. The emissions modeling community has been able to continually
improve the state-of-the-art for modeling of emissions of NOx and PM. The estimates presented
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in the NPRM as well as the improved estimates presented in this final rule strongly support the
importance of achieving large emission reductions from nonroad diesel engines. Even if EPA
were underestimating the emission contribution of these engines, EPA still believes its proposed
program is consistent with the mandate of the Clean Air Act section 213(a)(3) which requires
EPA to establish emission standards to achieve the "greatest degree of emission reduction
achievable" given the criteria set forth in the Act. While further emission reductions may be
necessary to attain NAAQS in certain areas, EPA does not believe that further reductions from
nonroad compression-ignition (CI) engines, beyond those being promulgated in the final rule for
these classes of engines and equipment, are currently feasible.
Finally, regarding the questions of diesel exhaust and cancer, EPA is aware of and is, in fact,
playing a leadership role in advancing the understanding of this health concern. However, EPA
is not relying on potential cancer-reduction benefits to justify this rule. A fuller discussion of the
health and environmental effects of ozone, PM, and smoke are discussed in Chapter 5 of the
Final Regulatory Impact Analysis (RIA).
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2. Standards
a. Form and Level of the Emission Standards
Summary of the Issue
The Agency proposed emission standards that it believed to be consistent with the Clean Air
Act requirement that such standards represent the "greatest degree of emission reduction
achievable" given the criteria specified in section 213(a)(3) of the Act. This section discusses
comments regarding the stringency and form of the proposed emissions standards. EPA's
discussion of comments on the technological feasibility of the proposed standards (Section 6) is
also relevant to this discussion. Comments on the level of the smoke standards are discussed in
Section 8.d.
Comments
Most commenters supported the proposed standards levels. State and local governments
generally supported EPA's efforts to adopt new stringent standards. Engine manufacturers
expressed support provided that other provisions, outlined in their detailed written comments, are
adopted as well. Environmental groups expressed the view that the proposed standards are not
stringent enough to meet EPA's new NAAQS, and argued that lower standards are necessary,
technologically viable, and cost-effective, although without providing any supporting rationale.
The Manufacturers of Emission Controls Association (MECA) stated that additional emission
reductions are possible through the use of oxidation catalysts, particulate filters and selective
catalytic reduction.
Commenters for the most part supported EPA's efforts to harmonize its emissions standards
with those in Europe and California. Industry commenters stressed the importance of adopting
harmonized standards. The European Commission requested that Tier 2 standards for three of
the power bands be further harmonized by combining them into one band, with one set of limit
values and one implementation year.
Several groups commented on EPA's deferral of Tier 3 standards for engines less than 37
kW or over 560 kW, as well as EPA's deferral of Tier 3 PM standards for engines between 37
and 560 kW. In general, industry commenters agreed that these Tier 3 standards could not be
promulgated at this time due to the uncertainty regarding the feasibility of more stringent
standards and limitations in current testing methods for PM. Several of these commenters,
however, urged EPA not to adopt more stringent Tier 3 PM standards in the future. On the other
hand, government and environmental groups called for EPA to express its commitment in the
Final Rule to establishing stringent Tier 3 PM and (for engines under 37 kW) NOx standards.
One commenter expressed support for the combined NOx and nonmethane hydrocarbon
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(NMHC) standard as providing helpful flexibility for the manufacturers, a point also made by
other manufacturers in development of the Supplemental Advance Notice of Proposed
Rulemaking (ANPRM).
One commenter pointed out that the power category descriptions are slightly askew from
current regulations which establish the largest power category as "greater than 560 kW" rather
than the proposed "greater than or equal to 560 kW".
Finally, emission control manufacturers and state and local governments commented that
EPA should set standards for in-use nonroad diesel fuels by extending the highway low-sulfur
diesel fuel requirements to nonroad applications.
Analysis
Based on a review of the comments received, EPA believes that the proposed standards
levels represent the greatest degree of emission reduction achievable considering feasibility, cost,
safety, noise and energy factors. Although no convincing evidence was provided that standards
levels below those proposed would better fulfill the requirements of the Act, the Agency does
agree that continued progress in the development of diesel emission control technology may
justify the adjustment of the Tier 3 (Tier 2 for engines under 37 kW) standards levels in the 2001
feasibility review rulemaking. EPA acknowledges those concerns raised by industry regarding
the feasibility of more stringent future controls. Before adopting any new, more stringent
emission standards, EPA will review feasibility, cost and the other criteria prescribed in Clean
Air Act section 213(a)(3) to determine the greatest degree of emissions reductions achievable.
The minor differences between the levels of the standards being promulgated in this final
rule and those being pursued in Europe do not compromise essential harmonization. These
differences are too small to cause manufacturers to build multiple versions of engine and
machine models sold to multiple markets.
The proposal's slight change in power category definitions around 560 kW was inadvertent.
The final regulations define the affected categories as "greater than or equal to 130 kW but less
than or equal to 560 kW" and "greater than 560 kW", to preserve consistency with current EPA
regulations and with the European program.
Although the Agency discussed the future possibility of regulating nonroad diesel fuel in the
Supplemental ANPRM, it did not propose any such regulations, and does not consider such
regulations necessary at this time to make the proposed emission standards feasible. EPA may,
of course, consider regulating nonroad diesel fuel in future actions.
b. Leadtime
Summary of the Issue
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The proposed emission standards would be phased in according to a schedule beginning in
1999. Special flexibility provisions were proposed to allow equipment manufacturers additional
time to incorporate new engine designs into their machines. Comments related to these
flexibility provisions and the leadtime issues for equipment manufacturers are discussed in
Section 4.
Comments
Most commenters raised no objections to the proposed leadtimes for achieving emissions
reductions. Two commenters concerned with harmonization between the proposed standards and
standards being considered in Europe suggested leadtime changes. To facilitate harmonization of
standards and reduce trade barriers, Euromot and the European Commission (EC) requested that
EPA change the Tier 1 implementation date for 19 to 37 kW engines from 1999 to 2001. The
European Commission also urged EPA to combine the three power bands for 130 to 560 kW
engines into a single power band with a Tier 2 implementation date of 2002.
Analysis
EPA believes that the proposed implementation dates are appropriate under the Clean Air
Act. Despite some differences between the deadlines for the standards being promulgated in this
final rule and those being considered in Europe, these differences do not compromise essential
harmonization. Special provisions being adopted in this rule's Averaging, Banking, and Trading
program provide manufacturers with flexibility to produce engines for both markets during the
transition years without undue duplication of design. Furthermore, the fact that the EC program
is still in a proposal stage makes it unadvisable for EPA to tie its implementation plan too
strongly to that being considered for Europe.
c. Feasibility Review
Summary of the Issue
In the NPRM, EPA proposed to conduct a special review, to be concluded by 2001, to
reassess the appropriateness of the Tier 2 standards for engines rated under 37 kW and the Tier 3
standards for engines rated between 37 and 560 kW. This review and any resulting changes to
the program would involve a public notice and comment opportunity. Any Tier 3 PM standards
and changes to test procedures would also be proposed in this notice.
Comments
Environmental groups commented that EPA should state in the final rule that the new ozone
and PM2.5 NAAQS will weigh heavily in the 2001 review. STAPPA/ALAPCO commented that
EPA should commit in the final rule to have the 2001 review include promulgation of Tier 3 PM
standards, a PM-controlling transient test, and a thorough assessment of aftertreatment
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technologies. The California Air Resources Board (ARB) stressed the importance of developing
a transient test cycle for the Tier 3 program. The National Association of Home Builders
(NAHB) encouraged EPA to expand the scope of the feasibility review to include economic
impacts on diesel engine dealers and consumers. Engine manufacturers stressed the critical
importance of the review, including the assessment of costs, leadtimes, emissions inventories,
health effects data, and equipment redesign impacts. They also commented that the Agency must
clarify in the final rule that EPA is committed to Tier 2 standards that allow for the continued
existence of direct injection technology in the under 37 kW market. Engine manufacturers also
doubted that a transient test cycle would be needed for effective control of PM, and expressed
concern that such a test may be infeasible for very large engines.
Analysis
The 2001 feasibility review will re-evaluate portions of this rulemaking, primarily to
consider technology improvements and their impact on engines and equipment. Other factors
relevant to making an informed decision on the appropriateness of Tier 3 standards (Tier 2
standards for engines rated under 37 kW), such as any new health effects and inventory data,
economic considerations, and the Agency's approach to applying newNAAQS to emission
control programs, must be considered as well. Furthermore, the Agency's intent to adopt
appropriate Tier 3 PM standards and test procedures, will clearly affect the review of the other
Tier 3 standards being promulgated in this final rule. The Agency believes that more information
is needed before the form of, and even the justification for, a transient test cycle for Tier 3 PM
control can be established, but is now working to gather this information.
The Agency reiterates its commitment in the Statement of Principles to have the feasibility
review include an assessment of the progress in meeting Tier 2 standards for engines under 37
kW that use direct injection technology, and its expectation that final Tier 2 standards will allow
for the continued existence of that technology.
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3. Durability
a. Useful Life
Summary of the Issue
Regulatory useful life was proposed to be based on typical time to first rebuild. For engines
at or above 37 kW, this was defined in the large CI Tier 1 rule as 8,000 hours or 10 years,
whichever occurs first, with an in-use testing liability period of 6,000 hours/7 years. For smaller
engines, EPA proposed the useful lives and recall testing periods shown in Table 1. EPA also
requested comment on the appropriateness of basing the useful life on the typical time until first
rebuild.
Table 1: Proposed Useful Life and Recall Testing Periods
Power Rating
Rated Engine Speed
Useful Life
Recall Testing Period


hours
years
hours
years
< 19 kW
All
3000
5
2250
4
19-37 kW
Constant speed @>3000 rpm
3000
5
2250
4

All others
5000
7
3750
5
Comments
A number of commenters suggested that the proposed useful lives are too short.
STAPPA/ALAPCO recommended a useful life of 14,000 hours, but did not provide data to
support this. The California ARB recommended that useful lives be based on engine retirement,
and suggested that this would typically be 14,000 hours for engines greater than 75 kW.
Although supportive of the proposed useful life periods for engines below 19 kW, the ARB
commented that all engines from 19 to 37 kW should have useful lives of 5,000 hours. American
Augers commented that a useful life of 8,000 hours or 6 years, whichever occurs first, is
appropriate for 37 kW engines. No commenters suggested raising the useful life of engines
below 19 kW. Cummins and the Engine Manufacturers Association (EMA) supported the useful
life requirement for engines at or above 37 kW. EMA argued that basing useful life on a period
longer than the time to first rebuild would be inappropriate, because the point of rebuild is
substantially determined by the technical capability of the engine to operate reliably. To make
engine manufacturers liable for performance after that point makes them liable for the work of
people over whom they have limited or no control.
Analysis
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EPA is retaining the 8,000 hour useful life for engines above 37 kW. The report done by
ICF for EPA shows this to be the average time to rebuild for these engines. Although aware of a
general trend toward longer-lived diesel engines, EPA cannot at this time justify an increase in
the useful life for these engines without data which demonstrates a time to first rebuild longer
than 8,000 hours. The commenters who favored longer useful lives did not provide any
additional data which supported their position.
Similarly, for engines between 19 and 37 kW, commenters did not provide information
which supports raising the useful lives above those proposed. EPA's report demonstrates an
average time to rebuild for these engines to be 5,000 hours for variable speed engines.
Information provided by a manufacturer indicates a 3,000 hour useful life for constant speed
engines in the 19 to 37 kW power range. Therefore, EPA is adopting the proposed useful lives.
EPA is aware that the structure of the industry, with the widespread practice of independent
rebuilding, makes it very difficult to adopt an enforceable program that carries manufacturers'
liability beyond the time to first rebuild. It is therefore not changing the basis for determining
useful life at this time.
b. Warranty Period
Summary of the Issue
The existing minimum warranty period for emission related parts on nonroad diesel engines
rated at or above 37 kW is 3,000 hours or 5 years of use, whichever occurs first. EPA proposed
to apply this warranty period to engines ranging from 19 to 37 kW as well. For engines less than
19 kW, EPA proposed a warranty period of 1,500 hours/3 years.
Comments
Cummins and American Augers supported the warranty requirements for engines at or
above 37 kW. EMA supported the proposed periods because they are consistent with current
practice, but also stated that warranty periods should be shorter than useful lives. Euromot
considered the proposed warranty period to be onerous and recommended a period of 1,500
hours/2 years for all engines less than or equal to 37 kW. Euromot commented that the warranty
period for constant speed engines rated from 19 to 37 kW should be less than the full useful life
of the engines. Euromot also commented that engine manufacturers should not be responsible
for warranting engines that are not properly used or maintained, and suggested that the warranty
only apply to exhaust emission related components. ARB and STAPPA/ALAPCO commented
that the warranty period should be 80 percent of the useful life, consistent with the approach
taken for on-road vehicles.
Analysis
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EPA agrees with Euromot's comment concerning the warranty period for under 19 kW
engines and for 19 to 37 kW constant speed engines rated at 3,000 rpm and above. Since these
engine categories have the same useful lives, they should have the same warranties. The warranty
period for these engines will be 2 years or 1,500 hours, whichever occurs first. EPA is not
changing the warranty period for other categories, consistent with their useful lives. EPA does
not agree with increasing the warranty periods to 80 percent of useful life. Only critical emission
related components are covered in the on-road programs referred to by commenters. The
nonroad diesel engine warranty periods, although shorter, covers all emission control
components for longer periods than the equivalent warranty for other types of regulated engines.
The warranty requirements for engines rated under 37 kW are listed in Table 2.
Table 2: Warranty Periods for Engines Under 37 kW.
Power Rating
Rated Engine Speed
Warranty Period


hours
years
< 19 kW
All
1500
2
19-37 kW
Constant speed, > 3000 rpm
1500
2

All others
3000
5
EPA's recognition of owner responsibilities for proper maintenance of emission controls is
already reflected in the regulations and therefore manufacturer concerns about being held
responsible for warranting engines that are not properly used or maintained are already
addressed. Consistent with the goal of the emissions control program, EPA's warranty
provisions require manufacturers to warranty those parts for which failure can cause the engine to
be in noncompliance with the emissions standards. Limiting these provisions to a subset of these
components would not serve the goal of the program.
c. Deterioration Factors
Summary of the Issue
EPA proposed to require deterioration factors (DFs) for regulated emissions for all engines
covered by this rule. Similar to the program for on-highway engines, EPA did not propose a
specific procedure but rather that manufacturers develop the DFs in accordance with good
engineering practices. The DFs were proposed to be subject to EPA approval. As an added
flexibility for nonroad engine manufacturers, EPA proposed that, where applicable, data from
certified highway engines could be used to develop DFs for similar nonroad engines. EPA also
proposed that, for engines using established technology, good engineering judgement could be
used in lieu of testing to develop DFs. Under the terms of the proposal, EGR and aftertreatment
would not be considered to be established technology. The proposal would also allow
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manufacturers to petition the EPA to classify engines meeting the Tier 3 NMHC+NOx standard
as using established technology.
Comments
Cummins and EMA commented that deterioration factors (DFs) should not be subject to
EPA approval. Caterpillar expressed concern that because the DFs are subject to EPA approval,
manufacturers could be in the position where they cannot develop approved DFs in time to
certify, because of overly long reviews by compliance officers. Euromot stated that the
establishment of DFs would be difficult in the time proposed, especially for engines below 37
kW. Euromot recommended the use of EPA-assigned DFs. The California ARB and
STAPPA/ALAPCO supported the proposed DF requirements.
Caterpillar, Cummins and EMA commented that engineering analysis and carryover (model
year-to-model year) or carry across (engine family-to-engine family) data be the primary methods
for determining DFs. They also commented that exhaust gas recirculation (EGR) and
aftertreatment should eventually be considered established technologies. Cummins and EMA
commented that separate NOx, carbon monoxide (CO), NMHC, and NMHC + NOx DFs should
not be required, and requested a straightforward, combined NMHC + NOx DF.
Analysis
EPA believes that the DF requirements proposed in the NPRM are an essential part of the
emission control program, and are needed to ensure that engines meet the emission standards
over their useful life. Although the manufacturers are in the best position for assessing their
engine's deterioration to prove compliance with the standards or with the family emission limits
(FELs) chosen in the averaging, banking, and trading (ABT) program, the Agency clearly has a
role as well in reviewing the manufacturer's submittal for adequate substantiation of the DFs.
Even a small DF can have a significant impact on the amount of credits generated or used under
the ABT program. Given the importance of DFs, EPA is retaining the manufacturer-determined
DF provision and the Agency's opportunity to disapprove any inadequately substantiated DFs.
Although retaining a requirement to provide DFs, EPA believes that it has provided a great
deal of flexibility to allow manufacturers to avoid unnecessary testing. EPA expects that
carryover or carry across data will be the primary method for determining DFs. EPA retains the
opportunity to disapprove the use of the carryover or carry across if significant differences exist
between the engine on which the data were generated and the engine to which the data are
applied.
EPA agrees that there may be insufficient time for manufacturers of engines below 37 kW to
verify DFs before the Tier 1 compliance dates. Service accumulation testing can be a time-
consuming and complicated process, especially for manufacturers who have no prior experience
with EPA programs because they only manufacture engines rated under 37 kW, which were not
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previously regulated. Alternative means of determining DFs may not be useful because these
smaller engines are currently not regulated by EPA, and so there may be little test data from
which to establish DFs. Therefore EPA believes that the development of accurate DFs using
these methods would not be possible in all cases for certification of engines in very limited time
available before the 1999 model year, and that the time between the anticipated effective date of
this rule and the compliance dates for the 2000 model year may also be too short to support DF
development using these methods. As a result, the Agency is allowing manufacturers to
determine DFs for these engines in model years 1999 and 2000 based on good engineering
judgement and reasonably available information. All information used for this purpose would
need to be made available to EPA, if requested. Any requests for carryover of these models into
the 2001 model year would need to include the more thorough justification of DFs under the new
requirements.
EPA agrees with Cummins and EMA that only one DF is needed for the NMHC + NOx
standard, and is adopting a combined DF for NMHC + NOx. However, consistent with the
approach taken in other EPA programs, notably the recently finalized program for heavy-duty
highway diesel engines (October 21, 1997 62 FR 54695), decreasing emissions of one pollutant
over time will not be allowed to offset increasing emissions of the other pollutant in this
combined DF. In effect, if one of the pollutants measured in determining this combined DF
exhibits a decrease in emissions over time, the DF must be adjusted to reflect an assumption of
no change in the emissions of this pollutant. A combined NMHC + NOx DF is not appropriate
for engines using aftertreatment devices, for which a multiplicative DF is required, because this
would inappropriately skew the DF toward one pollutant unless weighting factors were applied.
Therefore, for these engines, separate NOx and NMHC DFs will be required. Regarding the
possibility that EGR and aftertreatment could eventually be considered established technology,
EPA believes that its 2001 feasibility review will provide a better opportunity to assess this
potential and update the regulations if appropriate.
d. Allowable Maintenance Intervals
Summary of the Issue
For the engines covered by the new standards, EPA proposed limits on the frequency of
maintenance that can be required of the engine owners for emission-related items. These limits
were also proposed to apply to maintenance performed by the engine manufacturer during engine
certification and durability testing. The proposed allowable maintenance intervals are consistent
with requirements for on-highway engines.
Comments
Case, Euromot, and Cummins commented that the manufacturers are responsible for
meeting their customers needs and that EPA should leave establishment of maintenance intervals
to the discretion of manufacturers. Cummins commented that if EPA set limits, they should be
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only about 42% of the proposed limits. Cummins stated that the proposed intervals are based on
on-highway intervals which are inappropriate for nonroad engine which operate under more
severe conditions. EMA comments were similar to Cummins. However, EMA suggested that
EPA should lower the maintenance intervals by a third for engines over 37 kW and by two thirds
for engines less than 37 kW. Case commented that the proposed fuel injector maintenance
interval is difficult to meet. Case stated that injector cleaning may be needed at 1,000 hours,
with maintenance at 2,000 hours. Cummins stated that the proposed intervals are exceeded by
current engines but that new technologies may require more frequent maintenance. Euromot
commented that minimum maintenance of fuel injectors for engines less than 130 kW is
unreasonable especially for high speed engines. American Augers, ARB, and the Ozone
Transport Commission supported the proposed maintenance intervals.
Analysis
Of the components for which EPA proposed maintenance intervals, fuel injectors and
turbochargers are the only ones commonly used on current engines regulated under the Tier 1
program. A review of owners' manuals from seven engine manufacturers for engines at or above
37 kW was performed to determine current maintenance practices for these components. Three
of the seven manufacturers specify a maintenance frequency for fuel injectors. The other four
manufacturers do not require injector maintenance. The minimum maintenance interval for
injector cleaning is 2,400 hours. Two of seven manufacturers specify maintenance intervals for
turbochargers. The shortest interval is 4,800 hours. Based on this review, EPA believes that
proposed intervals would impose no undue burden for these engines.
However, the Agency is aware that engines not currently regulated and new engine designs
to meet Tier 2 standards may have different needs. The Agency is particularly sensitive to
manufacturers' concern for more frequent maintenance in severe operating environments.
Because the Agency agrees that manufacturers have a business incentive to avoid specifying
overly frequent maintenance in user manuals, EPA is finalizing the proposed maintenance
interval requirements, but is applying them only to testing performed by manufacturers to
demonstrate compliance, none of which is expected to occur in severe operating environments.
Furthermore, the Agency agrees that some engines rated below 19 kW and some 19 to 37 kW
constant speed engines rated at 3,000 rpm and above may not be able to meet the allowable
maintenance interval requirements, and is therefore allowing shorter intervals to be used on a
case-by-case basis, subject to EPA approval.
e. Critical Emission-Related Components
Summary of the Issue
EPA proposed a list of engine components that are considered critical emission-related
components. For these critical emission-related components, EPA proposed that manufacturers
must show that there is a reasonable likelihood that any scheduled maintenance on these
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components will be performed in use. In the proposal, there are several options available to the
manufacturer to satisfy EPA that in-use maintenance is likely. These proposed options included:
1) showing that performance would degrade without the maintenance; 2) providing survey data
showing that the maintenance already occurs in use; 3) providing the engine with a visible signal
system to alert the operator when maintenance is required; 4) collecting survey data to show that
the visible signal system is not necessary; 5) providing maintenance free of charge; or 6) any
other method approved by the Administrator.
Comments
Euromot expressed concerns with the proposed critical emission-related component
maintenance requirements. First they stated that positive crankcase ventilation valves (PCVs)
should not be considered critical since they have no effect on exhaust emissions and maintenance
for these valves is not necessary during the useful lives of these engines. Second, Euromot
commented that the options proposed to ensure that maintenance on critical emission-related
components were not feasible for nonroad engine manufacturers because: 1) no formal record
keeping on small engine maintenance exists for preparing a survey; 2) visible signal systems
require electrical systems, which do not exist on some small construction engines; 3) the survey
data option does not account for the great variety and low production of nonroad engines; and 4)
it is not practical to offer free maintenance due to long travel distances from remote users to
service centers.
Analysis
EPA does not believe that the proposed provisions are infeasible or overly burdensome.
Components that do not require maintenance, as Euromot indicates to be the case for PCVs, are
not affected by this provision. For other components, EPA believes that, although the full
complement of options on the list may not be available for any particular engine family, there is
substantial flexibility in the provision for manufacturers to meet it. For the options that involve
survey data, EPA is aware that manufacturers can and do carry out surveys on their engines and a
lack of a formal recordkeeping process should not be an impediment to this. Finally, it is
unlikely that this requirement will affect the small engines of concern to Euromot because it is
doubtful that the listed critical emission-related components, other than PCVs, will be needed on
the small inexpensive engines, and PCVs are not likely to require maintenance according to
Euromot. The requirement that manufacturers demonstrate a reasonable likelihood that
scheduled maintenance of critical emission-related components will be performed does not apply
if the manufacturer requires no maintenance for those components.
f. Rebuild Requirements
Summary of the Issue
EPA proposed to implement the same rebuilding requirements for nonroad diesel engines as
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those that are now in place for 2004 and later model year heavy-duty highway engines. This
proposal included requirements that the engine be rebuilt correctly to maintain equivalent
emission levels as the certified configuration. In addition, EPA proposed modest record keeping
requirements; EPA proposed that these records be held for 2 years but asked for comment on
whether or not a longer time would be appropriate. EPA made no distinction in its rebuild
requirements for marine engines.
Comments
The Automotive Engine Rebuilders Association (AERA) generally supported the proposed
rebuild requirements stating that nonroad diesel engine rebuilding is sufficiently similar to on-
highway diesel engine rebuilding. AERA stated that having the same requirements for on-
highway and nonroad engines would avoid the uncertainty associated with having different sets
of rules and would lessen the likelihood for unintentional noncompliance by rebuilders.
However, AERA did express two concerns. First, they believe that the phase-in of the model
years and engine designs that do not change across model years would make it difficult for
rebuilders to identify which specifications apply to rebuilding the engine. AERA suggested that
the engines subject to the new rule should be labeled or at least have an indicator included in the
serial number. Second, AERA commented that the rebuilder does not necessarily know the
hours of use on the engine at the time of rebuild and that the rebuilder should not be required to
investigate this any further than asking the party providing them with the engine to tell them the
hours of use for the purpose of the record keeping requirements. In addition, AERA commented
that a 2-year retention of records is sufficient and is consistent with the on-highway provisions.
EMA commented that replacement engines should not have to be of the same or later model
year, but consistent with the highway regulations, should only have to be replaced with an engine
with equivalent or better emissions. They also commented that it would be unrealistic to require
remanufacturers to build an engine to match the particular configuration of an engine that is
brought in as a core. EMA stated that there would be no incentive to replace engines in
equipment with previous emissions configurations; therefore, the proposed requirement that
replacement engines must be of the same configuration as the original engine is not needed.
American Augers claimed that the proposed record keeping requirements for engine repairs
would add unnecessary costs to small businesses without any real value. The California ARB
commented that records should be kept for 5 years for engines at or above 37 kW and 3 years for
all others. EMA supported the proposal not to require a particular format and the proposed 2-
year retention of records. Case and Cummins commented that rebuild record keeping should not
be done by engine manufacturers since rebuilds are generally beyond their control. Cummins
and EMA stated that EPA should amend the proposal so that manufacturers would be allowed to
build older model year engines for replacement in older equipment. STAPPA/ALAPCO
supported the proposed rebuild requirements.
The International Association of Drilling Contractors (IADC) expressed several concerns
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related to the application of the rebuild requirements to marine engines. First, they argued that
the requirement that an engine be rebuilt to a configuration of the same or later model year as the
original engine may not be realistic. They noted that if parts or components are produced
specifically to allow new engines to meet the more stringent criteria, and these parts outwardly
appear identical to parts from earlier engines and are interchangeable with those parts, then the
parts will inevitably be interchanged. They added that when an old part is installed on a new
engine, the anti-tampering provisions would be violated. They also expressed concern over
whether or not the substitution of non-original equipment parts would be allowed to constitute
"the same configuration."
Second, IADC argued that the requirement that a replacement engine be an engine of (or
rebuilt to) a configuration of the same or later model year as the original engine would preclude
the use of spare engines on a rotating basis between equipment. This was seen as unreasonable.
Third, IADC argued that the requirement that all emission-related components be checked
and cleaned, repaired, or replaced where necessary, following manufacturer recommended
practices, could be used by manufacturers to limit locations where repairs can be undertaken or
preclude the use of parts other than "original equipment" replacement parts.
Finally, IADC pointed out that marine engines are not used solely in the United States, and it
may be unduly burdensome (if not impossible due to custom requirements in some countries) to
obtain replacement parts from the U.S. while a vessel is abroad.
Analysis
To address comments from AERA and EMA, EPA is changing the language originally
proposed in 89.130(b) to be the same as for on-highway engines. The final language allows
engines to be rebuilt to a certified configuration and requires that the model year(s) of the
resulting engine configuration be identified. This allows for a rebuilder who is unable to identify
the original certified configuration to rebuild the engine to any certified configuration. However,
when an engine is being rebuilt and remains installed or is reinstalled in the same piece of
equipment, there should be no uncertainty regarding the engine's configuration, and so it must be
rebuilt to a configuration of the same or later model year as the original engine.
EPA also agrees with EMA that, when an engine is being replaced, the replacement engine
must be an engine of (or rebuilt to) a certified configuration that is equivalent, from an emissions
standpoint, to the engine being replaced. This allows for rebuilt engine configurations that,
although of a different model year than the original engine, were designed for the same tier of
emission standards. If the replacement engine is new, it must also meet the replacement engine
requirements of 40 CFR §89.1003(b)(7).
EPA is retaining the record keeping requirements as proposed. These requirements are the
same as the on-highway regulation. Only engine rebuilders need to keep rebuild records. When
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purchasing a used engine, the buyer need not obtain the rebuild records. The purchaser of the
used engine is responsible for buying a used engine which is documented by the rebuilder to be
of the same, or later, model year as the engine it replaces. The number of engine hours recorded
by the rebuilder should be based on the best available information, and so does not place an
unreasonable demand on the rebuilder to determine this information when it is not readily
available.
Regarding the concern that engine manufacturers could take advantage of EPA regulations
to limit locations where repairs can be undertaken or preclude the use of parts other than
"original equipment" replacement parts, EPA believes that there is sufficient clarity in the
regulations to avoid this. The rebuilder of an engine is clearly responsible for ensuring the
appropriate parts are used for the rebuild. The regulations allow for used or aftermarket parts.
Parts installed, whether the parts are new, used, or rebuilt, are such that a person familiar with the
design and function of diesel engines would reasonably believe that the parts perform the same
function with respect to emission control as the original parts. Furthermore, EPA would not
view any manufacturer recommended practices that specifically restrict the location of the work
being performed as required practices under these provisions.
With regard to the effect of the replacement engine provisions limiting the ability of users to
rotate engines among pieces of marine equipment, EPA believes that this concern is not so
serious as to warrant dropping this requirement or adding special treatment for this equipment.
First, as explained above, EPA has relaxed this provision to require only replacement with an
engine that is equivalent, from an emissions standpoint, to the engine being replaced, rather than
of the same or later model year. Second, EPA expects that the ability to rotate marine engines
among vessels is generally limited by the design requirements of the marine vessels or associated
equipment. These design requirements may make it impossible to rotate an older engine into a
newer vessel because of installation and performance concerns. For example, engine mounting
hardware or connections to the vessel's cooling system, or engine calibration and power
characteristics, may limit the ability to put an uncontrolled replacement engine on a vessel
designed to accommodate a Tier 1 or Tier 2 engine. Third, in those cases where such
vessel/engine interfaces are not a problem, EPA believes it is not unreasonable to expect owners
of fleets large enough to warrant the maintenance of a stock of spare engines to accommodate
partial or full conversion of this stock to complying configurations. Finally, EPA believes that
this requirement is important for preserving the emissions benefit of the program. Replacement
of a complying engine with an engine that has inferior emissions performance will clearly result
in higher in-use emissions, even if the complying engine may eventually be rotated back into
service. Furthermore, the fleet owner has no obligation to rotate this engine back into service. A
modified provision that requires this to occur would likely prove impractical.
Finally, EPA does not believe the rebuild provisions will be unduly burdensome for engines
installed on U.S. vessels that operate internationally. The engines subject to this rule are small,
and vessel owners often keep replacement parts on board for repairs. At worst, vessel operators
may be required to make a temporary repair while abroad, and bring the engine back into
compliance once appropriate parts can be obtained.
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g. Marine Concerns - In-Use and Recall
Summary of the Issue
EPA made no distinction in its in-use and recall programs for marine engines. Marine
engines would be subject to the same durability provisions as other nonroad engines.
Comments
One commenter expressed concern about imposing in-use and recall requirements on marine
engines. This commenter noted that it is almost impossible to conduct a recall or in-use test on a
marine engine. These engines are typically installed deep within a boat, eliminating the ability to
remove the engine in one piece from the boat without first severely physically altering the boat.
Also, it requires a considerable amount of money, time, and labor to remove an engine.
According to this commenter, no owner would allow this to be done to his boat just to conduct an
in-use emission test. Another commenter noted that many of the new marine engines subject to
this rule will be subject to periodic survey under the standards adopted by the International
Maritime Organization (IMO), therefore subjecting them to two in-use requirements. This
commenter argued that this is another reason to distinguish marine engines in terms of whether
they are installed on vessels operated domestically or internationally.
Analysis
EPA does not expect these requirements to be burdensome for the small, under 37 kW
marine engines that are subject to this rule. Because of their size, they should be fairly easy to
remove from a vessel for testing, if such a testing program becomes necessary. Also, owners of
engines are not required to participate in any in-use program. With respect to the second
comment, these engines are not subject to IMO inspections provisions, since the Annex VI NOx
provisions cover only diesel marine engines above 130 kW. For both of these reasons, EPA
believes that the recall and in-use provisions as proposed are appropriate for diesel marine
engines less than 37 kW.
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4. Equipment Manufacturer Flexibility Program
a.	The Need For Flexibility
Summary of the Issue
In developing the proposal, EPA was made aware of difficulties in implementing the Tier 1
program experienced by equipment manufacturers (called original equipment manufacturers, or
OEMs, in the proposal) whose products contain diesel engines. As a result, the Agency proposed
several provisions to allow OEMs to install a limited number of noncomplying engines in their
products during the first few years of the program.
Comments
OEMs provided more detailed information regarding the challenges they have faced when
certified Tier 1 engine designs were made available to them with very little time left to perform
the corresponding machine design and tooling changes. No commenters argued against
providing some form of flexibility. One commenter felt that the Agency should adopt a program
that reapplies the schedule of flexibility allowances with each new tier of standards.
Analysis
The information received from commenters reinforces the Agency's opinion that
implementation flexibility for OEMs is needed. The program being finalized provides
substantial flexibility for both the earlier and later tiers of standards, although it is acknowledged
that an engine model that is substantially redesigned for Tier 2 and again for Tier 3 could strain
an OEM's ability to cope with the changes. However, this possibility is a key concern of the
2001 feasibility review. Changes to flexibility provisions will be made as appropriate in light of
the findings of that review.
b.	Percent-of-Production Allowance Equity
Summary of the Issue
EPA proposed that a specified percentage of each OEM's U.S.-directed production volume
be allowed to use noncomplying engines in the first several years after a Tier 2 standard is
implemented in each power category at or above 37 kW. A somewhat more restrictive provision
would apply for equipment using engines rated under 37 kW in the Tier 1 time frame, although
an alternative proposal was made that this equipment receive the same flexibility allowances as
equipment with larger engines.
Comments
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Commenters supported the percent-of-production allowance concept but objected to the
lesser allowance proposed for OEMs using engines under 37 kW. They expressed the view that
the short implementation leadtimes for OEMs using these engines argued for flexibilities at least
as great as those for OEMs using larger engines.
Analysis
The Agency agrees with the commenters' arguments that the flexibility provisions for OEMs
using engines under 37 kW in their products should be broadened to match those provided to
OEMs using larger engines. The standards for engines under 37 kW are not as stringent as those
for larger engines, and therefore the impact of these standards on engine redesigns, and
subsequently on equipment redesigns, are likely to be less severe for the smaller machines.
However, the tight engine enclosures of many of these smaller machines will make whatever
engine changes do occur more challenging. This, together with the short leadtime provided for
any Tier 1 redesigns that might be needed, creates a need for flexibility that, in EPA's estimation,
is roughly equivalent to the needs of manufacturers of larger machines.
c. One-Model Restriction for the Small Volume Allowance
Summary of the Issue
EPA proposed an allowance intended to help the many small OEMs who make a very small
number of models. The proposal would allow OEMs to exempt up to 100 machines of any one
model annually. EPA proposed, as an alternative, that the one-model restriction be dropped.
Comments
No commenters objected to this proposed provision for a small volume allowance. Several
OEMs and engine manufacturers supported adoption of the allowance without a one-model
restriction.
Analysis
EPA felt the small-volume allowance was necessary for small OEMs who, because of their
limited product offering, gain little from exempting a set percentage of their production.
Expansion of this provision to cover multiple models, however, would also benefit larger OEMs
with more diverse product offerings, who, though fully able to use the percent-of-production
allowance, would get more exemptions from the small volume allowance. EPA examined
relevant sales data from the Power Systems Research (PSR) database and found that, if EPA
were to both allow the aggregation of exemptions (discussed below) and drop the one-model
restriction, almost all OEMs in each power category (85 to 98 percent) would be entitled to more
exemptions from the small volume allowance than from the proposed percent-of-production
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allowance.1 These OEMs represent a substantial portion of the total sales (10 to 70 percent) in
each power category. Many of them have a diverse product offering. The Agency believes that
the net result of such greatly expanded flexibility defeats the purpose of the small volume
exemption.
On the other hand, there appear to be many companies with very small annual sales
volumes, often well under 100, for whom the one-model restriction would be problematic
because their viability is enhanced by offering slightly different versions of a basic machine
product, marketed as separate models. These OEMs are within the scope of EPA's target group
for the small volume allowance. The Agency therefore is extending the allowance to cover any
of an OEM's models in each power category using engines in a single engine family. Although
there may be some small volume manufacturers with limited product offerings that do span
multiple engine families, the Agency feels that there would be a much lower likelihood that more
than one of these engine families would be beset with late delivery or redesign challenges.
Furthermore, other provisions of this program are available to help such OEMs. This resolution
also resolves the Agency's concern about how to define a "model" because the engine family
designation is well-established and readily available from the engine supplier.
Because this program allows exempted equipment in the power categories below 37 kW to
use uncertified engines (which do not have engine family designations), the small volume
allowance for each of these power categories will be applied to any of an OEM's models using
engines made by a single engine manufacturer.
d. Aggregating Exemptions Over Time
Summary of the Issue
The NPRM contained an alternative proposal which would enable OEMs to aggregate their
annual percent-of-production allowances and use the aggregated exemptions in any year of the
transition program. A similar proposed alternative would also enable aggregation of the small
volume allowances.
Comments
OEMs strongly supported the concept of aggregation, stating that it would allow them to
pursue implementation of the new standards in the most cost effective fashion. Deere further
commented that time limits on the use of exemptions are unnecessary.
Analysis
'EPA Memorandum from Don Kopinski to Docket A-96-40, "Potential Use of Small
Volume Allowance", August 7, 1998. EPA Docket A-96-40 item IV-B-01.
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EPA agrees that allowing the aggregation of percent-of-production exemptions over time is
appropriate. The reasons that a company may have for needing exemptions will vary from OEM
to OEM. OEMs needing flexibility to accommodate late deliveries of complying engines may
need to use their exemptions early in the transition process. Other OEMs with diverse product
offerings and limited engineering resources may need to spread exemptions more evenly to allow
themselves more time to roll out redesigned products. EPA sees the added flexibility of
aggregation as a way to deal with this diversity without resorting to lowest common denominator
solutions or to the granting of more hardship relief, with their potential for loss of environmental
benefit.
Allowing the complete aggregation of exemptions for the small volume allowance, however,
would create serious problems as discussed above in the summary and analysis of comments on
the one-model restriction for the small volume allowance, and would essentially defeat the
purpose of the small volume exemption. Therefore the Agency is finalizing the aggregation of
these exemptions with a cap on the number of exemptions that can be used in any one year. The
annual small volume exemptions may be aggregated, but no more than 200 exemptions may be
used in any year in any power category under this allowance provision. This strengthens the
small volume manufacturer flexibility without expanding the provision so greatly that larger
manufacturers for which the allowance is not targeted may take advantage of it. This approach
also deals with the concern EPA expressed in the NPRM regarding the undesirable curbing of
sales by manufacturers whose production of exempted machine models goes marginally over 100
before they have redesigned these models to accommodate complying engines.
EPA based it's choice of a 200-machine single-year cap for this allowance on a review of
data in the PSR database.2 This data shows that, under the no-cap scenario, most of the power
categories would have 20 percent or more of their total annual sales coming from manufacturers
who would benefit more from the small volume allowance than from the percent-of-production
allowance. In contrast, the 200-machine cap reduces these sales percentages to the 5 to 15
percent range in all but the 450-560 kW power band. This is a relatively less important power
band with a small population and emissions impact compared to the other bands. The Agency
views this possible maximum-use scenario for the small volume allowance to be acceptable,
considering the likelihood that many manufacturers will not make full use of any of the
flexibility allowances.
The Agency believes that it is essential to retain the time limits on the flexibility program to
preserve its character as a transition program, and to avoid the need for interminable tracking and
enforcement functions. No commenters provided evidence that longer durations are needed.
e. Expanded Allowances
2 EPA Memorandum from Don Kopinski to Docket A-96-40, "Potential Use of Small
Volume Allowance", August 7, 1998. EPA Docket A-96-40 item IV-B-01.
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Summary of the Issue
In the proposal, EPA identified a number of factors that the Agency believed would make
implementation of the new emissions standards more difficult for manufacturers of farm and
logging equipment. As a result, the Agency proposed that OEMs who make farm and logging
equipment receive expanded percent-of-production allowances for this equipment.
Comments
OEMs, including those with sizeable agricultural equipment markets, argued that the reasons
given by EPA for granting extended exemptions for farm and logging equipment would apply to
other applications as well, or, in some cases, are simply not valid. They supported combining the
allowances for the farm/logging and general application categories into a single aggregated
percent-of-production allowance, or adding a provision to allow exemption transfers between the
two categories. Various suggestions were made regarding the appropriate level of the combined
allowance. The Equipment Manufacturers Institute (EMI) recommended a combined aggregated
allowance of 135 percent (the level proposed for farm and logging equipment). Deere and the
Industrial Truck Association (ITA) recommended an averaged value of 90 percent. Caterpillar
suggested factoring in the environmental impact of both categories. No commenters expressed
support for limiting expanded allowances to farm and logging equipment manufacturers as
proposed.
Analysis
EPA's rationale for limiting special treatment to only farm and logging equipment was
effectively refuted by commenters, even those who were likely to benefit from the special
treatment. OEMs identified a wide range of other applications and special situations that involve
the same or comparable implementation challenges as those faced for farm and logging
applications.
Instead of suggesting that the expanded allowance for farm and logging equipment should be
dropped, these commenters argued that EPA should expand allowances for other categories.
Examples cited include forklifts, skid steer loaders, drilling rigs, and low volume models of all
applications. Although the comments on this topic were numerous, EPA does not view the
public record established by them as providing a comprehensive listing of all applications and
special situations that might need more flexibility. As might be expected, each commenter's
particular business interests tended to be reflected in their comments. Nevertheless, EPA is
convinced that some additional flexibility is warranted to meet the requirements of paragraph
213(a)(3) of the Clean Air Act calling for the "greatest degree of emission reduction achievable"
given certain criteria, including "the cost of applying such technology within the time available to
manufacturers". The Agency is also convinced by the comments and its own review of
equipment redesign challenges that the need for this flexibility is widespread across the regulated
power bands. For example, many smaller engines must fit into very compact equipment
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packages for which cost considerations are paramount; farm equipment predominates in the
medium-size power bands; and the largest engines are typically used in very low sales-volume
equipment models, for which aggressive redesign schedules may be costly or impossible.
The Agency is therefore expanding the percent-of-production allowance for all equipment to
a cumulative percentage of 80 percent in each power category, compared to the proposed
separate allowances of 45 and 135 percent for the general and farm/logging categories,
respectively. The proposed 7 year period for use of these exemptions will be retained. This
approach is superior to attempting to identify all applications and situations deserving of special
treatment and either assigning individual allowances to them or granting exemptions on a request
basis, because it maintains the proposal's focus on giving OEMs long-range control over how
they use their assigned pool of exemptions for their products affected by each new set of
standards, rather than on dictating category-by-category or model-by-model allowances. It also
serves the goal of avoiding unnecessary complexity by avoiding the need for numerous
equipment category definitions and exemption "account" calculations, a goal that was supported
by several commenters.
The choice of a cumulative allowance of 80 percent is based on the Agency's best estimate
of the degree of flexibility needed to meet the requirements of the Clean Air Act. EPA chose this
figure to provide a rough balance between the allowances proposed for manufacturers of
agricultural equipment and manufacturers of non-agricultural equipment.3 Commenters
demonstrated that manufacturers of non-agricultural equipment needed additional allowances for
several types of equipment facing implementation challenges. This final percent of production
figure also reflects the feeling of manufacturers who produce both agricultural and
non-agricultural equipment that the proposed farm and logging equipment allowances might be
less necessary for some agricultural equipment than for some types of non-agricultural
equipment. Finally, as discussed below, EPA believes this percent of production allowance,
combined with the small volume allowance provision, adequately protects those manufacturers
producing primarily agricultural equipment. EPA believes that this combination of
circumstances is best addressed by taking the total number of allowances proposed for all
manufacturers, and reallocating them in the form of a cumulative allowance of 80 percent,
without substantially changing the total number of allowances provided for all manufacturers.
The same 80 percent allowance is being adopted in every power band because, based on the
information available, the Agency has found the flexibility needed to meet the criteria of Clean
Air Act section 213(a)(3) to be fairly uniform across the power bands, although for different
reasons. Equipment using engines rated under 37 kW have early implementation dates, exist in a
large number and variety of models, are typically more cost-sensitive than larger machines, and
in many cases have very tight engine enclosures. These issues are balanced somewhat by the less
3 EPA memorandum from Phil Carlson to Docket A-96-40, "Comparison of Emission
Inventories Under Different Equipment Manufacturer Exemption Scenarios Analyzed for the
Nonroad Diesel Engine FRM", August 1998.
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stringent Tier 1 standards compared to the Tier 2 standards for larger engines, allowing some
Tier 1 engines and the equipment that uses them to require little modification from existing
designs. Engines between 37 and 75 kW also go into numerous models, many of which also
have packaging constraints such as the need to design farm tractor hoods for crop row visibility.
Compared to the smaller engines, they have more stringent standards that will likely cause larger
redesign impacts, but this is balanced by the several additional years of leadtime before standards
start. Packaging constraints are less severe in applications above 75 kW, although still common.
However, except for the very largest engines (those above 560 kW) the standards for these
engines are more stringent than those for smaller engines, and they have early implementation
schedules, adding to the need for equipment redesign flexibility in the first few years of the
program. Engines above 560 kW typically go into low-production equipment models. For this
reason, these models are on very long normal redesign cycles and so the flexibility is needed in
many cases more to avoid costly premature redesigns than to solve difficult packaging or
performance problems.
EPA has examined the impact on environmental benefits of the combination of changes
being finalized for this program, including this expanded allowance and the dropping of special
treatment for agricultural equipment. Although the actual impact will depend on the degree to
which the industry takes advantage of the flexibility provisions, the Agency has determined that
the net effect will be roughly equivalent to the impact of the proposed program.4
Although, no commenters supported limiting the special treatment to farm and logging
equipment, the Agency recognizes that some OEMs whose products are predominately focused
in farm or logging applications may have less flexibility in the program being finalized than in
the one proposed. The Agency has reviewed available sales data in the PSR database and has
concluded that almost all of these companies that are potentially adversely affected by the final
approach are very small and would therefore obtain more flexibility from the small volume
allowance than from the percent-of-production allowance, regardless of the final form of the
latter.
f. Transfer of Exemptions Across Power Categories
Summary of the Issue
Although it expressed concerns about competitive inequities and inappropriate expansion of
the flexibility program, the Agency requested comment on whether to allow exemptions for one
power category to be used in another, possibly with weighting to reflect the differing emissions
impacts of larger and smaller machines.
4 EPA memorandum from Phil Carlson to Docket A-96-40, "Comparison of Emission
Inventories Under Different Equipment Manufacturer Exemption Scenarios Analyzed for the
Nonroad Diesel Engine FRM", August 1998.
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Comments
OEMs expressed support for the allowance of such exemption transfers, arguing that it
would maximize the usefulness of a company's full complement of exemptions envisioned in the
proposal. They argued that, rather than potentially disadvantaging a manufacturer who produces
equipment in only one power category by allowing a more diverse competitor to stack
exemptions in that category, the lack of a transfer mechanism disadvantages the more diverse
competitor, because it cannot use its exemptions on the highest-cost machines unless they are
evenly divided among power categories.
Analysis
EPA disagrees with the view that a lack of transfer opportunity disadvantages the more
diverse manufacturers. These manufacturers receive just as large a share of exemptions and are
just as free to use their exemptions on higher cost machines in a power category as their less
diverse competitors. The Agency proposed the OEM flexibility allowances based on the view
that the introduction of new standards in each engine power category triggers the need for
implementation flexibility for the makers of machines using those engines. Expanding the
exemption allowance in any category by letting a manufacturer use exemptions it did not need in
another category would run contrary to this approach, and could create competitive inequities.
g. Purchase of ABT Credits
Summary of the Issue
EPA proposed that OEMs be allowed to purchase ABT credits and turn them in to the
Agency in exchange for additional equipment exemptions.
Comments
The California ARB objected to this proposal, stating that it defeats the purpose of the ABT
program by creating a new source of revenue for engine manufacturers, rather than simply
providing implementation flexibility. Engine manufacturers expressed support for the concept,
stating that such a program increases the potential value and usefulness of credits and increases
both engine and equipment manufacturer flexibility. Equipment manufacturers were less
enthusiastic. Some equipment manufacturers commented that they expected opportunities for
equipment manufacturers to purchase emission credits to be scarce, rendering this flexibility
provision largely illusory. They suggested that EPA improve OEMs' access to credits by giving
them the opportunity to purchase credits whenever they purchase an engine certified at a family
emission level below the applicable standard, or by requiring vertically integrated engine
manufacturers to make emission credits available for purchase by non-affiliated manufacturers to
the same extent that they make them available to a corporate affiliate.
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Analysis
EPA's past experience with ABT programs tends to confirm the expectation that ABT
credits may not be very available to OEMs without some provision to require that engine
manufacturers make them available. The Agency believes that such a requirement would be
inappropriate, because it would take away from the voluntary nature of the ABT program.
Credits could be generated voluntarily but could, in effect, be involuntarily taken away.
Furthermore, the Agency believes that this program has the potential to be very complex,
involving the need to convert grams-based ABT credits to number-of-machine-based exemptions
without an environmental detriment, and the potential need to administer many more ABT
accounts. Therefore, EPA is not finalizing this provision.
It should be noted that OEMs may still work to facilitate credit trades between engine
manufacturers to achieve similar results. An OEM dependent on an engine manufacturer who
cannot provide complying Tier 2 engines could arrange for this manufacturer to buy credits from
another engine manufacturer. The credits could then be used to demonstrate compliance while
the manufacturer continues to sell Tier 1 engines to the OEM. EPA recognizes that this may be
of limited usefulness to OEMs, but believes that the proposed program, with no provision to
force the sale of credits, has the same limitation.
h. Hardship Relief
Summary of the Issue
EPA proposed that a safety valve provision be adopted whereby small OEMs could apply
for and receive up to one year of additional relief if they are unable to comply with the
regulations due to engine supplier problems. They would need to provide evidence that the
pending noncompliance was not their fault and that they face possible bankruptcy if forced to
comply. Comment was requested on the advisability of requiring those who receive relief to
recover some of the lost environmental benefit, such as by purchasing Blue Sky Series engines.
Comments
Equipment manufacturers supported the proposed provision but commented that the
solvency criterion is impractical and should be replaced with a need to show a loss of sales or a
significant adverse economic impact. The Outdoor Power Equipment Institute (OPEI) asked that
similar relief be extended to engine manufacturers who cannot sell all of the engines they
produce in anticipation of requests by OEMs for exempted engines. One equipment
manufacturer objected to any inclusion of Blue Sky Series engine purchases as part of a relief
agreement.
Ingersoll-Rand provided evidence from their Tier 1 experience that being a large OEM does
not necessarily ensure the cooperation of engine suppliers in accommodating timely equipment
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redesigns. They felt that the exemption provisions, though helpful, must be supplemented by an
extension of the hardship relief provision to all non-vertically integrated OEMs, large and small,
without a need to prove impending bankruptcy.
Analysis
The Agency has granted requests in the past for relief from regulations in cases involving
unforseen special circumstances and the potential for major disruptions of business. By defining
specific criteria for granting and restricting hardship relief, the proposed provision will help to
ensure consistency and avoid abuse. The Agency agrees that the need to prove impending
bankruptcy may be too restrictive and that a showing of serious economic hardship to the
company is sufficient to discourage abuse of the provision. EPA is also convinced by experience
in the Tier 1 program that there is a need for a safety valve provision of this type for larger non-
vertically integrated OEMs as well as small ones, and is therefore extending this provision to
them.
To avoid the creation of a self-fulfilling prophecy, by which the very existence of this
provision prompts engine manufacturers to delay engine developments, the Agency wishes to
make clear that it expects this provision to be rarely used. Each granting of relief would be
treated as a separate agreement with no prior guarantee of success, and with the inclusion of
measures, agreed to in writing by the OEM, for recovering the lost environmental benefit. Any
engine manufacturers who do not make their best attempts at timely compliance, incorrectly
believing that their OEM customers will receive routinely-granted, no-cost relief, will likely have
very unhappy customers and a loss of future business instead. The Agency does not feel that
specifying the details of the emissions benefit recovery provisions in the regulations, such as
setting a quota of Blue Sky Series engine purchases, is possible or desirable at this time.
The requested granting of hardship relief to engine manufacturers to sell off unanticipated
surpluses does not appear appropriate. The potential for abuse of a provision of this sort would
be very large.
i. Design Freeze Concepts
Summary of the Issue
Some OEMs and Post-Manufacture Marinizers (PMMs) who do not make their own engines
have argued in the past for a program in which OEMs and PMMs would have a year or two after
engine manufacturers are required to finish their designs, in order to redesign their own products
to accommodate the new engines. This would amount to a mandatory engine design freeze for a
year or two before the engines would be required in the marketplace.
Comments
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Some OEMs and one PMM continued to argue for some form of this arrangement. Engine
manufacturers commented that it would be impractical and illegal to try to force an engine
manufacturer to have later Tier production engines available a year or more before anybody is
required to buy them. These commenters also explained that equipment manufacturers usually
encourage their engine manufacturer to improve performance and reduce costs on an ongoing
basis, rather than "freeze" on some less-than-optimal package.
Analysis
Although sympathetic to the concerns expressed by non-vertically integrated OEMs and
PMMs, the Agency received no new information that would allow it to conclude that requiring a
design freeze is practical. The likelihood of repeated delays in the program phase-in and
extensive litigation appear high. Instead, the Agency has chosen to provide additional relief for
these OEMs in other flexibility provisions, especially in expanding the hardship relief provision.
j. Early Compliance Credits
Summary of the Issue
Proposed flexibility provisions apply after a standard takes effect, with no credit provision
for early compliance.
Comments
Ingersoll-Rand requested that EPA allow non-vertically integrated OEMs to gain additional
exemptions for producing equipment that uses engines meeting emission standards sooner than
required—essentially an exemption banking program. Each early compliance credit would be
valid for the use of a noncomplying engine for 18 months after the certification date applicable to
that engine. The credits could be used across product lines and power categories, with proper
weighting factors for power differences.
Analysis
Although the Agency welcomes suggestions for environmentally-neutral flexibility
programs, it expects that engine manufacturers who introduce complying engines early will want
to earn ABT program credits for them. For an OEM to receive additional exemptions from the
same engines that an engine manufacturer receives ABT program credits would amount to
double-counting of emission benefits. An OEM can receive the benefit of the early-introduction
engines by convincing the engine supplier to use the ABT program credits generated by these
engines to build more engines designed to meet the previous tier of standards (which do not
reduce the OEM's exemption allowance) after the new standards go into effect. The opportunity
to arrange ABT program credit exchanges, discussed above, gives OEMs even more flexibility of
this sort. Therefore, EPA believes that an exemption banking program is unnecessary, and would
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be too complicated to administer and enforce.
k. Recordkeeping and Reporting Requirements
Summary of the Issue
The Agency proposed requirements for keeping and making available records on exempted
equipment and engines, stating its desire for a flexibility program that minimizes these
requirements while allowing for an enforceable program to discourage abuse by OEMs. EPA
made it clear that an OEM choosing not to use any of the flexibility provisions would not be
subject to any of the program's recordkeeping requirements. The Agency also requested
comment on requiring engine manufacturers who produce engines for the OEM flexibility
program to annually provide information on these engines.
Comments
OPEI requested that required OEM recordkeeping be limited to total annual production of
older design engines as a portion of total production, and that these records be made available to
EPA upon request.
Engine manufacturers stated that EPA should not require engine manufacturers to maintain
or annually provide records on the noncomplying engines manufactured for the OEMs'
exemption needs. They argued that to do so would impose an undue burden without any real
benefit, as the proposed recordkeeping requirements for equipment manufacturers should provide
sufficient assurance to EPA. They also requested clarification of how these engines are to be
certified and labeled.
Analysis
EPA does not see how limiting OEM recordkeeping to a single calculation would provide
any hope of compliance verification. The Agency would need to locate and check labels on a
large portion of an OEM's annual production to know if the allowance had been exceeded. The
proposed recordkeeping requirements are therefore being retained in the final rule.
After further analysis, the Agency has decided to require engine manufacturers who decide
to make engines for the OEM flexibility program to annually submit very basic records on these
engines to the EPA. These records would consist of the number of each noncomplying engine
model sold annually to each OEM customer or used in the engine manufacturer's own equipment
products. Such records would be invaluable in any OEM enforcement auditing that the Agency
conducts, and would not create an unreasonable burden for the engine manufacturers.
The Agency is not imposing any special certification or labeling requirements for engines
made for use in the OEM flexibility program. For example, a Tier 1 engine used in an exempted
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machine in the Tier 2 timeframe need only be certified and labeled as a Tier 1 engine.
1. Application of Exemption Provisions
Summary of the Issue
Clarification was requested on the definition of an equipment manufacturer for the purpose
of determining and enforcing compliance with exemption allowances. This is especially relevant
for use of the small volume exemption by companies that are affiliated with other companies.
Comments
Cummins recommended that the flexibility provisions be applied at the lowest level of a
company/division allowed by the Small Business Regulatory Enforcement Fairness Act.
Analysis
All of the exemption provisions are written in relation to the prohibited acts described in
§89.1003 of the regulations, most pertinently paragraph (a)(6), which makes it illegal:
For a manufacturer of nonroad vehicles or equipment to distribute in commerce, sell, offer
for sale, or introduce into commerce a nonroad vehicle or piece of equipment, manufactured
on or after the model year applicable to engines in such vehicle or equipment under
§89.112, which contains an engine not covered by a certificate of conformity.
A nonroad vehicle or nonroad equipment manufacturer is defined in §89.2 as:
Any person engaged in the manufacturing or assembling of new nonroad vehicles or
equipment or importing such vehicles or equipment for resale, or who acts for and is under
the control of any such person in connection with the distribution of such vehicles or
equipment. A nonroad vehicle or equipment manufacturer does not include any dealer with
respect to new nonroad vehicles or equipment received by such person in commerce.
The Agency agrees that clarification of these regulations is needed for the application of the
exemption provisions but does not agree that exemption allowances should be applied separately
to entities within or controlled by a company. Doing so would allow companies to artificially
create or utilize small subunits, all of which would qualify for the small volume exemptions even
though they are controlled in common. Instead the Agency wishes to make clear that all entities
that are under the control of a common entity, and that meet the above definition of a nonroad
vehicle or nonroad equipment manufacturer, must be considered together for the purposes of
applying exemption allowances. This provides certain benefits for the purpose of pooling
exemptions but also precludes the abuse of the small volume allowances.
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m. Manufacturers Who Resell New Equipment
Summary of the Issue
The regulations prohibit the sale of new equipment with noncomplying engines except as
provided for in the exemption allowance provisions. The exemption allowance provisions are
not clear for manufacturers who buy new equipment, modify it such as by adding specialized
attachments or relabeling it, and then resell it as new.
Comments
EMI asked that the Agency make clear that such manufacturers receive the same exemption
allowances as OEMs. Cummins requested that privately branded equipment, that is equipment
manufactured by one OEM but sold by another OEM under their own name, be considered
separately from the other equipment produced by the actual manufacturer.
Analysis
The Agency believes that the OEM flexibility provisions should apply only to the
manufacturer who installs the engine into the equipment. Other manufacturers who modify or
relabel and resell new equipment already introduced into commerce would be subject to the
regulations in the same way as independent dealers and distributors. EPA's desire to limit the
number of machines using noncomplying engines is therefore satisfied by regulation of the
original equipment manufacturers, such that the secondary manufacturers do not need exemption
allowances. They may sell as many machines with noncomplying engines as they are legally able
to obtain. The definition of a nonroad vehicle or nonroad equipment manufacturer has been
modified in the final rule to reflect this position. It should be noted that this approach is not
intended to in any way negate the anti-tampering provisions of 40 CFR §89.1003(a)(3).
n. Existing Inventories and Replacement Engines
Summary of the Issue
The existing paragraph 40 CFR §89.1003(b)(4) provides that: "Nonroad vehicle and
equipment manufacturers may continue to use noncertified nonroad engines built prior to the
effective date until noncertified engine inventories are depleted; however, stockpiling of
noncertified nonroad engines will be considered a violation of this section." EPA proposed to
update this to apply to the new proposed program with multiple tiers and effective dates. The
existing paragraph (b)(7) of this section provides an exception for the sale of replacement
engines after the implementation of Tier 1 engines at or above 37 kW.
Comments
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OPEI felt that EPA's proposed wording would create a more restrictive provision because
the provision as revised appears to limit manufacturers' use of uncertified inventories to one
model year. EMA commented that the replacement engine provision should be expanded to
include engines covered by the proposal.
Analysis
The apparent restriction identified by OPEI was unintended. EPA is revising the wording to
read: "After the date on which a new standard takes effect, nonroad vehicle and equipment
manufacturers may continue to use nonroad engines built prior to this date that are not certified
to the standard until inventories of those engines are depleted; however, stockpiling of such
nonroad engines will be considered a violation of this section." EPA agrees with EMA that
extending the replacement engine provision is appropriate and is modifying the regulations
accordingly.
o. Flexibility For Post-Manufacture Marinizers
Summary of the Issue
Post-manufacture marinizers produce marine engines by modifying engines purchased from
other engine manufacturers. They, therefore, have both the concerns of an engine manufacturer
regarding engine certification, as well as the concerns of an OEM regarding timely delivery of
redesigned engines from their engine suppliers. EPA requested comment on extending some or
all of the equipment manufacturer flexibility provisions to PMMs affected by this proposal.
Comments
Westerbeke, a PMM, expressed support for extending the proposed OEM flexibilities to
PMMs. Westerbeke believes that engine marinizers should be treated the same as OEMs since,
generally, engine marinizers do not manufacture the engine and they do not have control over the
major emission-effecting components and functions of the engine that they marinize. However,
Westerbeke also expressed a concern that extending OEM flexibilities to PMMs does not go far
enough to address the needs of PMMs, and requested that EPA adopt a design freeze provision as
discussed in section 4.i of this document.
Analysis
EPA recognizes that the potential unavailability of certified base engines may make it
difficult for PMMs to comply with the proposed emission control program, since they may not be
able to obtain base engines in time to adjust their marinization process, especially considering
that most of the marine engines affected by this rule are subject to standards beginning in 1999.
Therefore, the OEM flexibility provisions are being extended to PMMs, as proposed.
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In addition, even where complying base engines are made available, EPA recognizes that the
OEM flexibility allowances may not be sufficient for all PMMs to redesign and certify all of their
models in time to meet the program requirements. Based on these concerns, EPA has
determined that the proposed emission standards would not be feasible without additional
flexibility for PMMs who produce marine engines under 37 kW. Therefore, the Agency is
adopting another optional provision. Provided they inform EPA in writing before the date Tier 1
standards would take effect, PMMs may elect to delay the effective dates applicable to marine
engines under 37 kW for one year, instead of using the OEM flexibility provisions.
Although it provides a substantial boost in certainty to PMMs, the optional 1-year delay
provision will have a very small environmental impact. This is because: (1) the marine engines
under 37 kW produced by PMMs are a very small part of the total nonroad diesel engine
production, (2) these engines produce relatively low emissions due to their small size and low
usage characteristics, and (3) the total number of engines potentially exempted under this
flexibility provision is not much greater than that possible under the exemption allowance
provisions.
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5. Averaging, Banking and Trading
EPA proposed a comprehensive new ABT program in tandem with the proposed standards
that would replace the existing ABT program. The primary features of the proposed program
were that credits generated from engines certified to the proposed standards would have an
unlimited credit life and credits would be available for complying with both the NMHC plus
NOx standards and the PM standards. As in the current ABT program, there would be no
discounting of credits from engines certified to meet the proposed standards. EPA proposed to
allow both credit generation and use on a sales-weighted average power basis in lieu of the "buy
high/sell low" provisions of the current ABT program. Engines certified under the existing Tier
1 standards could generate NOx credits and PM credits which could be used to comply with the
proposed NMHC plus NOx standards and PM standards respectively. The NOx credits from
engines certified to the existing Tier 1 standards would be adjusted downward if the emission
levels were not below a specified level and the credits could not be used beyond the Tier 2 time
frame. The PM credits from Tier 1 engines would be calculated against the proposed Tier 2 PM
standards and could only be used to show compliance once the Tier 2 standards take effect.
Because EPA's proposal has, for the first time, set standards for engines below 37 kW, EPA
has proposed that the ABT program be expanded to cover those engines as well. Engines from at
or above 19 kW to less than 37 kW would be allowed to average, bank and trade credits with
other engines rated at or above 37 kW. Engines below 19 kW would only be allowed to average,
bank, and trade with other engines below 19 kW. Several other special provisions were proposed
to deal with the unique characteristics of the market for engines below 37 kW. These included
provisions requiring all engines below 19 kW to generate credits against the proposed Tier 2
standards (even Tier 1 engines), prohibiting the exchange of credits from land-based engines to
marine engines, limiting the lifetime of Tier 1 credits from engines less than 19 kW, prohibiting
the trading of credits from indirect injection engines at or above 19 kW to other manufacturers,
and allowing manufacturers to carry a negative balance of credits in the first four years that the
standards take effect as long as these negative credit balances are paid back with interest.
The following is a summary of the comments EPA received on the various aspects of the
proposal and EPA's analysis and response to those comments.
a. General Need for and Effects of the Proposed ABT Program
Summary of the Issue
An ABT program allows the Agency to propose and finalize more stringent engine standards
than might otherwise be appropriate under the Clean Air Act, since ABT provides flexibility for
high-cost manufacturers and improves the technological feasibility of achieving the standards.
EPA proposed the changes to the existing ABT program with the intent that the changes would
enhance the technological feasibility and cost-effectiveness of the new standards, and thereby
help to ensure the new standards would be attainable earlier than would otherwise be possible.
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The changes would provide manufacturers with additional product planning flexibility and the
opportunity for a more cost effective introduction of product lines meeting the new standards.
Also, EPA believes that ABT creates an incentive for early introduction of new technology which
allows certain engine families to act as trail blazers for new technology. This can help provide
valuable information to manufacturers on a given technology before it needs to be applied
throughout their product line. This further improves the feasibility of achieving the standards.
EPA viewed the effect of the ABT program itself as environmentally neutral because the use of
credits by some engines is offset by the generation of credits by other engines. However, when
coupled with the new standards, the ABT program would be environmentally beneficial because
it would allow the new standards to be implemented earlier than would otherwise be appropriate
under the Act.
Comments
EMA commented that engine manufacturers need the flexibility of an expanded ABT
program in order for the proposed standards to be cost-effective and achievable.
STAPPA/ALAPCO acknowledged the importance of ABT to manufacturers, however, they want
to ensure that the flexibility offered by ABT does not jeopardize the realization of the full
potential benefits of the new standards. They do not believe EPA has sufficiently proven that
further flexibility is needed compared to the current program. In addition, they believe EPA's
justification for increased flexibility is insufficient without an increased commitment to in-use
compliance testing and enforcement. Without this commitment by EPA, they argue,
manufacturers have an incentive to take advantage of the certification process. Environmental
groups commented that ABT undermines the effort to meet national air quality standards as
quickly as possible.
Analysis
As described below, EPA has made minor changes to the proposed ABT program in
response to comments on particular issues. EPA believes that the final version of the ABT
program helps make the final standards appropriate under the Clean Air Act. EPA is able to
impose more stringent standards by revising the current ABT program. The more stringent
standards are based on the availability of credits, and thus may not have been mandated in the
absence of such credits. EPA also continues to believe that, even with the modifications, the
effect of the ABT program alone, separate from the level of the standard, is at worst
environmentally neutral. Moreover, it is clear that the program provides emissions reductions
earlier than would otherwise be achieved. Although all engines would not meet the more
stringent standards beginning in the applicable model year, the excess emissions from such
engines are offset by engines that are cleaner than the required standard prior to the applicable
model year. Furthermore, these early emissions reductions represent the early introduction of
emissions reduction technologies or strategies that manufacturers would not otherwise be
required to apply, which has the advantages discussed earlier. Manufacturers are able to earn
credits for experimentation with advanced technologies. In addition, by spreading out the
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emissions reductions, manufacturers are able to optimize their product plans without overall loss
of emissions reductions. All of these points help to allow for the adoption of a lower standard
than would otherwise be reasonably achievable. The ABT changes therefore should not add
uncertainty to air quality planners' ability to rely on these reductions.
As laid out in the technology and cost analyses of the RIA, EPA expects that meeting the
final standards will require manufacturers to employ new technologies, heretofore unused in
nonroad diesel applications. Such technology has potential operating cost and durability
implications which may make it prohibitive to meet the standard for every engine family
beginning in 2004. For some engine families, achieving the required emissions reductions will
represent a more difficult challenge for engine manufacturers than for others and manufacturers
may need additional time for the more difficult engine families. The revised ABT program
provides the engine manufacturers with design and implementation flexibility. Eventually,
however, when credits have been consumed, all engines will be required to be equipped with
advanced emissions controls (not considering the possible effect of averaging).
EPA does not believe that the ABT program results in the loss of emissions reductions as a
result of a lack of an in-use compliance threat. EPA currently performs Selective Enforcement
Audits (SEAs) that require testing of production line engines to ensure they are meeting the
emission levels established by the manufacturer during the certification process. EPA believes
this provides a significant deterrent to the manufacturers against gaming the ABT program. In
the future, EPA expects to continue performing SEAs and to build upon other methods of in-use
compliance testing in the nonroad area as expertise is gained in the on-highway heavy-duty
engine compliance arena.
b. Credit Life/Use of Tier 1 NOx Credits beyond Tier 2
Summary of the Issue
EPA proposed that credits earned under the revised program have an unlimited credit life.
Under the existing ABT program for engines at or above 37 kW, credits have a lifetime of three
years. One exception to the unlimited life for credits was proposed for engines below 19 kW
certified to the Tier 1 standards. Due to the potential to earn significant credits from indirect
injection engines, EPA proposed that unused credits generated from Tier 1 engines below 19 kW
expire on December 31, 2007.
EPA also proposed limits on the use of credits from Tier 1 engines rated at and above 37
kW. Under the proposal, NOx credits generated on Tier 1 engines could be used to show
compliance with the existing Tier 1 standards or the proposed Tier 2 standards, but not to show
compliance with the proposed Tier 3 standards. In effect, this placed some limit on the use of
credits from Tier 1 engines above 37 kW, although they could continue to be used indefinitely
for engines between 19 kW and 37 kW, and those above 560 kW, because EPA has not proposed
Tier 3 standards for these engine categories.
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Comments
EMA and engine manufacturers supported unlimited life for credits. Citing the high
expected costs of Tier 1 compliance, EMA also supported an unlimited life for credits from Tier
1 engines below 19 kW, which EPA proposed to expire at the end of 2007. They noted that an
unlimited credit life provides the incentive for manufacturers to hold on to their credits rather
than use them up before they expire. Rather than waste credits, manufacturers would have an
incentive to defer lower emitting technologies in order to use up the credits. EMA also noted
that EPA should eliminate the regulatory language that requires the use of credits "expiring in the
earliest model year." EMA and engine manufacturers also opposed the proposed restriction on
the use of Tier 1 NOx credits from engines above 37 kW for Tier 3 compliance noting they
oppose limitations on the use of credits in general.
EPA also received comments that an unlimited credit life was inappropriate.
STAPPA/ALAPCO questioned the need for extending credit life beyond three years and noted
they do not believe EPA has sufficiently proven that further flexibility is needed compared to the
current program. Environmental groups opposed extending credit life beyond three years
because credits accrued in the early years could be used by manufacturers to delay real engine
improvements far into the future.
Analysis
EPA agrees with the rationale presented by the engine manufacturers for unlimited credit
life. There would be an environmental benefit associated with limiting credit life if
manufacturers allowed credits to expire. However, credits are not generated without a cost to the
manufacturer and/or the consumer and thus they have value to a manufacturer. If faced with
credit expiration, manufacturers would likely use the credits if at all possible. Based on
experience with the ABT program for on-highway heavy-duty diesel engines, manufacturers have
not been inclined to allow credits to expire in the past.5 Future credits are even more valuable
due to the more stringent standards.
For the nonroad CI engine ABT program, EPA believes that an unlimited credit life is
appropriate and beneficial for several reasons. There is no environmental advantage to forcing or
encouraging credits to be used because credit use results in higher emitting engines. EPA does
not agree that allowing an unlimited credit life unduly delays the introduction of technology.
While unlimited credit life would create the potential for technology delay on a few families,
limiting credit life would encourage technology delay in the near term since it would be "use or
lose" for the credits. Allowing for holding of credits delays the incentive to use dirtier
technology rather than delaying cleaner technology. Furthermore, EPA believes some
5 Based on EPA heavy-duty engine compliance records in which manufacturers report to EPA
on their credit generation and use. Engine Programs and Compliance Division of the Office of
Mobile Sources, 401 M St. SW, Washington DC, 20460.
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manufacturers are likely to exercise the option of retaining credits for future use. Credits that are
not used, but kept in an account, represent a benefit to the environment.
EPA believes that a limit on credit life would, in this case, to some degree, stifle the
development and introduction of new technology. Under the stringent new standards, credits are
unlikely to be generated without the application of additional emissions controls. Manufacturers
will likely expend significant resources to generate credits. Regulatory provisions which limit
manufacturer flexibility in credit use have the effect of reducing credit value and thus reducing
the incentive to invest in the development and introduction of new technology. With limits on
credit life, a manufacturer would plan carefully and would not generate credits that are not
needed in the time frame before they would expire.
EPA recognizes that this is a departure from the current ABT program for nonroad engines
but believes that it is warranted given the stringency of the standards being finalized. Initially,
the Agency adopted the banking and trading program for Tier 1 nonroad engines without any
certification experience with nonroad CI engines. This led the Agency to adopt conservative
measures such as limited credit life to limit the program's scope. However, providing the
manufacturers with the degree of freedom represented by unlimited credit life will aid them in
meeting the stringent standards being adopted. EPA believes the potential for environmental
benefits outweighs the environmental risk associated with delay.
Where credits could be easily generated, however, EPA has proposed adjustments for credit
life. For example, EPA has recognized the possibility that a large bank of credits could be
accumulated from current Tier 1 engines to be used against the Tier 3 standards. EPA expects
that credits generated from the existing Tier 1 engines will be used substantially to meet the new
Tier 2 standards. However, because there are already Tier 1 engines certifying below the existing
Tier 1 standards (but not generating ABT credits currently), there is the potential for significant
credits to be generated before the new Tier 2 standards take effect. For this reason, EPA
continues to believe that it is necessary to prohibit the use of credits generated from engines
certified to the existing Tier 1 standards in the Tier 3 time frame. This would prevent
manufacturers from delaying the Tier 3 standards far into the future by producing engines that
emit lower than the relatively high, existing Tier 1 standards.
EPA also continues to believe that limiting the lifetime of credits from Tier 1 engines below
19 kW is appropriate. Based on EPA's cost analysis for engines below 19 kW, EPA believes that
EMA's estimated cost of compliance for such engines is overestimated significantly. Because of
the possibility for manufacturers to generate large numbers of credits from indirect injection
engines under the new Tier 1 standards and delay the new Tier 2 standards significantly, EPA
believes it is necessary to set an expiration date of December 31, 2007 for credits from Tier 1
engines below 19 kW. This will allow manufacturers to use credits for the first three years that
the Tier 2 standards apply, but will not allow their use beyond that point.
EPA agrees with EMA that the regulatory language requiring the use of credits expiring in
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the earliest model year should be removed. Such language is unnecessary given the
abandonment of the three year credit life and the lack of discounting in the nonroad ABT
program. (Discounting decreases the value of credits generated in previous model years relative
to those generated in the current model year which are not typically discounted until banked or
traded). EPA is therefore removing the language related to use of credits expiring in the earliest
model year from §89.204 of the regulations.
c. Adjustment of NOx Credits from Engines Meeting the Existing Tier 1 Standards
Summary of the Issue
Due to concerns that manufacturers could potentially earn significant NOx credits from their
current Tier 1 engines and delay compliance with the Tier 2 standards, and to encourage the pull-
ahead of newer and cleaner technologies, EPA proposed that banked or traded NOx credits be
adjusted downward unless the engine on which the credits were earned has emissions below the
Tier 1 standard of 9.2 g/kW-hr by a specified amount. (Credits that were to be used for
averaging in that same year were not subject to the downward adjustment.) EPA proposed a
NOx level of 8.0 g/kW-hr as the trigger for the adjustment. If the family emission limit (FEL)
were at or below the trigger, then no adjustment to the NOx credit calculations would be
necessary. If the FEL was above the trigger, EPA proposed to adjust the NOx credits (if they
were to be banked or traded) downward by 35 percent. EPA requested comment on the level of
the adjustment.
Comments
EMA and a number of engine manufacturers commented that EPA should eliminate the 35
percent adjustment citing the high cost of compliance with the Tier 2 standards. At the very
least, EMA commented that EPA should eliminate the adjustment for credits banked from Tier 1
engines and later used by other Tier 1 engines because the current ABT program does not have
any similar type of discounting in it.
With regard to the level of the adjustment, the California ARB commented that if EPA
believes the 8.0 g/kW-hr level is a reasonable discriminator for pull-ahead technology, then
credit generation should only be allowed for engines below that level.
Analysis
EPA believes that an adjustment of the credits for Tier 1 engines above 37 kW is still
appropriate for those engines with FELs above 8.0 g/kW-hr. As noted earlier, EPA's cost
analysis for the new standards contained in the RIA, shows that the expected cost of compliance
for the Tier 2 standards is much lower than projected by EMA. Therefore, the need to eliminate
the adjustment for cost reasons is not justified.
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The sales-weighted average certification levels of Tier 1 engines are well below the 9.2
g/kW-hr NOx standard for all power categories currently certified. The potential for the
manufacturers to earn significant credits remains. While the engines are cleaner than required by
the regulations, the type of technology used by many of the engines slightly below the standards
could be categorized as incremental improvements in engine technology, such as calibration
changes and increased cooling. Contrary to the assertion by the California ARB, EPA believes
the reductions from the incremental technologies are real, and should be recognized in an ABT
program. However, they represent minor engine changes rather than the step forward in
technology that EPA believes an ABT program should encourage and reward fully. For these
reasons, EPA is retaining the 35 percent downward adjustment to NOx credits generated from
Tier 1 engines rated at or above 37 kW with FELs above 8.0 g/kW-hr.
With regard to applying the adjustment to credits that will be banked and used later by
manufacturers to certify another Tier 1 family at or above 37 kW, EPA believes that it would be
appropriate not to apply the adjustment as originally proposed. The current ABT program for
nonroad CI engines does not include a similar adjustment on credits. It was not EPA's intent to
change this aspect of the program for engines complying with the existing Tier 1 standards.
Therefore, EPA will not apply any downward adjustment to NOx credits generated by Tier 1
engines at or above 37 kW that are banked and later used to show compliance for other Tier 1
engines at or above 37 kW.
d. Use of Average Power instead of Min/Max Power in Calculating Credits
Summary of the Issue
EPA proposed to allow the calculations for both credit generation and credit use to be based
on a sales-weighted average power basis in lieu of the "buy high/sell low" provisions of the
current ABT program. The "buy high/sell low" provisions require manufacturers to calculate
credits generated based on the lowest power rating within an engine family and credits used
based on the highest power rating within an engine family. This results in a penalty to the
manufacturer because calculations using lower powers result in fewer credits than with higher
powers. As with other proposed revisions to the ABT program, the proposed removal of the
"buy high/sell low" provision was meant to enhance the flexibility the ABT program provided to
manufacturers in meeting the new standards.
Comments
EMA, two engine manufacturers, and EMI supported the use of sales-weighted average
power in credit calculations.
Analysis
EPA agrees with commenters that the penalty imposed under the previous "buy high/sell
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low" unnecessarily restricted generation of ABT credits. EPA also believes the change to
average power for credit calculations is desirable to simplify recordkeeping and make the
calculation methods more consistent between the nonroad and highway programs. For these
reasons, EPA is finalizing use of the sales-weighted average horsepower for calculating ABT
credits.
e. Discounting Tier 2 and Tier 3 Credits
Summary of the Issue
The 1994 nonroad CI engine emission standards being amended today did not include any
discount adjustments for purposes of calculating ABT credits. In revising the current ABT
program, EPA proposed to discount the value of NOx credits earned under the Tier 1 standards
unless the emissions from the engines are below a specified trigger level. EPA, however, did not
propose discounting credits earned under the standards for engines less than 37 kW or under the
Tier 2 and Tier 3 standards applicable to engines rated at or above 37 kW.
Comments
STAPPA/ALAPCO stated that it questioned the elimination of credit discounting. No other
comments were submitted on EPA's decision not to discount credits beyond the Tier 1 time
frame.
Analysis
STAPPA/ALAPCO's comment is slightly unclear because credit discounting is not being
eliminated from the current nonroad rule which does not include any credit discounting
provision. EPA, however, will read this comment as an objection to EPA's decision not to
include discounting for Tier 2 and Tier 3 ABT credit calculations.
EPA believes that the Tier 2 and Tier 3 standards are sufficiently stringent to justify
allowing manufacturers to claim full credit for any reductions of emissions below the standards.
Unlike the Tier 1 NOx standards where incremental improvements can and have been made to
achieve compliance, the Tier 2 and Tier 3 NMHC plus NOx standards will require more
significant engine redesigns. Even marginal improvements beyond the newly adopted standards
will require advancements in technology and should be encouraged. Discounting ABT credits
from Tier 2 and Tier 3 engines is not necessary and would diminish the incentive to reduce
emissions below the standards. Therefore, EPA is not requiring any discounting of credits earned
in the Tier 2 or Tier 3 time frame.
Although EPA is not finalizing any discounts for Tier 2 or Tier 3 engine credits with this
final rulemaking, EPA is concerned that there is some potential for manufacturers to generate
unwarranted credits against the Tier 2 standards. For this reason, EPA plans to monitor the
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emission levels of engines and use of the ABT program over the next few years. EPA will take
this information into account as it reassesses the appropriateness of not having any discounting of
credits for both Tier 2 and Tier 3 engines as part of the 2001 feasibility review of the ABT
provisions.
f. NOx Credit Surcharge
Summary of the Issue
Due to concerns over the amount of credits manufacturers could earn from currently
certified Tier 1 engines and the potential to delay the Tier 2 standard, EPA requested comment
on requiring engine manufacturers to pay a ten percent surcharge if they used credits to certify
more than 20 percent of their fleet. The surcharge would have been applied in either the first or
second year a Tier 2 standard applied in a given power range.
Comments
EMA and two engine manufacturers opposed the ten percent surcharge, calling it a form of
discounting. Environmental groups commented that instead of imposing a surcharge, EPA
should prohibit manufacturers from using credits to certify more than 20 percent of its fleet.
Analysis
EPA does not believe a surcharge should be adopted in the revised ABT program. Although
currently certified Tier 1 engines are well below the Tier 1 standard on average, the adjustment to
credits from engines with FELs above 8.0 g/kW-hr should be sufficient to ensure that there is not
a significant delay in implementation of the Tier 2 standards. Adding a surcharge to those
manufacturers who certify more than 20 percent of their fleet with ABT would not be expected to
have a significant impact on the number of credits available to manufacturers because EPA does
not expect that manufacturers will use ABT to such a high level. As a result, EPA no longer
believes a surcharge on such use is necessary to prevent delay. In addition, EPA believes that
adding the requirement for a surcharge on high users of ABT credits would start to overlimit the
flexibility offered by ABT and create an even more complicated program. Therefore, EPA is not
finalizing the NOx surcharge on manufacturers that certify more than 20 percent of their fleet
using ABT credits.
A flat prohibition, as recommended by environmental groups, would also overlimit the
flexibility of the ABT program and is not warranted because there may be rare circumstances
where a manufacturer needs to certify a percentage of their fleet greater than 20 percent,
especially if they have some high volume engine families that are slightly above the applicable
standards. EPA wishes to reiterate that in order to have enough credits to certify a high fraction
of their sales, the manufacturer would have already had to accumulate a sizeable credit balance
by certifying a large number of engines below the applicable standards.
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g. Availability of PM Credits
Summary of the Issue
The current ABT program for Tier 1 engines does not cover PM emissions. Because EPA
proposed PM standards for all power categories, and because the tight NMHC plus NOx
standards will affect manufacturers' ability to comply with the PM standards, EPA proposed to
include PM emissions in the revised ABT program. EPA proposed that the PM portion of the
ABT program begin with the Tier 2 standards for engines at or above 37 kW, and the Tier 1
standards for engines below 37 kW. EPA also proposed to allow the early banking of PM
credits. Engines below 37 kW could generate early PM credits upon finalization of the rule. Tier
1 engines at or above 37 kW could also generate credits upon finalization of the rule provided the
engine met the existing Tier 1 NOx standard. EPA requested comments on limiting the
availability of early PM credits to the three years before the proposed standards took affect.
Comments
With regard to the proposed inclusion of PM in the ABT program, EMA and one engine
manufacturer supported the inclusion of PM. However, environmental groups commented that
EPA cannot allow PM credit generation until it can demonstrate an adequate understanding of
real world PM emissions.
With regard to the issue of early PM credits, EMA and one engine manufacturer commented
that there should be no limits on the availability of early PM credits. STAPPA/ALAPCO
commented that the availability of early PM credits should be limited to three years prior to the
applicable Tier 2 standards taking affect.
Finally, Case Corporation commented that EPA's proposal to only allow early PM banking
if the engine meets the Tier 1 NOx standard is arbitrary and capricious. They believe there is no
technical reason to link NOx and PM.
Analysis
EPA continues to believe that including PM emissions in the ABT program is important for
ensuring the feasibility of the standards. Based on the certification levels of currently certified
Tier 1 engines, manufacturers will be required to reduce PM levels in order to meet the new
standards, especially as the NOx standards are reduced, which makes it more difficult to meet the
PM standards. Including PM emissions in the ABT program will help provide a greater level of
flexibility to manufacturers for complying with the new standards. In response to the comment
from environmental groups, EPA believes that engines designed to meet the PM standards on the
current steady-state test procedure do achieve in-use PM reductions. However, the level of the
in-use reductions is not fully understood at this time. As part of the 2001 feasibility review, EPA
is planning to assess the adequacy of the current steady-state test procedure to determine if the
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expected level of PM benefit is achieved in-use. Should EPA determine that the current test
procedure is inadequate and the expected in-use emission benefits are indeed not being fully
realized, it would, of course, be inappropriate to allow the continued use of credits generated
under the current test procedure to demonstrate compliance under a future, more appropriate test
procedure without considering how to deal with the existing supply of PM credits. EPA would
therefore need to reassess the appropriateness of the PM provisions for any Tier 3 standards,
taking into consideration the amount of credits generated up to that point and adjusting their
value in some manner or taking the expected credit balances into account in setting the Tier 3
standard levels. However, at this time, EPA is finalizing the inclusion of PM emissions in the
ABT program.
For early banking of PM credits, EPA will allow manufacturers to begin banking credits as
soon as the rule becomes effective. EPA had asked for comment on limiting the number of years
manufacturers could accumulate early PM credits due to concerns that manufacturers might be
able to accumulate a significant number of PM credits in the two to seven years that will occur
before the new Tier 2 standards take affect and a lack of PM emissions data on Tier 1 engines
below 130 kW which were not fully certified at the time the NPRM was developed. In the time
since the NPRM was issued, more certification information for the Tier 1 program has become
available. Beginning in 1997 and 1998, the engines between 37 kW and 130 kW were required
to be certified. While these engines are not required to meet a PM standard under Tier 1, a
number of manufacturers did submit PM emissions data on their certification engines. The
results show that as the power level of the engines is reduced, the PM levels go up. Based on the
full set of certification PM data submitted, EPA analyzed the potential for early generation of PM
credits before the Tier 2 standards take effect for each category. There was not a significant
difference in the amount of early PM credits that could be generated with and without the
proposed two-year limitation.6 In addition, providing for early PM credit generation for all
engines at the same time (i.e., as soon as today's action becomes effective) simplifies the
program and reduces the oversight necessary, by both manufacturers and EPA, to assure
manufacturers are complying with the appropriate provisions. For these reasons, EPA is not
finalizing any limitation on the number of years manufacturers can bank early PM credits prior to
the new standards taking effect.
EPA also now believes the proposed limitation that would prohibit early PM credit
generation for Tier 1 engines at or above 37 kW unless the engines meet the Tier 1 NOx level is
overly restrictive. EPA now believes these engines should be allowed to generate PM credits
against the Tier 2 PM standards (i.e., a more stringent requirement than now applies to Tier 1
engines at or above 37 kW) and use NOx credits against the Tier 1 NOx standard. As noted later
in this Summary and Analysis, EPA is adopting a proposed provision that would prevent
manufacturers from earning credits on one pollutant while using credits on another pollutant.
However, EPA believes Tier 1 engines at or above 37 kW should be allowed to generate early
6 EPA memo from Phil Carlson to Docket A-96-40, "Early PM Credit Generation from
Nonroad CI Engines," July 22, 1998.
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PM credits while at the same time using NOx credits because these engines would have to be
below the new Tier 2 PM levels in order to generate any PM credits, and therefore the engines
would already be cleaner than Tier 1 currently requires for PM. EPA is not concerned about
possible gaming of the ABT program for such engines since all Tier 1 engines certified between
37 kW and 560 kW are currently meeting the Tier 1 NOx standard without the use of ABT.
While it is possible that manufacturers could introduce new Tier 1 engine designs or modify their
current Tier 1 engine designs prior to the new standards being implemented, it does not seem
likely that such engines would have emissions above the Tier 1 NOx level. For these reasons,
EPA is not finalizing the requirement that Tier 1 engines at or above 37 kW meet the Tier 1 NOx
standard in order to bank early PM credits.
h. PM Credit Trading Restrictions
Summary of the Issue
Due to the fact that EPA only had limited PM emissions information on Tier 1 engines
below 130 kW, EPA requested comment on whether EPA should prohibit trading of PM credits
across the regulatory power categories. The numerical levels of the proposed Tier 2 PM
standards increase as the power level category goes down. EPA was concerned that lower power
engines, which have higher PM standards, could generate large numbers of credits which, in turn,
could be used to certify higher power engines with more stringent PM standards and thereby
significantly delay implementation of the Tier 2 PM standards.
Comments
EMA, two engine manufacturers, and EMI opposed restrictions on trading PM credits across
power categories. They commented that such restrictions will increase costs, decrease flexibility,
decrease the incentive to participate in the ABT program, and decrease the potential benefits
ABT can provide. Cummins Engine Company commented that, at a minimum, any restriction
should apply only to credits generated by Tier 1 engines and should only be restricted such that
credits do not cross the 130 kW point.
STAPPA/ALAPCO and environmental groups commented in support of the trading
restrictions. In addition, environmental groups commented that EPA should prohibit
manufacturers from trading PM credits altogether.
Analysis
EPA does not believe that restricting PM credit trading across power categories is necessary.
In the time since the NPRM was issued, more certification information from the current Tier 1
program has become available. Beginning in 1997 and 1998, the engines between 37 kW and
130 kW were required to be certified. While these engines are not required to meet a PM
standard under Tier 1, a number of manufacturers did submit PM emissions data on their
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certification engines. The results show that as the power level of the engines goes down, the PM
levels begin to increase. Therefore, EPA's concerns regarding the potential for significant PM
generation from lower power engines due to the numerically higher PM standards for those
power categories appears unwarranted. In addition, EPA agrees that trading restrictions
unnecessarily limit the flexibility offered by ABT and would not be expected to have any effect
on the environmental impact of the program. For these reasons, EPA is not finalizing any
restrictions on the trading of PM credits across power categories. (One exception to this is the
limitation applied to all trading of credits across averaging sets. Under this restriction, credits
cannot be transferred across the 19 kW breakpoint. This exception is discussed below.)
i. Multi-Year Averaging Program for Engines Below 37 kW
Summary of the Issue
Because of the short period of time between the date the standards were expected to be
finalized and the 1999 and 2000 model year implementation deadlines for the Tier 1 standards
for engines rated under 37 kW, EPA proposed a multi-year averaging program for engines below
37 kW. The program would require manufacturers to keep tab of the credit accounts for two
categories of engines - engines less than 19 kW and engines from 19 kW to less than 37 kW.
Unlike the current ABT program, manufacturers would be allowed to create a negative balance of
credits during the first two years the Tier 1 standards applied and would be required to eliminate
the negative balance by the end of the fourth year that the Tier 1 standards applied. However, at
the end of each year, a ten percent penalty would be added to the manufacturer's negative balance
of credits being carried over to the next year. The credits needed to pay off the negative balances
would have to be generated by the manufacturer within the given power category and could not
be credits obtained through trading with another manufacturer.
Comments
EMA and OPEI supported the multi-year averaging program. EMA commented, however,
that EPA should eliminate the ten percent penalty for carry-over credit balances because it
reduces benefits manufacturers gain by participating. Environmental groups did not support
allowing manufacturers to generate a negative credit balance because they believe such flexibility
is not warranted since manufacturers agreed to the proposed standards. They also noted that if
EPA decides to allow multi-year averaging, then manufacturers should be assessed at least a 20
percent penalty to provide a greater environmental dividend.
Analysis
In order to preserve the early implementation dates of the Tier 1 standards for engines less
than 37 kW, EPA continues to believe it is necessary to retain the multi-year averaging program.
Without such a program, EPA would need to consider delaying implementation of the Tier 1
standards for engines below 37 kW and risk losing the environmental benefit from these engines
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for at least one year. Allowing manufacturers to carry negative balances in the first years of the
program may result in a small loss of benefit in the short term. However, because they will be
required to make up the negative balance, there should be no negative impact. Indeed, applying a
penalty to the negative credits carried over as proposed will result in a small improvement in
emissions in the long run. Therefore, EPA is retaining the multi-year averaging program for
engines below 37 kW.
Regarding the level of the penalty applied to negative credit balances that are carried over,
EPA believes having the penalty will ensure the environment receives a small benefit from the
program. If EPA sets the level too high, then manufacturers may not be able to take advantage of
the program because making up the credits within four years would be too difficult. EPA
continues to believe that the ten percent penalty strikes the appropriate balance between the
environment and making sure that manufacturers can meet the new standards through use of the
multi-year averaging program. Therefore, EPA is retaining the ten percent penalty for negative
credit balances carried over in the multi-year averaging program.
j. Credits from Engines Below 37 kW
Summary of the Issue
As noted earlier, EPA proposed several special provisions for engines less than 37 kW that
were intended to account for the unique characteristics of the market for these engines. The
proposed provisions included a requirement that Tier 1 credits for engines below 19 kW be
calculated against Tier 2 standards, a limited lifetime for credits generated from Tier 1 engines
below 19 kW, a prohibition on trading credits across the 19 kW power threshold, and a
prohibition on trading credits generated from indirect injection engines at or above 19 kW to
other manufacturers.
Comments
Environmental groups commented that instead of the piecemeal fixes proposed, EPA should
require that credits for all Tier 1 engines below 37 kW be calculated against the Tier 2 standards.
The California ARB also commented that all credits below 37 kW should be calculated against
the Tier 2 standards.
Analysis
In developing the proposal, EPA proposed both emission standards and the ABT program to
go along with those standards. For engines less than 19 kW, where the cleaner, indirect injection
engines predominate (roughly 80 percent), EPA proposed to require all credit generation and use
against the Tier 2 standards even during the Tier 1 time frame. Therefore, manufacturers would
not be allowed to earn credits on their large numbers of relatively clean indirect injection engines
unless they were certified below the more challenging Tier 2 standards. At the same time, the
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higher-emitting direct injection engines would not be required to meet a level of standard that
would be too difficult to meet in the short amount of leadtime available. In the power category
from 19 kW to less than 37 kW, where a much more significant fraction of direct injection
engines are sold (roughly 50 percent), EPA proposed to require that all credit calculations be
made against the applicable standard (i.e., against the Tier 1 standards for Tier 1 credits and
against the Tier 2 standards for Tier 2 credits). Because of the larger proportion of direct
injection engines in the 19 kW to less than 37 kW category, EPA believes that having a
requirement similar to the one for engines below 19 kW could be problematic for manufacturers
that produce a large number of direct injection engines since they would not be able to rely on the
availability of credits from indirect injection engines if needed. The main benefit EPA sees to
adopting the approach suggested by the commenters would be to simplify the ABT program
requirements for engines below 37 kW. While a simple program is desirable, the overall concern
is the feasibility of the standards, which would definitely be negatively affected if such a change
to the ABT program were made. Therefore, EPA is planning to retain the provisions for engines
below 37 kW as proposed.
k. Indirect Injection Engine Credit Trading Restrictions
Summary of the Issue
Because indirect injection engines are significantly cleaner than current direct injection
engines, EPA proposed to prohibit the trading of credits from indirect injection engines. EPA
concluded that most engines below 19 kW use indirect injection. As a result, EPA defined
averaging sets for purposes of the ABT program that would prevent emission offsets in engines
rated at or above 19 kW using credits generated by engines below 19 kW. EPA also proposed to
prohibit the trading between manufacturers of credits generated from indirect injection engines
rate at or above 19 kW. Manufacturers would still be allowed to use the credits from indirect
injection engines for their own engines at or above 19 kW.
Comments
Case Corporation commented that EPA's proposal to restrict credit transfers across power
categories for indirect injection engines is arbitrary and capricious. They believe that EPA
should address this concern by setting separate emission standards for indirect injection engines.
Analysis
Case Corporation appears to have misunderstood the proposed provisions. As described
above, EPA did propose to prohibit the trading of credits from indirect injection engines between
manufactures. However, the only restriction on exchanging credits across power categories was
the prohibition on the exchange of credits from engines below 19 kW with credits from engines
greater than or equal to 19 kW. That restriction applied to all technologies, not only indirect
injection engines. EPA is making no changes to the indirect injection engine trading provisions
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as proposed.
1. Marine Engines
Summary of the Issue
As noted earlier, for the first time, EPA has proposed to cover engines below 37 kW in the
nonroad CI engine program, including marine engines less than 37 kW. For the purposes of
ABT, EPA proposed to prohibit the use of credits from land-based engines to show compliance
for marine engines. However, manufacturers would be allowed to use marine credits to show
compliance for land-based engines. The remaining details of the ABT program would apply to
equally to marine engines.
Comments
EMA supported EPA's proposal to allow the use of marine credits for land-based
applications. They also recommended that EPA allow the use of land-based credits for marine
applications. The International Association of Drilling Contractors questioned the application of
the ABT program to marine engines introduced into international service as the emission
reductions may not benefit areas in the United States.
Analysis
EPA continues to believe that trading credits from land-based applications to marine
applications is inappropriate. Allowing such trading could allow some manufacturers that make
both marine and land-based applications to effectively trade out of the marine portion of the
program. This could put those manufacturers at a competitive advantage over small marinizers
who only sell marine engines and therefore could not trade out the program as easily, if at all. In
addition, if land-based credits are allowed to be used to certify marine engines, port areas may
not achieve the levels of emission reductions since land-based applications tend to be spread
throughout the nation whereas marine applications are tightly focused in the port areas of the
country. For these reasons, EPA is retaining the provisions that prohibit the trading of credits
from land-based applications to marine applications.
With regard to the issue of including engines used in international service, EPA believes the
comment has some merit. However, EPA also believes that the cost of introducing and
managing a tracking program for engines less than 37 kW installed on U.S. vessels engaged in
international voyages would far outweigh the benefits of preventing these engines from
generating credits. These engines are relatively small and are not used in large numbers on
vessels that travel internationally. Therefore their impact on the emissions benefit of the ABT
program will be negligible. For this reason, EPA will not require tracking of marine engines to
determine if the engines are used in international service. Manufacturers may include all of their
marine engines sold in the U.S. in their ABT credit calculations.
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m. Prohibition on Credit Generation and Use by the Same Engine
Summary of the Issue
EPA proposed to prohibit manufacturers from earning credits for one pollutant while
generating credits for another pollutant from the same engine family.
Comments
Case Corporation commented that EPA's proposal was arbitrary and capricious. They
argued that it does not make a difference environmentally, which engines use credits and which
engines generate them.
Analysis
EPA does not believe that such a prohibition is arbitrary and capricious. It is a known fact
that there is a tradeoff between NOx and PM emissions with CI engines. By Case's own
admission, the proposed restriction ensures that the stringency of the standards is maintained and
does, therefore, benefit the environment. Without the restriction, manufacturers could
overcontrol one pollutant to generate credits at the expense of undercontrolling the other
pollutant. This type of gaming of the ABT program could result in a significant relaxation of the
standards. Therefore, EPA continues to believe that manufacturers should be prohibited from
generating credits for one pollutant while using credits for another pollutant and is retaining the
provision. As described earlier, one exception to this restriction is allowed for Tier 1 engines at
or above 37 kW which generate early PM credits. EPA will allow those engines to generate PM
credits while simultaneously using NOx credits, but only because the PM credits are calculated
against the more restrictive Tier 2 PM standards.
n. Inclusion of California Engines in the ABT Program
Summary of the Issue
EPA requested comment on including engines certified to meet the State of California's
standards in the ABT program. Manufacturers may not currently include engines sold in
California in their credit calculations.
Comments
EMA and two engine manufactures supported the inclusion of engines certified to
California's standards in the ABT program citing cost and harmonization issues.
Analysis
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The new standards for nonroad CI engines contained in this rulemaking are expected to be
adopted by California in the near future. This will result in one harmonized set of standards for
the entire United States. Therefore, EPA is modifying the ABT program to allow manufacturers
to include engines sold in California in their credit calculations.
o. FEL Upper Limits
Summary of the Issue
Along with the proposed standards, EPA proposed maximum FELs for engines certified
using ABT credits to limit the number of credits that can be used to offset emissions for a
particular engine family.
Comments
Case Corporation commented that the Tier 2 FEL upper limit of 10.5 g/kW-hr for NMHC
plus NOx needs to be at least 12.5 g/kW-hr for all engines at or above 37 kW. They noted that
EPA, in proposing the Tier 2 FEL upper limit for engines rated at or above 37 kW, assumed
engines had NMHC emissions below 1.3 g/kW-hr when, in fact, not all engines between 37 kW
and 74 kW currently achieve that NMHC level. Case Corporation commented that the Tier 3
NMHC plus NOx FEL upper limits and the Tier 2 and Tier 3 PM FEL upper limits should also
be raised to account for production variability.
Analysis
For most power categories, EPA set the FEL upper limits at the level of the standards for the
previous Tier. For engines at or above 130 kW, where Tier 1 standards currently exist for
NMHC, NOx and PM, EPA sees no reason to change this practice. These engines are already
meeting these standards without the use of ABT credits. Therefore the Tier 2 NMHC plus NOx
FEL upper limit for engines at or above 130 kW shall remain 10.5 g/kW-hr. Likewise, for the
Tier 3 NMHC plus NOx standard, EPA is retaining the proposed FEL upper limits which were
based on the Tier 2 standards.
For engines at or above 37 kW and less than 130 kW, EPA agrees that some engines could
have NMHC emissions greater than the 1.3 g/kW-hr level assumed in establishing the proposed
FELs since those engines are not required to meet an NMHC standard under the current Tier 1
program. Based on emission levels for pre-control nonroad CI engines presented in the Nonroad
Engine and Vehicle Emission Study (NEVES) report, the maximum hydrocarbon emissions level
is 2.3 g/kW-hr. Therefore, for engines at or above 37 kW and less than 130 kW, EPA is revising
the Tier 2 NMHC plus NOx FEL upper limit to 11.5 g/kW-hr (i.e., the sum of the Tier 1 NOx
standard of 9.2 g/kW-hr and the 2.3 g/kW-hr hydrocarbon level noted above). For the Tier 2 PM
standards, EPA is retaining the proposed FEL upper limits which were already based on the
previous PM standard for engines at or above 130 kW, and the maximum PM from pre-control
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CI engines noted in the NEVES report.
p. Credits from Engines Certified with Special Test Procedures
Summary of the Issue
EPA's current ABT program does not allow manufacturers to include engines certified
under special test procedures in their ABT calculations.
Comments
EMA commented that EPA should permit engines certified under special test procedures in
the ABT program. They noted that EPA approves special test procedures based on equivalency
with established test procedures, and therefore there is no reason to exclude such engines from
the ABT program.
Analysis
While it seems reasonable to allow engines in the ABT program if they were certified under
a special test procedure approved by EPA as equivalent to the established test procedure, EPA is
concerned that there may be some cases where a special test procedure can be approved but it
would not be appropriate to grant credits to such engines (or allow them to use credits).
Therefore, EPA does not believe it would be appropriate to adopt a blanket approval for
inclusion of engines certified under special test procedures in the ABT program. However, EPA
believes that manufacturers should be allowed to request inclusion of such engines in the ABT
program at the time of certification. Therefore, EPA will allow manufacturers to request
inclusion in the ABT program of engines certified under special test procedures at the time of
certification. EPA will respond to each request as part of the normal certification process as to
whether or not to grant the manufacturer's request.
q. Credit Calculations
Summary of the Issue
Within the regulations for the ABT program, EPA proposed the equations that
manufacturers will use to calculate the amount of credit generated or used by an engine family.
Comments
Case Corporation commented that EPA should use annual usage rate and load factor if EPA
is trying to tie the ABT credits to in-use emission reductions. They also commented that EPA
needs to address the rounding of credits to 0.1 Megagram because it is difficult to even generate
0.1 Megagram of credits in cases of low production volume. EMA commented that EPA should
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use metric units throughout the ABT regulations to be consistent with the metric units used for
the emission standards.
Analysis
Historically, EPA's ABT programs have relied on an engine's useful life as a surrogate for
its usage rate. While it would be most accurate to use actual hours of operation to establish the
in-use credits generated by an engine, establishing such a requirement for engine manufacturers
to track and monitor the in-use operation of equipment using their engines would be extremely
burdensome and make the ABT program unusable. Therefore, EPA is retaining the useful life
term in credit calculations.
The current and proposed equations for credit calculations do not include an adjustment for
load factor. As noted in the proposal, most types of nonroad CI equipment have similar load
factors and therefore load factor was not included in the credit calculation equations. Again,
EPA does not believe it would be feasible for engine manufacturers to track and monitor the in-
use load characteristics of equipment using their engines. Therefore, EPA is not requiring the
use of any load factor in determining ABT credits.
With respect to rounding credits, EPA can see in certain cases, that engines with a low
power rating, low sales, and FELs close to the standard could generate, or need to use, less than
0.05 Megagram of credits, which under the current approach would be rounded off to zero. For
this reason, EPA believes it would be appropriate to allow manufacturers to round to the nearest
0.01 Megagram so as to assure manufacturers that they do not lose the flexibility offered by ABT
and can still certify their engines through the use of the ABT program. Therefore, EPA will
allow manufacturers to report their credits to the nearest 0.01 Megagram for both credit
generation and credit use.
In regard to the comment on metric units, EPA believes it would be appropriate to require
manufacturers to use metric units for all ABT credit calculations. The standards, themselves, are
designated in metric units and it makes sense to use metric units throughout the ABT program.
Therefore, EPA is revising the credit calculation equations to require the use of metric units for
all appropriate terms.
r. Reporting Requirements
Summary of the Issue
Manufacturers are required to keep a variety of records for their engines certified under the
ABT program and report certain pieces of the information to EPA on a regular basis.
Comments
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Case Corporation commented that EPA should simplify the reporting procedures for ABT.
Specifically, they noted that requiring manufacturers to know how many engines will be
delivered to customers in the United States when they ship engines to equipment manufacturers
results in additional complexity and costs.
Analysis
In establishing the reporting requirement for the ABT program, EPA has attempted to
minimize the effort necessary for manufacturers while ensuring the integrity of the program and
the accuracy of the emission impact of the program. Because a large amount of nonroad CI
equipment is exported overseas, EPA believes it is very important to require engine
manufacturers to accurately predict their engine sales for the United States market. Otherwise,
manufacturers that have large numbers of their engines exported in pieces of nonroad equipment
could inappropriately generate high levels of credits, or conversely, be required to use a higher
number of credits than actually necessary. Engines exported out of the country may only be
included in ABT calculations if those engines are imported back and sold in the United States in
nonroad equipment. Thus, to ensure accurate credit calculation, EPA is retaining the requirement
that manufacturers retain records of the number of engines sold in the United States.
s. Averaging Sets
Summary of the Issue
As part of the ABT program, EPA defines averaging sets. A manufacturer is allowed to
average, bank and trade credits within the averaging sets but not outside of the averaging sets.
EPA proposed four averaging sets in the NPRM.
Comments
EMA noted that §89.204(c) of the regulations needs to be clarified to define the four
averaging sets EPA has described in its proposal. They commented that the regulations only
define three of the four averaging sets.
Analysis
In response to EMA's comment, EPA has made minor changes to the averaging set
definitions to clarify the four averaging sets contained in the ABT program. For clarification
purposes, the four averaging sets will be as follows: 1) Marine engines rated at or above 19 kW,
2) marine engines rated below 19 kW, 3) eligible engines rated at or above 19 kW, other than
marine engines, and 4) eligible engines rated below 19 kW, other than marine engines.
t. Use of "Credit Shortfall" Terminology in the Regulations
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Summary of the Issue
In the ABT regulations, EPA uses the terminology "credit shortfall" to denote the situation
where a manufacturer is certifying an engine family with an FEL above the applicable emission
standard. In other words, the manufacturer will be required to offset those negative credits with
credits generated from engine families with FELs below the applicable emission standard before
the end of that year. (Except as proposed under the special multi-year averaging program for
engine less than 37 kW, EPA does not allow manufacturers to carry a negative credit balance at
the end of a year.)
Comments
Cummins Engine Company commented that EPA needs to improve the choice of wording
for "credit shortfall" used in the regulations. They believe it implies the manufacturer fell short
of its ABT plans, when it is actually referring to a normal situation that could occur to a
manufacturer during a calendar year before they do the necessary credit accounting.
Analysis
The term credit shortfall is used repeatedly in the current nonroad ABT regulations (see
§§89.203 and 89.204) as well as the ABT regulations for highway, marine spark ignition, and
locomotive engines. EPA wishes to clarify that the term is used to denote the situation where a
manufacturer is certifying an engine family with an FEL above the applicable emission standard
and generating "negative" credits. That negative credit balance is expected to be paid back
before the end of the year, otherwise the manufacturer is violating the requirements of the ABT
program. EPA does not believe it is necessary to change the language in the regulations.
u. ABT and the 2001 Feasibility Review
Summary of the Issue
In the proposal, EPA noted that it intends to undertake a review of the current steady-state
test procedure as part of the 2001 feasibility review. Should EPA determine as a part of that
review that a new test procedure is necessary to achieve the expected in-use emission reductions,
EPA noted that it would need to reassess the appropriateness of the PM ABT provisions for any
future Tier 3 standards.
Comments
EMA commented that any changes EPA plans to make as a result of the 2001 feasibility
review cannot retroactively eliminate or affect credits already generated or used.
Analysis
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EPA believes it would be inappropriate at this time to make any commitments related to the
potential effects of the 2001 feasibility review on the ABT program. If a switch in test
procedures is made, EPA will need to determine whether credits calculated with steady-state test
results should be adjusted to account for any differences between the test procedures. EPA may
also decide to consider the number of credits, or expected level of credits, in setting a proposed
Tier 3 PM standard. By connecting the stringency of the standard to the number of available
credits, EPA might indirectly affect the value of those outstanding credits. While EPA will work
to avoid unfair results, EPA must leave open available options to ensure that EPA has adequate
flexibility to respond to the 2001 feasibility review findings.
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6. Technological Feasibility and Projected Costs
Summary of the Issue
In conjunction with the proposed emission standards, EPA completed an assessment of the
technological feasibility of meeting the standards and estimated the associated costs to engine
and equipment manufacturers. EPA received numerous comments on the methodology and
details of the analysis, which are addressed below, with comments grouped into broad categories.
a. Technological Feasibility and Technology Transfer
Comments and Analysis
1.	Commenters wanted EPA to justify reduced R&D estimates for complying with nonroad
emission standards relative to highway engines (10%, 40%, 67% for different sizes of engines);
they argued that the cost analysis relies too heavily on technology transfer.
Given the recently completed effort to estimate costs for highway engines, EPA's analysis of
nonroad engine costs provided a rationale to justify the various levels of R&D projected for each
power category. Specifically, technologies developed for highway engines, typically between
100 and 400 kW, would transfer most readily to nonroad models in the same power range
because the engines produced for the different applications have so much commonality in design
and construction. Smaller and larger engines are expected to require more design effort than the
highway-size nonroad engines, though not as much for the initial development of these
technologies for highway engines. This is evidenced by the natural trend of incorporating heavy-
duty diesel engine technologies into light-duty applications; once basic improvements in fuel-
injection, air handling, etc. are developed, those changes eventually work their way into other
engine markets. Commenters offered little or no rationale for the limited potential for cost
savings from technology transfer and suggested no quantitative adjustment to the methodology;
EPA therefore believes that the approach to determining projected R&D costs still represents the
best estimate of the level of effort required to redesign engines to comply with the new emission
standards.
2.	Commenters stated that reduced costs for tooling relative to highway engines are only
applicable where nonroad and highway engines are identical.
EPA agrees that tooling costs can only be shared with highway engines in cases where
engine components are identical. As discussed in the Draft RIA, EPA believes that in many cases
similar nonroad and highway engines will be combined into a single model, or at least share an
increasing number of identical hardware components. Differences between highway and
nonroad counterpart engines will decrease over time, with minor variations, especially in
electronic control software, to account for the different applications. Retooling costs in the Final
RIA have been adjusted accordingly.
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3.	Commenters believe that EPA needs to re-evaluate the transfer of highway technologies for
certain applications such as skid-steer loaders that have unique constraints; e.g., compact
equipment may lose its utility if an engine requires more space. Adding a turbocharger and
after cooler was thought to impair the utility and increase operating costs to the point of
obsolescence.
To argue that an application using naturally aspirated engines is pressed to the limit of the
engine size that can be accommodated is unjustified. While an engine's "envelope" may change
or increase in size, turbocharging a naturally aspirated engine can readily increase its power
density by 30 percent or more, allowing equipment manufacturers to specify a significantly
smaller engine to do the same work. Adding a turbocharger and an aftercooler generally reduces
operating costs and improves performance, as experienced by various current models.
Manufacturers have indicated that turbo lag can be problematic in some applications; if turbo lag
is an unacceptable compromise for these engines, then similar charge air compression without
lag could be achieved with a supercharger.
4.	Commenters believe that EPA needs to demonstrate the feasibility of emission standards or
otherwise show that the standards are achievable.
EPA included in the Draft RIA an assessment of various technologies under consideration in
the effort to control diesel engine emissions. The Draft RIA also included a reference to the RIA
prepared for the 2004 highway emission standards, which has extensive quantitative information
about emission reductions associated with the various technologies. The Agency believes that
this information sufficiently supports the feasibility of complying with the new emission
standards.
5.	Commenters argued that the anticipated increase in cooling loadfrom increased heat
rejection will increase noise, which needs to be addressed.
As described in the Draft RIA, controlling NOx emissions will correspond with significant
reduction in engine noise because of the correlation between NOx emissions and the noise of
combustion. Combustion-related noise reductions may be as great as 8 or 10 decibels, which is
much greater than that anticipated from increasing the size or speed of the cooling fan.7
6. Commenters felt that EPA inadequately supported the expectation that diesel engine
technology would be transferable to nonroad applications.
Highway heavy-duty engines will be subject to a 5.4 g/kW-hr (4.0 g/hp-hr) NOx standard
7 "New Common-rail Diesels Power Alfa's 156," Automotive Engineering International,
January 1998 (Docket A-96-40)
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beginning in the 1998 model year. For those manufacturers that produce engines for both
highway and nonroad service, variations on a single engine model are sometimes sold for both
markets. Because these engines have similar emission levels on the eight-mode test, they could
likely comply with the proposed Tier 2 NMHC + NOx standards with relatively minor
modifications to adapt the technology to nonroad applications. Similarly, Tier 3 standards are
intended to follow the highway engine standards proposed for the 2004 model year, with the
expectation that technology transfer will be a very important element of achieving compliance
with the nonroad standards. Even where engines are dedicated to nonroad applications, the very
similar engine design makes clear that much of the technological development that has led to
lower-emitting highway engines can be transferred or adapted for use on nonroad engines.
Specifically, much of the improvement in highway engines has come from "internal" engine
changes such as variation in fuel injection variables (injection pressure, spray pattern, rate
shaping), modified piston bowl geometry for better air-fuel mixing, and improvements intended
to reduce oil consumption. Introduction and ongoing improvement of electronic controls have
played a vital role in facilitating many of these improvements.
Other technological developments for highway heavy-duty engines require a greater degree
of development before they can be applied to nonroad engines. Turbocharging is widely used
now in nonroad applications, especially in larger engines, because it improves power and
efficiency by compressing the intake air. Turbocharging can also decrease PM emissions;
however, changing an engine from naturally aspirated to turbocharged may raise concerns about
"packaging," since with the added turbocharger the equipment may have to be adapted to
accommodate a physically larger engine. The concern for packaging is especially sensitive for
small, compact equipment designs. Space constraints, though, are generally a matter of cost
rather than feasibility and are further addressed in the discussion of cost to equipment
manufacturers. Turbochargers increase the power density of engines, but switching to a smaller
engine with equivalent power may require substantial equipment redesign. EPA expects that,
over the long term, equipment specifications will be updated to take advantage of the substantial
growth in power density from all engines; however, the difficulty of making this transition
prevents any straightforward analysis of addressing engine packaging concerns with more
compact engines.
Aftercooling is a well established highway engine technology that has only recently been
widely used in nonroad engines. The aftercooler chills the hot air coming from the turbocharger
before it enters the cylinder, which decreases fuel consumption and helps prevent NOx formation
by reducing combustion temperatures. Air-to-water aftercoolers, which use the engine's coolant
to provide partial cooling of the the intake air, can fit readily into most engine applications. In
the long term, manufacturers are expected to move toward air-to-air aftercooling, which provides
much better benefits for fuel economy and NOx control. Because of the additional space
required for air-to-air aftercoolers (for a separate heat exchanger and a bigger fan), these
improved aftercoolers may in some cases be integrated when equipment manufacturers are ready
to rework the overall designs for their equipment models.
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In evaluating the feasibility of the proposed nonroad standards, it is helpful to separately
consider three broad categories of engines. First, manufacturers of turbocharged nonroad diesel
engines, most often rated over 75 kW, generally have the flexibility to incorporate more
sophisticated technological innovations for performance, fuel economy, and emission control,
including those derived from counterpart highway engines. Electronic controls offer great
potential for improved control of engine operating parameters for better performance and lower
emissions. Unit pumps or injectors would allow higher-pressure fuel injection with rate shaping
to carefully time the delivery of the whole volume of injected fuel into the cylinder. Routing of
the intake air and the shape of the combustion chamber can be redesigned for improved mixing
of the air-fuel charge. Air-to-air aftercooling will likely gain widespread use in turbocharged
engines, primarily for its fuel consumption and durability benefits, though it also lowers NOx
emissions. Manufacturers will be able to combine many of these technologies to comply with
Tier 2 standards. Tier 3 standards will require deployment of additional technologies. Common
rail injection systems provide greater overall control of the fuel injection strategy by maintaining
a constant supply of high-pressure fuel at the injectors. Also, exhaust gas recirculation will likely
be introduced in highway diesel engines over the next several years, providing valuable
experience in developing those systems for nonroad engines. EPA believes these technologies
will be important in achieving compliance with Tier 3 emission standards. A more detailed
treatment of the feasibility of these engines meeting the proposed standards is included in the
regulatory impact analyses, as described above. Because the long-term standards depend on
significant progress in technology development, EPA will be reviewing requirements for Tier 3
engines by 2001 to confirm that developments are progressing as expected.
The second category is the set of water-cooled naturally aspirated engines, which are most
often rated under 50 or 75 kW. The lack of turbocharging (and aftercooling) and the greater
sensitivity to increased costs for these relatively inexpensive engines suggest that manufacturers
will likely depend on basic technologies to control emissions to the necessary levels. Expected
changes can be divided into two broad categories. First, combustion optimization includes
changes to basic engine design for improved air-fuel mixing and management of the combustion
process. These changes might include retarded injection timing, re-entrant piston bowl shapes,
greater swirl of the intake air, and improved ring design for lower oil consumption. Second, fuel
injection parameters provide many variables for the engine designer. Manufacturers might
modify fuel pumps, injectors, or controls to achieve higher injection pressures, more rapid
injection, better control of injection timing (including rate shaping), and reduced sac volume. In
addition to exhaust emission control strategies, emissions from the crankcase of naturally
aspirated engines can be eliminated by routing vapors from the crankcase directly to the air
intake. These technological developments are well understood and should provide manufacturers
with the tools needed to comply with Tier 1 and Tier 2 standards for engines rated under 37 kW.
Similarly, engines rated between 37 and 75 kW should be able to comply with Tier 2 standards
using these technologies; compliance with Tier 3 standards may in addition require use of
exhaust gas recirculation. EPA believes these engines can meet the proposed emission standards
without needing to incorporate turbocharging. EPA believes that increasing the numerical
NMHC + NOx standard by 0.9 g/kW-hr (0.7 g/hp-hr) relative to the larger engines appropriately
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compensates for the design constraints imposed by these engines.
Third, many of the air-cooled diesel engines rated under 8 kW face unique design
challenges. The small cylinders and low cost of these engines limit the flexibility of designing or
adapting technologies to control emissions. Tier 1 standards for these engines are therefore set at
less stringent levels than larger engines. To reach these levels, manufacturers will need to rely on
several of the strategies used for other engines. For example, increasing swirl and redesigning
piston head geometries can be an effective way of improving fuel-air mixing in small engines,
with the additional benefit of allowing higher injection pressures without increasing fuel wetting
on the cylinder walls. The position and design of piston rings can be improved to reduce the
contribution of engine oil to particulate emissions. Incorporating fuel injectors that provide
mechanically controlled rate shaping would allow substantial control of NOx emissions at a low
cost. Using injectors with valve-closed-orifice nozzles would similarly control HC emissions.
Engines that operate within a relatively narrow range of engine speeds can achieve a degree of
charge-air compression with intake manifold designs that rely on pulse tuning. The unique
characteristics of the smallest engines pose a challenge to the designer, but these and other
technologies are available for complying with the Tier 1 and Tier 2 standards. Also, certification
data from the California ARB shows that most direct injection diesel engines rated under 19 kW
are currently emitting between 8 and 11 g/kW-hr (6 and 8 g/hp-hr) NMHC + NOx; all these
engines will need to improve, but the current best performers support the feasibility of the Tier 1
and Tier 2 standards for all these engines.
Finally, any engines relying on natural aspiration technology are also subject to the proposed
requirement to eliminate crankcase emissions. This requirement has long been in place for
naturally aspirated highway engines. EPA believes that the technology required to close the
crankcase is well established and easily transferrable to any size of nonroad engine.
b. Projected Deployment of Various Technologies
Comments and Analysis
1. Commenters felt that the costs of adding or modifying turbochargers and after coolers
should be taken into account; aspiration changes occurring after Tier 1 are a direct result of
new emission standards. These changes should include consideration of increased heat
rejection, which will require major changes to cooling systems. They contend that EPA 's
projected cost of cooling system changes (radiator andfan) is therefore low by about an order of
magnitude. According to commenters, technology changes that should be included in the
analysis are (a) adding a turbocharger, (b) adding an air-to-air aftercooler, (c) converting from
air-to-water to air-to-air aftercooling, and (d) adding a waste gate. Also, aspiration upgrades
should include consideration of additional cost to intake and exhaust systems to account for the
increase in air flow, with cost increases of $30 to $80 per piece of equipment.
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EPA excluded the cost of turbocharging and aftercooling from the analysis for the proposed
standards, not because these changes were expected to occur anyway, but principally because
these changes carry performance or fuel economy benefits that far outweigh the benefit of
improved emission control. EPA now agrees with the commenters that there should be some
reflection of turbocharger and aftercooler changes in the costs analysis, though the costs of these
improvements need to be adjusted to account for the benefits unrelated to emission controls. For
turbochargers, the revised analysis includes the same 50 percent reduction in costs that were used
in the draft analysis for electronic controls and fuel injection changes, which provides a cost
discount for benefits unrelated to emission control. In the revised analysis, all direct-injection,
naturally aspirated engines rated above 37 kW are projected to add a turbocharger with a waste
gate. Certification data was used to determine that 50 percent of engines rated between 37 and
75 kW will need to add turbochargers, while only 25 percent of current-model engines rated
between 75 and 130 kW are not yet equipped with turbochargers. All bigger engines already
employ turbocharging.
Furthermore, EPA projects in the revised analysis that all engines rated between 75 and 560
kW will rely on air-to-air aftercoolers, some for Tier 2 and some initially for Tier 3. Using
certification data, EPA was able to determine the fraction of engines needing to change from
air-to-water to air-to-air aftercooling and the fraction of engines needing simply to add a new
air-to-air aftercooler. Unlike the other technologies considered, which offer benefits for power,
power density, fuel economy or otherwise improved performance, aftercoolers offer a predictable
improvement in fuel economy as the principal benefit. Rather than relying on a 50 percent
discount, the revised analysis therefore attributes the whole hardware cost to emission standards
(accounting for the additional cost to intake, exhaust, and cooling systems), but includes a
calculated cost credit for the reduction in fuel consumption. In most cases, the fuel savings are
significantly greater than the incremental cost of adding or upgrading the aftercooler.
2.	Commenters noted that some Tier 2 engines will include EGR and that projections should
include cost estimates for EGR, including secondary EGR costs.
Not all manufacturers agreed on the likelihood of utilizing EGR in Tier 2 engines. In EPA's
judgment, it is sensible to anticipate the use of EGR in engines rated between 37 and 75 kW.
Industry sources have indicated that these engines are typically very cost-sensitive products, with
less of a priority placed on fuel economy or durability. EPA therefore projects in the revised
analysis that all direct-injection engines in this power range will adopt a low level of EGR for
Tier 2, with an increasing degree of EGR anticipated for Tier 3 to achieve reductions in NOx
emissions without resorting to the expense of adding an aftercooler. Since EGR coolers would
also likely not be used for these engines, some fuel economy penalty is expected for both Tier 2
and Tier 3 engines.
3.	EPA 's projections ofpercentage deployment of certain technologies was seen as arbitrary
and unsupported. In particular, the specified deployment of electronic controls and radiator
upgrades were identified as arbitrary. One commenter noted that nearly all engines between 37
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and 450 kWwere expected to use electronics to comply with Tier 2 emission standards. Another
commenter questioned the validity ofprojecting that only 33 percent of engines rated below 37
kW would need to be redesigned.
Commenters have challenged EPA's assessment of technology deployment but have not
offered any countervailing information on the direction or magnitude of technology changes.
EPA has nevertheless revised some of its projections used in the Final RIA. For example, as
described above, aftercooling changes for the majority of equipment have replaced the modest
projections for radiator and fan improvements. Also, all direct-injection engines rated over 37
kW are expected to utilize electronic controls, either for Tier 2 or Tier 3, though certification data
indicates that 85 percent of Tier 1 engines rated between 450 and 560 kW already have electronic
controls. Engine modifications are split between Tier 2 and Tier 3, where applicable, to more
accurately reflect engine design improvements. Finally, all engines rated between 450 and 560
kW are expected to make a single fuel system upgrade to common rail for Tier 2 or Tier 3, rather
than upgrading unit injection systems as a step toward adopting common rail systems.
As described in the Draft RIA, indirect injection engines, accounting for two-thirds of all
engines below 37 kW, are already near or below the Tier 2 standards. Projecting that only 33
percent of engines will see modification is therefore easily supported for complying with Tier 1
standards. The revised analysis incorporates increased use of fuel pump upgrades to ensure that
indirect injection engines will comply with Tier 2 standards. All direct injection engines and half
of indirect injection engines are projected to need fuel pump upgrades, corresponding with
currently measured emission levels from these engines.
c. Cost Projections for Individual Technologies
Comments and Analysis
1.	Commenters contend that cost estimates developedfor highway engines are not well
documented.
Commenters are correct that the analysis of costs for nonroad engines relies heavily on the
accuracy of cost estimates developed for technologies associated with highway engines. The
highway cost estimates were developed by an EPA contractor and included extensive interaction
with engine manufacturers. The results of that effort were included in a lengthy and very detailed
report, with a summary and compilation of data presented in EPA's Draft RIA for the highway
rulemaking and released for public comment. EPA received several comments on this cost
analysis, which resulted in numerous changes to the contractor's report and EPA's analysis. EPA
therefore believes that these highway cost estimates are well documented and provide a
reasonable basis for estimating the cost of today's nonroad rule.
2.	One commenter noted that the EGR system costs in the draft analysis looked reasonable,
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though another commenter encouraged EPA to consider adding a cost item to address control of
recirculated soot.
EPA's draft analysis included a cost for improved engine oil to accommodate the particulate
loading from recirculated exhaust gases. Other approaches may be preferred over time, but much
progress has already been made to develop lubricating oil and additives to accommodate up to a
5 percent loading of particulate matter without significant agglomeration of particles. As long as
soot particles remain suspended in oil without agglomeration, low levels of engine wear can be
maintained.8 New standards are being developed by industry to define the performance
specifications for engine oils for anticipated diesel engine designs.9 EPA continues to believe
that improved engine oil properties will be adequate to address engine performance and wear
issues related to recirculated soot.
3.	Commenters agreed that the projected cost for adopting electronic controls was reasonable.
While the cost of electronics was found to be reasonable, EPA determined that the draft
analysis overestimated costs for adding electronics to engines that utilize rotary fuel pumps.
These systems can accommodate electronic controls at a significantly lower cost than other fuel
systems because of the simpler level of control required, a smaller number of input sensors with
corresponding software simplification, and a lower need for heat removal and shielding. These
cost estimates have been adjusted accordingly in the Final RIA.
4.	The unit cost of improving rotary fuel pump designs was found by one commenter to be
several times too low. Another commenter wanted EPA to justify the $3 million figure estimated
for R&D to upgrade a rotary fuel pump design.
The cost estimate for a new rotary fuel pump allows for an extensive R&D effort.
Translating the estimated $3 million into time, the estimated cost corresponds with a team of
three engineers and three technicians working full-time for four years to develop and test out a
new fuel pump design. This should be adequate considering the intermediate complexity of these
fuel pumps. EPA believes that the estimated incremental cost of the new fuel pumps (nominally
$100) is in line with the cost increase associated with a similar, recent upgrade of Bosch's VP-44
fuel pump. If a greater effort or a more expensive upgrade would be anticipated, then EPA
would expect manufacturers to abandon rotary fuel pumps in favor of in-line or common rail
systems. Yet, fuel pump manufacturers are continuing their development of rotary pump
systems. EPA believes the current cost estimates for upgrading rotary fuel pumps are reasonable
^'Understanding Soot Mediated Oil Thickening Through Designed
Experimentation—Part 5: Knowledge Enhancement in the GM 6.5L," Ewa A. Bardasz, et al.,
SAE 972952, October 1997.
9"Lube Oil Specs Change to Meet Tighter Exhaust Emission Regulations," Diesel
Progress, February 1998.
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and is therefore retaining these estimates in the Final RIA.
5. One commenter believed the cost of converting to common rail should be twice as high.
It is not clear from the comment why common rail costs were considered inaccurate,
whether for the hardware items listed, for the level of R&D, or for the relative costs of the fuel
system being replaced. Typically common rail systems are replacing in-line pump or unit
injector systems, each of which are themselves complex and expensive systems. EPA attempted
in the draft analysis to take all this into account in developing an incremental cost estimate for
common rail systems. Lacking any new information or specific suggestions for changing the
details of this cost estimate, EPA will maintain the published cost figure.
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6. Several commenters suggested that the draft analysis did not include enough consideration
of a fuel penalty associated with the new technologies. One commenter acknowledged that the
fuel economy benefits of turbocharging or converting to air-to-air aftercooling can offset some
fuel penalties for other technologies.
The draft analysis addressed fuel economy impacts by stating the general expectation that
fuel penalties associated with technologies such as timing retard or EGR would be offset by
improvements made possible by improving fuel injection technologies and adding electronic
controls. EPA has reviewed the potential fuel economy impacts and made some adjustments in
the revised analysis. First, for engines rated between 37 and 75 kW, the analysis now includes a
fuel economy penalty. Since these engines are already very close to meeting the Tier 2 standards,
EPA believes that manufacturers will attempt to trim NOx emissions as needed while
minimizing purchase price. As a result, the revised analysis projects the use of a small degree of
hot EGR for all direct injection engines and some timing retard for a small number of engines.
Both of these have corresponding fuel penalties of 0.5 percent; the small fuel penalty is
reasonable given the fact that little additional control is needed for these engines to comply with
Tier 2 standards. For Tier 3 standards, greater use of EGR will add to the fuel penalty, but that
effect should be partially offset by the use of electronic controls, improved fuel injection systems,
and other engine modifications. Thus, a net penalty of another 0.5 percent was used for Tier 3.
For engines rated between 75 and 560 kW, introduction of air-to-air aftercooling is expected
to dominate the fuel economy impact. The expected benefit of upgrading from air-to-water to
air-to-air aftercooling ranges from 6 to 8 percent at Tier 1 emission levels. Introducing air-to-air
aftercooling to achieve lower emission levels will somewhat compromise the fuel economy
benefit, though not in a way that is easy to predict. Also, as described above, other technology
changes will likely lead to no net change in fuel economy, or may at worst involve a small fuel
penalty. The analysis therefore includes a projected 3 percent improvement in fuel economy for
those engines upgrading from air-to-water to air-to-air aftercooling. Engines currently with no
aftercooling are projected to see a 6 percent improvement in fuel economy by adding an air-to-air
aftercooler. The resulting fuel savings (net present value at the point of sale) in most cases are
greater than the total anticipated increase in the purchase price of engine or equipment models.
While these projected fuel savings would be a valuable improvement, EPA does not rely on this
benefit to justify the new emission standards; in fact, the principal calculations for cost-
effectiveness supporting the final rule do not factor in any credit for reduced fuel consumption.
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7. One commenter thought that engine changes falling under the category identified as engine
modification should include consideration of variable costs for upgraded systems (injection
pressure, etc.); for example, timing retard requires better parts to deal with greater wear
potential. Commenters felt that engine capital costs per unit are reasonable for small engines
(between 37 and 75 kW), but are several times too low for larger engines.
Confidential information received by EPA indicated that some manufacturers anticipate
variable costs associated with their engine modifications, while others listed only fixed costs.
The example cited of increasing variable costs for increasing injection pressure is consistent with
EPA's analysis, since those costs are factored into the analysis of hardware improvements to
upgrade fuel injection systems. With respect to timing retard, EPA expects that manufacturers
will try as much as possible to improve combustion chamber geometry and other air-fuel mixing
variables to optimize the system before resorting to timing retard. This difference in approach
would account for the varying cost information from the different manufacturers.
EPA has included a provision for multi-million dollar R&D investments for these engine
modifications, in addition to the R&D associated with all the other individual technologies. For
example, for engines rated between 450 and 560 kW, the total expenditure anticipated for the
range of technology development needed for Tier 2 and Tier 3 standards is $4.4 million, which
corresponds to eight engineers working full-time for two years (including associated lab and
clerical support). Manufacturers with high sales volumes in a product line may be able to
recover greater R&D expenditure, which would allow them to more broadly assess engine design
and incorporate additional features. EPA believes, however, that the cost estimates in the
analysis represent a reasonable projection of the average expenditures required for the whole
range of engine manufacturers participating in this market to comply with the new emission
standards.
d. Costing Methodology
Comments and Analysis
1. Commenters contended that EPA 's decision to attribute only a portion of the cost of
technology to emission standards is not adequately supported and that using a 50 percent (or
100 percent) discount is arbitrary. Commenters believed that EPA has failed to support an
argument that these technologies would have come anyway.
Several commenters misunderstood EPA's approach of attributing less than the full cost of
technologies to emission standards. EPA did not intend to discount costs to account for changes
that would occur in the absence of another tier of emission standards. The discount applied to
selected technologies was intended merely to reflect the fact that some technologies in the
package of upgrades needed to meet emission standards carry benefits for improved engines that
go beyond reduced emissions. Turbocharging and aftercooling in the draft analysis were
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effectively treated as having a 100 percent discount, meaning that these technologies were
thought to have sufficient benefits for engine performance and fuel economy that the cost of
these systems were warranted without regard to the potential improvement in emission control.
As described above, the revised analysis now takes into account the costs of turbocharging and
aftercooling.
EPA agrees that supporting a numerical percentage discount is not straightforward. By
taking the turbocharging and aftercooling costs into account, EPA acknowledges that no
technologies used to control emissions should be completely discounted. On the other hand, the
engine performance benefits of certain technologies are so important that it would clearly be
inappropriate to attribute the whole cost of these technologies to the tighter emission standards.
Highway diesel engines illustrate this effect. Engines meeting current emission standards have
incorporated many technology changes over the last fifteen years to better control emissions,
while truck drivers and trucking companies enjoy the benefits of using the sophisticated, new,
high-performance electronic engines. Thus neither a 0 percent nor a 100 percent discount are
appropriate. EPA believes that it is appropriate to provide equal weighting to emission and
non-emission benefits of electronic controls, fuel injection changes, turbocharging, and engine
modifications, based on the observed value of these performance improvements in the field. This
translates into the 50 percent discount generally used in the draft analysis. Lacking any feedback
on a better numerical discount, EPA will continue to use the 50 percent figure in the revised
analysis.
2. Commenters felt that applying a learning curve to reduce the variable costs of hardware
changes over time is unsupported. They added that the initial quoted cost estimates already
reflect expectations for reducing costs through production learning. Commenters believed that
EPA's analysis inappropriately counted learning curve benefits.
In the draft analysis, EPA drew its conclusions about the economic benefits of a
manufacturing learning curve from a single reference that compiled 22 separate case studies
demonstrating an overwhelming dominance of continuous cost savings over time. The Draft
RIA referenced only this single work, but EPA's contractor included an additional 15 published
papers supporting the same phenomenon.10 Moreover, in the public comments on the highway
cost estimates, commenters generally supported the concept of the learning curve. EPA believes
that its application of a learning curve to the incremental costs is reasonable and adequately
supported.
The draft analysis applies the learning curve one time for each engine. In cases of
transferring technology to nonroad engines, the learning curve was applied one time to the
nonroad engine in parallel, or simultaneously, with the same learning on highway engines.
10"Estimated Economic Impact of New emission Standards for Heavy-Duty On-Highway
Engines," Final Report by Acurex Environmental under contract to EPA, March 31, 1997.
(Docket A-96-40).
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Contrary to commenters concerns, learning curve benefits for highway engines are not counted
again for nonroad engines. The two learning curves are treated as parallel and separate.
Absent countervailing cost information from manufacturers, EPA will continue to interpret
the initial inputs and the range of costs estimates developed as applying to the first year of
production. In fact, it may be justifiable to mark down manufacturers' initial inputs to account
for R&D developments that would occur before the first year of production, then continue with
the learning curve from the start of production. Preferring to err on the conservative side, EPA
will leave unchanged the use of the learning curve in estimating long-term costs.
3. One commenter argued that EPA has not assessed the technological feasibility or
cost-effectiveness of over complying with the proposed standards in order to generate credits.
This commenter felt that these costs must be taken into account to judge the merits of averaging,
banking, and trading as a feasible compliance alternative.
As described elsewhere, EPA included an averaging, banking, and trading program with the
proposed emission standards because it allowed a schedule of implementing new standards
earlier or more stringent than would otherwise be feasible. Engine manufacturers' continuing
strong support of a viable ABT program supports EPA's expectation that the ABT program will
be used. Moreover, comments from companies advocating the use of their technologies for
achieving lower emission levels support the position that engine manufacturers will have the
option of selecting from a range of technological solutions to demonstrate compliance with the
emission standards. Manufacturers can use varying degrees of expected control technologies, or
focus on a staggered introduction of a new technology to more effectively comply with standards
across their product lines. The manufacturers' use of ABT justifies EPA's application of
representative, or average, cost estimates in assessing the impacts of the new emission standards,
because ABT will lower costs for those engines that would otherwise be at the high end of the
cost distribution curve, bringing them more in line with costs estimated for other engines.
e. Small Volume Product Lines
Comments and Analysis
1. Commenters suggested that EPA 's assumptions about streamlining engine models were not
justified. They believed that some streamlining may occur, but added that reducing total sales by
15 percent would result in keeping only 17 to 31 percent of engine families. They believed that
the elimination of engine models would be a loss of some value that should be assessed as a cost
to society.
Engine manufacturers have informed EPA that they intend to simplify their product offering;
however, due to the difficulty of accurately quantifying projected changes, EPA has revised its
analysis to move away from any such explicit assumption. As an alternative to the streamlined
PSR data, EPA has taken engine model and projected sales data directly from the certification
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records for Tier 1 engines. This approach takes into account any streamlining that manufacturers
have done to comply with Tier 1 emission standards, but assumes no further streamlining.
Engines rated below 37 kW and above 560 kW are not yet certified so no sales data from
certification is available for these engines. For the largest engines, EPA used the PSR data
without modification. For engines rated under 37 kW, EPA used the certification data from
37-75 kW engines to gauge the accuracy of the PSR data for smaller engines. As a result, the
number of engine models in the PSR database is decreased by 20 percent and the number of total
engine sales is increased by 10 percent.
In revisiting amortization issues surrounding the number of engines models and sales
volumes, EPA identified another important and related factor that EPA had not taken into
account in the draft analysis: namely, the potential to amortize R&D and other fixed costs over
global sales volumes rather than focusing exclusively on the U.S. market to recover costs.
NERA tallied up the manufacturers' input data to report that, on average, global sales for an
engine family with a common R&D base are 454 percent of North American sales.11 The number
would presumably be higher if sales to Canada and Mexico were excluded from the North
American sales volumes. The revised analysis incorporates this effect of global amortization of
R&D costs by increasing the sales volumes for the amortization calculations by 450 percent.
2. Streamlining equipment models was also seen as unrealistic and heavy-handed. One engine
and equipment manufacturer compared its product line with that of the PSR database (which
formed the basis of amortizing fixed costs), andfound that the database had only 63% of its
actual equipment models and only half of the actual equipment customers. Moreover, one
commenter noted that streamlining equipment models does not provide much cost savings
because R&D and retooling costs can be extensively shared between similar models anyway.
EPA was misunderstood as advocating or requiring wholesale elimination of many nonroad
equipment applications. Given the manufacturer's comparison of PSR data with actual sales
information, EPA has removed any effect of streamlining equipment models in the cost analysis.
EPA has found that the PSR data sometimes overestimates and sometimes underestimates sales
information and numbers of models. Comments on the industry characterization contained in the
Draft RIA generally supported the figures presented. EPA therefore believes that using the PSR
data without modification is the best way of capturing the range of equipment sales and models
from all manufacturers.
Based on new information from the National Economic Research Associates (NERA), EPA
has also expanded the base for amortization of these costs. The NERA report included averaged
data for global equipment sales volumes similar to that for engine families. For equipment,
global sales of an engine family with common R&D were found to be 195 percent of North
n"Economic Evaluation of Regulations on Exhaust Emissions from Large Nonroad,
Compression-Ignition Engines," Final Report by the National Economic Research Associates for
EMA and EMI, October 29, 1997 (Docket A-96-40).
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American sales. The revised analysis therefore increases sales volumes for amortization
calculations by 200 percent.
f. Cost of Redesigning Equipment
Comments and Analysis
1. One commenter noted that between 200 and 400 engineering hours have been requiredfor
past redesigns of a variety of augur equipment models. (EPA 's analysis allowedfor anywhere
from 130 to 1400 engineering hours, depending on the degree of difficulty in redesigning
equipment.) One company commented that 1800 man-hours were required to fix a single
compressor design. (While EPA 's analysis projects total labor requirements from 180 to 3100
man-hours, compressors were included in the [/portable " category, which was not expected to
require more than 530 man-hours per equipment model on average.) One commenter noted that
EPA's high-endfigure of $220,000for fixed costs per equipment model was [/conceivable, 0
while another related that past redesigns have cost anywhere from $100,000 to $500,000 per
product line. One high-volume equipment manufacturer thought that EPA 's projected per-unit
cost of equipment capital agreedfairly well with their own estimate, though consideration of all
low-volume lines should justify higher unit costs. On the other hand, it was pointed out that by
sharing R&D and retooling between similar models, low volume models can be produced
relatively cheaply.
The variety of comments received regarding EPA's estimate of fixed costs for equipment
models seem inconclusive. Some comments generally support the accuracy of the published
estimates, while others suggest that it would be appropriate to significantly increase the cost
figures. One factor that may serve to reconcile these opposing perspectives is the idea that
individual models may be more costly, but combining the effort for similar product lines can lead
to substantial reductions in the average cost to redesign equipment models. It seems clear that an
extensive investment of effort and even retooling to redesign one equipment model would have
the potential for greatly reducing the time and expense of redesigning a second model.
EPA understands that the anticipated shift to air-to-air aftercooling will require a very large
effort for equipment manufacturers. Accommodating these engines in new equipment models
would typically involve development of new or modified parts to support the hardware changes,
R&D to ensure that the equipment performs acceptably with the different engine operation, and
extra effort to make room for the additional heat exchanger. To account for the effect of
air-to-air aftercooling on equipment redesign, estimated total fixed costs for all motive and
portable categories of equipment were increased by 50 percent in the revised analysis.
Moreover, deployment of air-to-air aftercooling was taken as an indicator of whether equipment
model redesigns were considered "extensive" or "moderate." For example, for equipment with
engines rated between 75 and 560 kW, anywhere from 70 to 100 percent of models are projected
to upgrade to air-to-air aftercooling; the same percentages of equipment models are therefore
included in the "extensive" redesign category. The effect of these changes is a significant
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increase in the average projected equipment costs.
2.	Commenters claimed that accommodating newly redesigned engines will be such a big
effort that no other improvements are expected in equipment design along with the introduction
of Tier 2 and Tier 3 engines; it is therefore inappropriate to discount total design time to account
for developments unrelated to emission controls.
The draft analysis states the expectation that R&D improvements unrelated to emission
control are expected, but the numerical calculation of fixed and variable equipment costs in fact
does not factor in any such discount. The analysis is based on the estimated expenditures for
changes or improvements directly related to accommodating engines redesigned to meet new
emission standards. Any additional R&D or other expenses for general product development
would be in addition to the published cost estimates. EPA continues to believe that there will be
substantial effort toward improving equipment designs over the next ten years, but that
assumption does not affect the estimate of costs related to new emission standards. The Final
RIA has been modified to state more clearly that all cost figures related to equipment redesign
are applied to the total cost impact of emission standards.
3.	Commenters argued that including a cost for only one equipment model redesign for two tiers
of standards is improper because a single redesign is unlikely.
EPA considered only a single redesign per equipment model for the two tiers of emission
standards. This effort was spread across the tiers to reflect the possibility of delaying significant
redesign until the second new tier of standards or splitting the redesign effort for an equipment
model between the two tiers. The combination of tiers of standards was developed with the
agreement that the 2001 Feasibility Review would consider whether substantial additional
equipment redesign would be needed for the second new tier of standards. EPA has already
agreed to review the final rule, including emission standards and implementation flexibilities, to
determine if the second tier of new emission standards will require a second full redesign of
equipment models. It would therefore be inappropriate to include this as a cost under the current
program.
4.	Commenters believed the projected use of additional steel should also include consideration
of the need for other additional materials such as weldments, plastics, castings, gaskets, seals,
and hoses.
In general, EPA believes that there is a tradeoff between R&D and variable costs in
estimating equipment redesign costs. If equipment manufacturers have sufficient time to conduct
development work with a prototype engine, then variable costs for additional parts can be
minimized. In contrast, a tight schedule prevents the expenditure of adequate R&D resources,
which is balanced by the need to make hurried case-by-case decisions, which often result in the
need to fabricate new parts to address packaging, performance, or maintenance concerns.
The extensive fixed costs allocated for equipment redesign follow the scenario of having
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adequate time to plan and develop new products with minimal impact on equipment variable
costs. Adjusting the variable costs for all the material changes that might result from a more
hurried effort should only be done in conjunction with a lowered projection of fixed-cost
expenditures. This second scenario is much harder to quantify, but would not be expected to
increase overall costs.
The introduction of air-to-air aftercooling is the only engine technology expected to have a
broad effect on equipment variable costs. To account for this, EPA has included a cost for
miscellaneous materials to support the placement of the new engine and aftercooler components
in the engine compartment.
5.	EPA's analysis was thought to ignore additional costs associated with servicing field
equipment, including time to train repairmen in addition to the actual time for repairs.
EPA's analysis includes a warranty cost, at 10 percent of the total variable cost, for any
technologies thought to have the potential to cause an increase in field servicing. This cost
should cover the expenses involved in preparing for and executing repairs of defective units.
6.	Commenters believe EPA is obligated under the Clean Air Act to estimate costs for each class
or category of equipment, which requires a cost estimate for most or all equipment types.
Section 213 of the Clean Air Act requires EPA to set emission standards for classes and
categories of new nonroad engines and new nonroad vehicles. The Act further directs EPA to
give appropriate consideration to the cost of meeting those standards. Contrary to commenters'
assertions, nothing in the Act requires EPA to estimate the cost of compliance for most or all
equipment types. In a challenge to the 1994 nonroad diesel engine rule, the court in EMA v.
EPA. 88 F.3d 1075, 1097-98 (D.C. Cir. 1996) upheld EPA's grouping of different equipment
types into the same category and rejected claims that EPA failed to adequately analyze
compliance costs for specific types of large mining equipment. The legislative history of section
213 further supports a rule of reason with respect to the cost analysis anticipated under the Act.
See, e.g.. Senate Report No. 101-228 at 104 (instructing EPA not to disaggregate the universe of
nonroad engines into small subcategories).
EPA believes its analysis of compliance costs for different types of equipment is sufficiently
detailed to provide an accurate assessment of costs. For engines, the draft analysis develops and
applies a single set of costs for each range of power ratings. Equipment costs, in contrast, were
analyzed with an effort to distinguish between different types or applications of equipment. For
example, the twenty to sixty different applications listed in the database for each power range
were sorted to distinguish between motive and nonmotive equipment. Equipment types that are
moved or driven as part of their normal functions, or that may have similar constraints, were
expected to require a greater degree of effort to accommodate newly designed engines. EPA
attempted to further differentiate between models, both motive and nonmotive, with specific
physical constraints, such as limited engine compartment space, that would influence cost. At
the time of the proposal, the greatest degree of difficulty was expected for compact, lower-power
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units, though the final rule adds consideration of air-to-air aftercooling as an indicator of more
difficult engineering challenges for equipment manufacturers. For example, skid-steer loaders
(one of the specific examples of equipment that commenters claimed EPA must analyze) would
be considered motive equipment, with 70 to 80 percent of models expected to have "extensive"
redesign within the range anticipated for motive equipment. These most complex equipment
models were anticipated to require $220,000 of fixed costs, compared to only $110,000 for
simpler motive equipment, and only $15,000 for the simplest nonmotive equipment. These
numbers have been adjusted in response to comments received, as described above.
EPA therefore believes that the cost analysis developed to support the rulemaking represents
a reasonable attempt to assess the impact of the new requirements on engine and equipment
manufacturers for the range of products affected.
g. NERA Cost Study
Comments and Analysis
1. Under industry sponsorship, the National Economic Research Associates (NERA) conducted
a study to compile estimated costs for complying with EPA 's proposed emission standards for
engines at or above 37 kW. NERA surveyed several engine and equipment manufacturers for
cost and technology projections related to several scenarios of possible future emission
standards, then generalized the input data into a set of cost projections for the industry. The
study showed cost impacts to be very much higher than those estimated by EPA.
To assess the validity of the NERA study, EPA reviewed NERA's summary of the survey
data it used to project industry-wide costs. NERA's survey requested that manufacturers provide
estimated variable costs (dollars per unit) and fixed costs (total outlay without amortization).
NERA's variable cost data included data for nine different engine models of varying sizes. EPA
plotted this variable cost data versus engine power to generate a curve for projecting cost as a
function of engine power. EPA's variable cost estimates were somewhat higher than those
generated using the NERA data, but were easily reconciled, given the differing methodologies
employed (e.g., EPA presumed a mix of technologies and discounted costs to reflect
non-emission benefits, whereas manufacturers projected an undiscounted cost increase for
discrete engine models). In contrast, the NERA report developed a methodology for combining
the variable and fixed cost data in a way that resulted in predicted Tier 2 variable costs that were
at least ten times higher on average than the actual variable cost data for those engine models
included in the survey. An attempt to resolve this apparent internal inconsistency is discussed in
the next subsection.
Computations with fixed costs are more difficult to compare because of the need to factor in
amortization variables such as sales volumes. A review of the data nevertheless led to additional
concerns about the NERA study. The confidential data submitted by equipment manufacturers
show actual amortized production capital costs to be, on average, one-third as great as capital
costs for R&D. NERA's results, however, predict amortized production capital costs to be on
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average fifteen times greater than capital costs for R&D.
Given these concerns with the NERA report, EPA is not prepared to rely heavily on
NERA's predicted cost estimates. The Agency has, nonetheless, considered the input data
collected by NERA and some parts of the NERA analysis to revise the cost projections for the
final rule, as described elsewhere in this section. Furthermore, given the importance of cost
analyses in the 2001 feasibility review, the Agency is continuing to work with the industry to
facilitate better understanding and improvement of methodologies and assumptions used in these
analyses.
2. In response to an EPA letter expressing concerns regarding the validity of the NERA
analysis, EMI sent a follow-up letter to EPA containing NERA 's attempts to explain the apparent
discrepancies and challenging EPA 's interpretation of the NERA study. NERA argued that (1)
EPA improperly compared "recipes" to the proposed standards; (2) EPA looked at component
cost estimates, rather than total costs; and (3) EPA inappropriately compared NERA 's overall
study results (reflecting the entire population) to the sample data; NERA 's recommendation was
to evaluate how well NERA 's statistical model replicates the actual survey data.
The additional support offered for the NERA study and the challenge to EPA's
interpretation are easily addressed. First, NERA's original survey defined several "recipes" of
target emission levels and asked engine manufacturers to estimate costs for each recipe. Recipe
2a clearly corresponds to EPA's proposed Tier 2 standards, except that it includes more stringent
smoke levels. EPA's discussions with engine manufacturers about the survey data made it clear
that they perceived Recipe 2a as the "Tier 2 recipe." The more stringent smoke levels, if they
affected costs at all, would presumably increase the costs in the manufacturers' survey
responses, such that NERA would need to subtract these incremental costs from the survey
numbers to match Tier 2 requirements.
NERA argued, nonetheless, that EPA's use of the Recipe 2a cost data for analyzing NERA's
Tier 2 cost predictions was improper. NERA, however, provided no support for its belief that
"the proposed Tier 2 standard represents significant additional emission reductions beyond these
[Recipe 2a] levels." EPA believes that its use of the Recipe 2a data provides a conservative basis
for checking NERA's Tier 2 cost predictions.
Second, NERA determined its total costs by summing various cost components such as
engine fixed costs, engine variable costs, and equipment fixed costs. As described for the
preceding comment, EPA looked closely at one cost component that made a large contribution to
total costs, namely engine variable costs, and found NERA's predictions to be overestimated
compared to the survey data upon which they were purportedly based. NERA's argument that
EPA should have looked at total rather than component costs would only be justified if NERA
could show that the other cost components were underestimated to such a degree as to offset
NERA's apparent overestimate of variable costs. EPA has no information that these other
component costs are so underestimated.
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With respect to NERA's third point, EPA had already done precisely what was
recommended, attempting to replicate the actual survey data with the statistical model.
Unfortunately, that effort showed that the statistical correlations of cost as a function of engine
power do not fit the data points supplied by engine and equipment manufacturers.
NERA's arguments do not remove EPA's concerns with the results of the NERA study.
EPA continues to believe that its own revised cost analysis, which factors in valid aspects of
NERA's approach and underlying data, provides the most reasonable assessment of the costs
associated with the final rule.
h. Small Business Impacts
Summary of the Issue
The Regulatory Flexibility Act was amended by the Small Business Regulatory
Enforcement Fairness Act of 1996 (SBREFA), Pub. L. No. 104-121, to ensure that concerns
regarding small entities are adequately considered during the development of new regulations
that affect them. In response to the provisions of this statute, EPA identified industries subject to
this rulemaking and provided information to and received comment from small entities and
representatives of small entities in these industries. The Agency also convened a Small Business
Advocacy Review Panel under section 609(b) of the Regulatory Flexibility Act. The Panel
collected the advice and recommendations of representatives of small entities that will be subject
to the rule and reported those comments and the Panel's findings to EPA.
EPA prepared an Initial Regulatory Flexibility Analysis (RFA) which analyzed the economic
impacts of the proposed rule on small companies and discussed issues related to each of the four
elements listed above. The Initial RFA also described EPA's initiatives to involve small entities
in developing the proposal and the Agency's responses to the recommendations of the small
entities and the Panel for greater flexibility for small entities. In the NPRM, EPA proposed to
adopt the provisions recommended by the panel.
In its analysis of the impacts of the proposed rule on small entities, EPA gathered
information on a sample of several hundred small equipment manufacturers. Parts suppliers,
distributors, end users, and other entities not subject to the rule were not analyzed. EPA used the
PSR and Dun and Bradstreet databases to identify and establish economic information on small
equipment manufacturers. The projected costs of the proposed rule on equipment manufacturers
as developed in the NPRM were then applied to equipment manufacturers in the cross-section of
small equipment manufacturers to arrive at an assessment of economic impacts on this industry
segment.
Commenters have raised challenges to EPA's analysis and compliance with the
requirements of the Regulatory Flexibility Act in three general areas, each of which is discussed
below.
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1) Small Entities Impacted by the Rule
Comments and Analysis
EMI and NAHB argued that EPA improperly, and against the recommendations of the Small
Business Advocacy Review Panel, limited its analysis to those small businesses directly regulated
by the rule, underestimating the impacts of the rule. These commenters argued that EPA should
consider the impacts on upstream and downstream businesses such as consumers of nonroad
equipment. EMIfurther argued that EPA underestimated the number of small equipment
manufacturers by relying solely on the PSR database which includes only 60 percent of
equipment manufacturers, and by only looking at manufacturers with 500 or fewer employees
despite SBA definitions for certain equipment manufacturers that include companies with up to
1000 employees as "small businesses. "
EPA disagrees with commenters' assertion that EPA's analysis should include upstream
and/or downstream entities. The Agency believes that the Regulatory Flexibility Act only
requires agencies to analyze the impacts of a rule on those small entities subject to the rule. A
string of cases supports EPA's interpretation. See Motor & Equip. Mfrs. Ass'n v. Nichols. Nos.
96-1392 and 96-1397, 1998 U.S. App. LEXIS 7848, at *55-60 (D.C. Cir. Apr. 24, 1998); United
Distribution Cos. v. FERC. 88 F.3d 1105, 1170 (D.C. Cir. 1996); Mid-Tex Elec. Co-op. Inc. v.
FERC. 773 F.2d 327, 342 (D.C. Cir. 1985). Secondary impacts on parties not regulated by the
rule involve large uncertainties and are extremely difficult, if not impossible, to project. EPA
does not believe such analysis is required and does not believe that it would add value to the
conclusions about the impacts of the rule.
EPA also believes that its approach for analyzing the impact on small entities subject to the
rule is proper. EPA used in its small business analysis the broadest available databases that
included the detailed company data necessary to conduct an economic analysis. EPA was aware
of the Department of Commerce data recommended by EMI, but decided not to rely on it because
EPA concluded that it did not include sufficient information to be useful in this analysis. While
the commenter is correct that the PSR database used by EPA did not cover all companies, the
coverage represented a large cross-section of the industry and was sufficient for EPA to be
confident in the results of the analysis by its contractor and the subsequent analysis performed by
the Agency. EPA did not claim that the number of small entities in the PSR database comprised
the total number of small entities impacted by the rule.
EPA's analysis of the impact of the rule on small businesses included small businesses with
500 or fewer employees. Commenters are correct that this is a simplification of the Small
Business Administration's (SBA's) definition of small business. The Small Business
Administration, in 13 CFRPart 121, defines manufacturers of construction equipment and
industrial trucks up to 750 employees and manufacturers of other nonroad equipment up to 500
employees as "small." While EPA did make the simplifying decision for purposes of its primary
analysis to look only at businesses with 500 or fewer employees, EPA did, in fact, consider the
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impact on the analysis of including larger companies per SBA's definitions. The Initial RFA
explains that EPA considered including other industry categories which SBA would consider
"small" with greater than 500 employees (like construction equipment manufacturers). However,
EPA found that to do this would only add 3 more companies to the list of 283. EPA found that
nearly all equipment manufacturers in those industry categories with higher thresholds for
defining small businesses actually have fewer than 500 employees. EPA believes that its analysis
reasonably takes into account all significant impacts on small businesses subject to the proposed
rule.
2)	Impact of Assumption of "Streamlining" of Product Lines
Comments and Analysis
EMI and the Compact Loader Council both pointed out that EPA had projected that 2870 of
the existing 4343 equipment product lines would no longer be produced if the proposed rule
were promulgated. EPA, they claimed, had not discussed the impact on the small businesses that
produced some of these eliminated product lines. EMI added that EPA must show whether the
proposed flexibility provisions would be adequate to protect those small businesses that
produced these eliminated product lines.
As noted earlier in this section, EPA has re-analyzed the overall economic impacts of the
rule and has revised its earlier assumption regarding manufacturers' discontinuation of product
lines. The Agency believes that these revised costs are more accurate and provide a better
assessment of the impact of the rule on small businesses. In light of this change, EPA has
reassessed the impact of the rule on small equipment manufacturers based on the higher
estimated costs of the revised economic analysis. EPA's re-analysis of the small business
impacts of the proposed program is described in the Final RFA found in the Final RIA.
3)	Challenges to SBREFA Process
Comments and Analysis
EMI claimed that EPA did not provide adequate information to the panel to allow them a
meaningful opportunity to assess the impacts of the rule on small businesses.
EPA believes that the small business panel process worked as intended and provided a
meaningful opportunity for small entities to assess the impacts of the rule. The RFA process is
intended to provide an opportunity for small businesses that will potentially be affected by a
rulemaking to offer input very early in the process, well before a formal proposal is prepared. As
described in the Final RFA, EPA was able to provide information about the likely form of the
program and potential regulatory alternatives to small businesses. The small business
representatives subsequently participated during the Small Business Advocacy Review Panel
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process in developing provisions for easing compliance burdens that were ultimately proposed.
In the case of economic information, EPA's detailed cost analyses were underway at the
staff level at the time the Panel Report was being prepared. However, it was some time later that
these analyses were completed and reviewed, and later still that they were publicly released as a
part of the Notice of Proposed Rulemaking. Although detailed cost estimates were not available
from EPA, the Panel and the small business representatives were aware of the probable
framework and the nature of potential impacts. This information was fully sufficient to support
the discussions that led to the flexibility provisions that were proposed and are now in large part
finalized.
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7. Voluntary Low-Emission Standards
a. Level of the Standard
Summary of the Issue
EPA proposed a set of voluntary standards to provide a program recognizing the potential
for a degree of emission control significantly greater than that required for all engines. Three
different levels were proposed in order to provide flexibility to recognize varying levels of
control for different technology approaches. Any engine meeting one of the proposed voluntary
emission standards would be considered a "Blue Sky Series" engine.
Comments
Most commenters supported some form of voluntary low-emission standards. The
Manufacturers of Emission Controls Association strongly supported the proposed standards,
including the format of the standards and the specific percentage reductions identified.
Environmentalists supported the concept of voluntary standards but encouraged adoption of only
one, or at most two, levels of standards. These commenters recommended that a 50 percent
reduction should be the minimum for qualifying as a Blue Sky Series engine. The Department of
Defense (DOD) also urged a simplified scheme of proposed voluntary standards to assist in
DOD's eventual procurement of Blue Sky Series engines; DOD suggested either adopting a
single qualifying level or creating an indexed classification system. The indexed system would
allow for recognizing varying levels of control, but would rely on the index to communicate the
degree of control (more so than the proposed Class A, Class AA, etc.).
The Engine Manufacturers Association recommended an alternative approach which would
allow any engine with emissions below the mandatory standards to qualify as a Blue Sky Series
engine, as long as the credits generated by the engine were not used to allow another engine to
emit above the mandatory standards. Finally, Euromot commented that the proposed program
will mislead consumers as to the intent and ability of engine manufacturers to produce clean
engines. Euromot also raised concerns that the program could give highway engine
manufacturers an unfair advantage in the nonroad market. Euromot recommended that the
whole arrangement of voluntary standards should be revised to reflect the low-emission targets in
the Nonroad Statement of Principles.
Analysis
Several factors are involved in developing a successful program of voluntary standards.
First and most importantly, the program should avoid complexity as much as possible to prevent
confusion and avoid administrative disincentives to participation. Second, there should be a
clear qualifying threshold that presents a significant challenge beyond the mandatory emission
standards. Third, recognition of levels of control that go beyond the minimum required to
qualify as a low-emitting engine are desirable but must be balanced with the need for simplicity.
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In keeping with the need to create a simple and manageable program, EPA believes it is best
to establish a single qualifying threshold for the Blue Sky Series engines. To best align with
future emission standards, Tier 3 emission levels, where applicable, are believed to be the best
level of control for defining Blue Sky Series engines. This represents a reduction of
approximately 40 percent beyond the Tier 2 NMHC + NOx levels. For PM emissions and for
engines with no Tier 3 standards, a calculated level corresponding to a 40 percent reduction
beyond Tier 2 levels will be used to qualify as a Blue Sky Series engine.
EPA is not at this time formalizing a plan to recognize a level of emission control going
beyond the single qualifying level. As part of the 2001 feasibility review, EPA will reevaluate
the voluntary standards, both to review the effectiveness of the Blue Sky program as adopted,
and to decide what changes would be needed as Tier 3 standards are implemented. Successful
implementation of a simple program is seen as a necessary first step before addressing the
possibility of multiple levels of voluntary standards or indexed controls. If EPA adopts voluntary
standards in the Tier 3 time frame, the voluntary standards will need to be tightened to
correspond to the more stringent mandatory standards. In the near term then, even with only one
level of voluntary standards, engine manufacturers will have some incentive to design a system
that will qualify as a Blue Sky Series engine through the transition to more stringent emission
standards. Notwithstanding this initial simplicity of the federal program, states or other
organizations may do well to design incentive programs that include recognition of varying
degrees of superior emission control levels.
EPA does not believe Euromot's concerns regarding public perception warrant changes to
the Blue Sky approach. As with any program defining an alternative, more environmentally
friendly, voluntary product, consumer education is critical to the success of Blue Sky Series
engines. While some consumers may conclude that a defined voluntary standard implies that
manufacturers are unwilling or unable to achieve an adequate level of emission control, this
concern does not affect the appropriateness of adopting the voluntary standards.
EPA is also unconvinced that the Blue Sky program will create unfair competitive
advantages for highway engine manufacturers. For highway engine manufacturers to
substantially increase market share as a result of the voluntary low-emission standards, they
would need to be able to deploy very advanced technologies of a broad scale at a relatively low
cost, with sufficient incentive provisions in place to address the cost premium for the superior
engine design. Such a technology scenario is overly optimistic. More realistically, EPA expects
that a small number of engine manufacturers may introduce advanced technologies on a few
engines on a demonstration basis. By the time EPA completes the 2001 Feasibility Review,
there will be a clearer picture of the market potential for any of the current candidate
technologies.
b. Test Cycle
Summary of the Issue
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EPA proposed a requirement that manufacturers use the highway heavy-duty transient test
cycle to demonstrate attainment of voluntary emission levels, primarily to ensure adequate
control of PM emissions during in-use operation.
Comments
MECA and the California ARB expressed support for transient testing to demonstrate low
emission levels.
Analysis
EPA will retain the provision specifying use of the highway heavy-duty transient test cycle
for Blue Sky Series engines. Any changes for testing nonroad engines considered as part of the
2001 Feasibility Review will also be considered for possible inclusion for qualifying as a Blue
Sky Series engine.
c. Incentives to Introduce Low-Emitting Engines
Summary of the Issue
EPA proposed to allow Blue Sky Series engines to generate credits under the proposed ABT
program, intending to provide an incremental incentive to develop and introduce low-emission
control technologies. In addition, EPA requested comment on other incentives that may lead to
successful implementation of the voluntary standards.
Comments
Some commenters wanted equipment manufacturers or users to receive emission credits,
instead of, or in addition to, credits generated by engine manufacturers. Another commenter
echoed EPA's concerns regarding potential double-counting of emission reductions by providing
ABT credits for emissions reductions that are also counted in emission inventories.
Environmentalists strongly supported a labeling program, both to provide an incentive for
consumers and to help educate the public that there are low-emitting engines available. Other
incentive ideas were also promoted. Environmentalists referred to "Green Construction
Projects," developed by the Northeast States to factor reduced engine emissions into construction
bidding procedures. DOD made several suggestions for Blue Sky Series engines, including (1)
exempting engines from local permitting requirements, (2) excluding engines from conformity
analysis calculations, or (3) defining a life-cycle cost index or payback period to help potential
purchasers understand any possible long-term cost savings from the advanced technology.
Fundamentally, DOD was interested in directing incentives at the purchaser of the equipment.
Analysis
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The Agency has concluded that granting federal ABT credits to engine manufacturers for
Blue Sky Series engines would not be appropriate. Providing federal ABT credits for Blue Sky
Series engines, while creating an incentive for the early development of clean technology, would
send an improper message that the environment is benefitted when in fact the emission
reductions from these engines may be offset by increased emissions from other engines using
those credits. EPA believes there may be some merit in shifting an emission credit program
from engine manufacturers to equipment manufacturers or users. EPA also believes, however,
that states or other groups are best positioned to manage a credit program that would recognize
the potential for emission reductions from Blue Sky Series engines.
For voluntary programs related to consumer products, labeling is very important to
communicate information to actual and potential purchasers. For nonroad diesel equipment,
however, purchasers are generally not individual consumers, but companies or agencies with very
different procurement practices. The value of owning a low-emitting engine on its own merits,
or for intangible benefits, is not expected to be a significant factor in procurement decisions.
Moreover, nonroad diesel equipment has much less exposure to the public than highway vehicles
or other consumer products. EPA is therefore not finalizing a labeling program with the
voluntary standards.
The other incentive ideas raised by commenters are outside the scope of EPA's activities.
EPA therefore encourages states and other groups to consider these other suggested provisions as
possible incentives to encourage the production and sale of low-emitting engines.
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8. Other Certification Issues
a. Crankcase Emissions
Summary of the Issue
EPA proposed that no crankcase emissions would be allowed from naturally-aspirated Tier 2
nonroad engines rated at or above 37 kW, or naturally-aspirated Tier 1 nonroad engines rated
under 37 kW beginning in 2001.
Comments
EMA generally supported the proposal, but stated that delaying the requirement for engines
rated under 37 kW until Tier 2 would be preferable. They also stated that EPA should allow
crankcase emissions to be routed into either the intake air or the exhaust stream. American
Augers and Kubota requested a delay in the applicability of these requirements. Euromot also
requested that certain crankcase emission controls be imposed "at the introduction date" and not
in 2001, which is in between the effective dates for the Tier 1 and Tier 2 standards for engines
rated under 37 kW, to avoid giving open crankcase engines a competitive advantage in
controlling emissions. Euromot also stated, however, that they have safety concerns related to
the potential for engine runaway with closed crankcases on engines less than 19 kW. Euromot
explained that because of the potential for these small engines to be overturned, there is a risk
that crankcase oil could be introduced into the cylinder through recirculation of the crankcase
emissions causing the engine to continue to operate after shutdown. They argued that EPA
should exempt all engines below 19 kW from this requirement because of these safety concerns.
Analysis
EPA agrees that it would be appropriate to delay the closed-crankcase requirement for all
naturally-aspirated engines until the Tier 2 standards take effect. Some manufacturers, especially
those that produce engines rated under 19 kW, are likely to need additional time to resolve all of
their concerns related to safety. While EPA did not receive comments specifically related to
safety concerns for engines rated between 19 and 37 kW, EPA believes that the concerns about
potential safety problems are equally relevant. This delay in requiring control of crankcase
emissions will not have a substantial adverse environmental impact. Crankcase emissions of CO
and NOx (g/kW-hr) are typically much less than one percent of the total exhaust emissions of CO
and NOx. Crankcase emissions of hydrocarbon (HC) are somewhat higher, but still less than 5
percent of total exhaust HC emissions. (EPA's best estimate is that crankcase emissions of HC
represent about 2 percent of total exhaust HC emissions.12) EPA also believes that this approach
will have the least competitive effect since it treats all engine power classifications the same with
12 "Basic Evaporative Emission Rates for Nonroad Engine Modeling", EPA, February 13,
1998, Docket A-96-40.
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respect to crankcase emissions.
EPA agrees with EMA's recommendation to allow routing of crankcase emissions into the
exhaust stream. Manufacturers choosing this option would effectively be required to reduce their
engine-out exhaust emissions further than other manufacturers that choose to route the crankcase
emissions into the engine intake. It is important to note that this optional approach will require
that the engine (and vehicle) be designed so that the routing would also occur under all in-use
conditions. Manufacturers using this approach will be required to modify their deterioration
factors to account for potential increases in crankcase emissions over time. EPA is also
considering using this approach in the future for controlling crankcase emissions from
turbocharged engines, which are currently uncontrolled. The advantage of this approach is that it
allows manufacturers the flexibility to either route crankcase emissions into the engine intake,
thereby combusting the crankcase emissions of HC and CO, or to route the emissions into the
exhaust (where they would be measured as part of the exhaust emissions) and to reduce the total
exhaust emissions using other means.
b. Test Fuel
Summary of the Issue
In the proposal, EPA discussed several different options for changing the test fuel
specifications. However, EPA proposed to maintain the existing specifications for sulfur in test
fuels. The proposed regulations would allow the use of low-sulfur California fuel, but eliminated
the particulate adjustment for tests using federal fuel.
Comments
EM A emphasized that changing test fuels will affect the stringency and feasibility of the
proposed standards. They suggested that EPA adopt an approach similar to the European
approach (i.e., adjust to 0.15 weight-percent (wt%)). In support of this, they provided some data
which indicated that the current sulfur content of "high-sulfur" fuel is about 0.2 wt%, and an
analysis claiming that the average sulfur content for fuel used in nonroad engines is about 0.15
wt%. EMA members and Euromot also supported adopting the European approach. The
California ARB, STAPPA/ALAPCO, and MECA all supported an in-use low sulfur requirement
for nonroad engines, the same as is currently applicable to on-highway engines.
Analysis
Section 206(h) of the Clean Air Act requires EPA to ensure that vehicles are tested under
circumstances reflecting actual in-use conditions including conditions related to fuel. The sulfur
level of in-use fuel used in nonroad engines is highly variable. Nonroad engines use both low
sulfur (<0.05 wt%) and high sulfur fuel (typically 0.1 to 0.4 wt%). Unfortunately, EPA does not
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have reliable data regarding the relative amounts used by nonroad engines. EPA does have two
independent references (surveys) indicating that the average sulfur level of in-use "high-sulfur"
fuel is about 0.3 wt%. This is higher than the average level claimed by EMA (0.2 wt%). From
these data, EPA can determine only that the vast majority of in-use nonroad engines fuels have a
sulfur level of 0.03 to 0.4 wt%, and that the average value is probably between 0.15 and 0.25
wt%. Therefore, EPA is finalizing test fuel specifications with a sulfur specification of 0.03 to
0.4 wt%, which covers the range of sulfur levels observed for most in-use fuels.
The final sulfur specification is slightly different from that proposed (0.03 to 0.5) because
EPA believes the final specification more appropriately covers the range of sulfur levels found in
the majority of in-use fuels. Manufacturers will be free to test using any fuel within this range.
Thus, they will be able to harmonize their nonroad test fuel with either on-highway testing (<0.05
wt%) or with European testing (0.1 to 0.2 wt%). Testing conducted by EPA would use test fuels
typical of in-use fuels.
At this time, EPA believes that the average sulfur level of diesel fuel being used in current
nonroad engines is on the order of 0.2 wt%. In order to provide manufacturers with some
certainty regarding how EPA will implement its test fuel policy, the Agency is including a
regulatory provision specifying that it will use test fuels with sulfur levels no greater than 0.20
wt% when it performs testing of Tier 1 engines and Tier 2 engines rated at or above 37 kW. EPA
is not applying this provision to Tier 3 engines or Tier 2 engines rated under 37 kW because
those standards do no take effect for some time, and EPA has no basis for determining what the
properties of in-use fuels will be for these engines. Moreover, EPA has not determined that it
would be an appropriate long-term policy to specify a narrow range for the sulfur specification.
This would be especially true for engines utilizing catalytic aftertreatment to reduce particulate
emissions. Such engines may comply with the emission standards when tested using a
moderately low sulfur fuel, but have much higher particulate emissions when using a higher
sulfur fuel with a sulfur level between 0.3 and 0.4 wt%. EPA intends to examine test fuels for
Tier 3 engines and Tier 2 engines rated under 37 kW in its 2001 feasibility review.
EPA is eliminating the particulate adjustment factor for test fuels with different sulfur levels.
Such an adjustment, while potentially appropriate for the initial modest particulate emission
control program of a newly regulated industry, is not appropriate as a long-term policy.
Moreover, EPA has significant concerns regarding the accuracy of the previously used
adjustment factor equation, which was based on limited data. However, even if more complete
data were available, it would not be possible for a single adjustment factor equation to accurately
predict the effect of different sulfur levels on particulate emissions for each engine model. This
is because the effect of sulfur levels on particulate emissions can vary significantly from engine
to engine, especially for engines with and without aftertreatment.
EPA recognizes that the sulfur level of test fuels has an effect on the stringency of the
standards, and that the elimination of the particulate adjustment factor has the effect of making
the particulate standards more stringent than they otherwise would have been. However, EPA
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has considered this effect in making its determination that the standards being adopted in this
rulemaking are feasible.
c. Test Cycles
Summary of the Issue
EPA proposed to continue to rely on the International Standards Organization (ISO) 8178
CI test cycle, but to allow the use of other ISO 8178 cycles for certain types of engines having
unique operating characteristics (i.e., D2 for constant speed, G2 for engines rated under 19 kW,
and E3 for marine engines), as shown below. EPA also proposed to eliminate the specification
for a maximum stabilization time for each test mode (as part of a series of technical amendments
to the test procedures.)
Table 8-1 - 8-M
ode Test Cycle For Variable-Speed Engines (CI)
Test
Segment
Mode
Number
Engine
Speed
Observed Torque
(percent of
max. observed)
Minimum
T ime in mode
(minutes)
Weighting
Factors
1
1
Rated
100
5.0
0.15
1
2
Rated
75
5.0
0.15
1
3
Rated
50
5.0
0.15
1
4
Rated
10
5.0
0.10
2
5
Int.
100
5.0
0.10
2
6
Int.
75
5.0
0.10
2
7
Int.
50
5.0
0.10
2
8
Idle
0
5.0
0.15
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Table 8-2 - 5-Mode Test Cycle For Constant-Speed Engines (D2)
Mode
Number
Engine
Speed
Observed Torque
(percent of
max. observed)
Minimum T ime
in mode
(minutes)
Weighting
Factors
1
Rated
100
5.0
0.05
2
Rated
75
5.0
0.25
3
Rated
50
5.0
0.30
4
Rated
25
5.0
0.30
5
Rated
10
5.0
0.10
Table 8-3 - 6-Mode Test Cycle For Engines Rated under 19 kW (G2)
Mode
Number
Engine
Speed
Observed Torque
(percent of
max. observed)
Minimum T ime
in mode
(minutes)
Weighting
Factors
1
Rated
100
5.0
0.09
2
Rated
75
5.0
0.20
3
Rated
50
5.0
0.29
4
Rated
25
5.0
0.30
5
Rated
10
5.0
0.07
6
Idle
0
5.0
0.05
:>le 8-4 - <¦
-Mode Test Cycle for Propulsion Marine Diese
Engines (E
Mode
Number
Engine Speed
(percent of
max. observed)
Observed Power
(percent of
max. observed)
Minimum T ime
in mode
(minutes)
Weighting
Factors
1
100
100
5.0
0.20
2
91
75
5.0
0.50
3
80
50
5.0
0.15
4
63
10
5.0
0.15
Comments
EMA generally supported EPA's proposal, but argued that EPA should adopt the alternate
test cycles (D2 and G2) as primary test cycles (instead of the CI) for constant speed and small
engines, and that it should be the manufacturer's option to use the CI cycle as an alternative for
those engines. They also argued that EPA should allow constant speed engines certified over the
D2 cycle to be grouped in the same engine family as similar engines certified over the CI cycle.
Individual manufacturers also supported this approach. States, environmental groups, and
MECA encouraged EPA to continue its efforts to adopt a transient test cycle as soon as possible,
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since it would better control in-use particulate emissions. The California ARB also argued that
EPA should not eliminate the maximum stabilization times since it might create a potential for
abuse by manufacturers.
Analysis
EPA agrees with EMA's suggestion to specify the D2 and G2 cycles for constant speed
engines and engines under 19 kW, respectively, with the CI cycle as an optional alternative for
the manufacturer. However, if the CI cycle is used by the manufacturer, any testing conducted
by EPA could use either the alternative CI cycle or the specified primary cycle. EPA also agrees
that manufacturers should be allowed to certify such engines within the same engine family as
engines certified using the CI test cycle data. EPA is also finalizing the proposal to use the E3
cycle for marine propulsion engines, with the allowance for a manufacturer to certify marine
propulsion engines in a family with land-based engines using the CI cycle. The Agency is being
more restrictive with marine engines in this respect (i.e., allowing it only for marine engines in
land-based engine families) because there are no common modes in the E3 and CI cycles. The
E3 cycle is based on fractions of maximum power, while the CI, D2, and G2 are based on
fractions of maximum torque.
EPA is in the process of considering the need for a transient test cycle. Until this work is
completed, EPA will continue to use the steady-state test cycles that were proposed. EPA is also
eliminating the maximum stabilization times as proposed. EPA agrees with the California ARB
that there is some potential for manufacturers to use unreasonably long stabilization times in an
attempt to gain some emission advantage, and will therefore retain its authority to perform
emission testing with stabilization times as short as five minutes. Thus, any manufacturer that
relied on long stabilization times for compliance would run the risk of failing tests performed by
EPA with shorter stabilization times.
d. Smoke Testing
Summary of the Issue
EPA proposed continuing to use 40 CFR, Part 86, Subpart I test procedures and standards
for smoke from nonroad engines. EPA also discussed the possibility of using the ISO smoke
procedure after it is finalized. (The ISO TC70/SC8 committee is currently balloting a nonroad
diesel engine exhaust gas smoke emissions test procedure (8178-9). However, this balloting
procedure is not yet completed and thus there is no final ISO technical voluntary consensus
standard that the Agency can adopt at this time.) EPA proposed to extend the application of the
current procedures and standards to nonroad engines rated under 37 kW. EPA also proposed the
following modifications to the existing test procedure: 1) exempting single cylinder engines and
marine engines under 37 kW from smoke testing; 2) allowing two-cylinder engines to be tested
using a muffler to dampen pulsations; and 3) adjusting the exhaust pipe size requirements for
different size engines. Finally, EPA asked for comment on the need for an in-use smoke test.
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Comments
Manufacturers generally supported EPA's proposal, but argued that all engines should be
tested using a muffler, that two-cylinder engines and constant speed engines should be exempted
from testing, and that EPA should modify its specifications for exhaust pipe diameters. They
also supported adoption of the ISO procedure after it is finalized. Westerbeke commented that
smoke requirements should be eliminated for marine auxiliary engines as well as marine
propulsion engines. They argued that smoke, like noise, is addressed in response to consumer
demand for all marine engines, and thus, the reduction of smoke is adequately addressed by
market forces alone. STAPPA/ALAPCO and the California ARB argued for more stringent
standards, and for an in-use test.
Analysis
EPA is generally finalizing the smoke regulations as proposed. EPA received no comments
opposing the use of the Subpart I procedures until the ISO procedure is finalized. EPA also
received no comments opposing the exemption for single-cylinder and marine engines.
In response to EMA's request for additional modifications, the Agency is not allowing all
engines to use mufflers during testing, nor is it revising the standard pipe diameters. The original
Subpart I procedure and the applicable standards were developed for testing engines without
mufflers. Thus, since the use of mufflers can affect the stringency of the standards, allowing all
engines to use mufflers would require that EPA reconsider the levels of the standards. The
Agency is allowing two-cylinder engines to use mufflers during testing, as proposed, only
because it believes that the special needs of such engines warrant special consideration. With
respect to the standard exhaust pipe diameters, EPA does not believe that any revision is
necessary. The only significant differences between EPA's proposed diameters and EMA's
suggested diameters are for engines between 175 and 200 horsepower (where EPA's diameter
results in a slightly less stringent standard) and for engines between 500 and 600 horsepower
(where EPA's diameter results in a slightly more stringent standard). The Agency believes that it
is more important, at this time, to maintain consistency with the existing power categories of the
Subpart I regulations, than to be consistent with the nonroad power categories applicable for
gaseous and particulate standards. EPA agrees that the current smoke test cannot effectively be
performed on constant speed engines, and so is dropping smoke requirements for them until an
adequate smoke test becomes available. The Agency believes the air quality impact of this action
will be minimal because these engines do not often experience acceleration modes, which are the
principal focus of smoke standards.
EPA is finalizing no smoke requirements for marine propulsion. However, a smoke
requirement will remain for variable speed marine auxiliary engines. This is reasonable both
because these engines can be tested for smoke and because they are expected to be simple
derivatives of land-based engines.
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The Agency expects to revisit the issue of smoke testing in the near future. EPA has
analyzed the draft ISO procedure (8178-9) and concluded that most of its elements would be
appropriate for adoption. Thus, the Agency expects that it will adopt the ISO smoke
measurement procedure after it is finalized. At that time EPA may also reconsider the issues
related to the use of mufflers, single-cylinder and two-cylinder engines, and standard exhaust
pipe diameters. It is important to note that the ISO 8178-9 smoke emissions test procedure is
very different from the procedure specified in Subpart I of Part 86. As a consequence, if EPA
adopts the ISO 8178-9 procedure, EPA will also need to revise the numerical limit values to be
associated with the ISO procedure.
The existing smoke procedure (Subpart I) allows for three different numerical standards
(i.e., acceleration, lugging, and peak), while the most recent draft of the ISO cycle allows only for
two different numerical standards (i.e., lugging and peak). This is important because with the
current Subpart I cycle, it is the numerical standard associated with the acceleration phase of the
cycle (20 percent opacity) that provides the most significant control of smoke puffs from diesel
engines. The current standard associated with the Subpart I peak measurement is 50 percent
opacity and this provides less effective smoke puff control. Thus, in order for a control program
based on the ISO cycle to provide comparable or better smoke control relative to the current
program, the peak smoke standard associated with the ISO cycle would need to be much lower
than the current peak smoke standard (based on Subpart I) of 50 percent opacity. Moreover, the
current standards associated with Subpart I were established in the early 1970's and were
appropriate for diesel engine technology of that era. Current technology is possibly capable of
lower smoke emissions and thus a lower numerical standard may be appropriate. EPA believes
the appropriate numerical standard that should be associated with ISO 8178-9 peak
measurements is likely to be within the range of 20 to 30 percent opacity. It is important to note,
however, that this is only a preliminary estimate.
Finally, EPA recognizes the strong interest of states regarding the need for an in-use smoke
test in order to better control emissions from nonroad engines. EPA is continuing to consider
this issue. As noted above, EPA is likely to revise its certification smoke testing and standards in
the near future, and EPA believes that the development of an in-use smoke test would be more
appropriate in conjunction with its reconsideration of the certification test and standards.
e. Rated and Intermediate Speed Definitions
Summary of the Issue
The large CI nonroad engine rule allowed the manufacturer to specify rated and intermediate
speeds for purposes of determining certification test points. Allowing manufacturers to specify
the rated speed can have the result of different manufacturers running different test cycles. For
example, an engine governed at 2100 Rpm may produce maximum horsepower at 1600 Rpm.
One manufacturer may choose to specify a rated speed of 2100 Rpm while another may specify
1600 Rpm. The test cycles developed from these two definitions can produce significantly
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different emissions results. Since the definition of rated speed defines the test cycle, EPA
believes that there should be only one definition. Each manufacturer should run the same test
cycle in order to have the same stringency of emission standards. EPA proposed a definition for
rated speed as the maximum full load speed for governed engines and the speed of maximum
horsepower for ungoverned engines. The definition proposed for intermediate speed was based
on peak torque speed and would limit intermediate speed to 60 to 75 percent of rated speed.
EPA proposed to apply these new definitions to nonroad engines immediately, including to Tier
1 engines covered by the large CI nonroad engine rule.
Regarding marine engines, the proposed definition of rated speed is different than the
definition adopted by the IMO in Annex VI to MARPOL 73/78. The IMO's NOx Technical
Code defines rated speed as the crankshaft revolutions per minute at which the rated power
occurs as specified on the nameplate and in the Technical File of the marine diesel engine, where
rated power means the maximum continuous rated power output as specified on the nameplate
and in the Technical File of the marine diesel engine to which regulation 13 of Annex VI and the
NOx Technical Code apply.
Comments
Caterpillar commented that the proposed definition of rated speed differs from the proposed
EU nonroad machinery directive. Caterpillar also commented that bringing power curves or
sales or service literature into the determination of rated speed only complicates the matter and
increases the chance of confusion or error. Euromot recommended that the rated and
intermediate definitions not be changed because they are currently in line with ISO 8178 and the
European NRMM directive. Caterpillar, EMA, and Cummins commented that the proposed
definition should not take effect until Tier 2. EMA commented that immediate implementation
would cause manufacturers to recertify.
IADC noted that the discrepancy in the definition of rated speed between EPA and IMO
could become a source of confusion for manufacturers seeking certification of engines to both
IMO and EPA standards, and to the purchasers of such engines.
Analysis
Because of the importance of these parameters, EPA believes that there should be only one
definition. Since ISO definitions allow the manufacturer to specify rated speed, harmonization
can be accomplished by testing to EPA's definition. EPA is not aware of any engines which
would need to be recertified as a result of this definition. However, EPA realizes it may be
difficult for manufacturers to prove that all the engines within an engine family meet this
requirement. Because certification of many of the Tier 1 engine families is accomplished by
carrying over previous data, EPA is not requiring manufacturers to meet the rated speed and
intermediate speed definitions for Tier 1 engines certified prior to January 1, 1999. Engine
families that are certified prior to January 1, 1999 may carry over certification under the old
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definitions into subsequent Tier 1 model years. All Tier 2 engines must meet the definitions for
rated and intermediate speeds.
EPA is linking the definition of full load governor speed to horsepower curves and sales and
service literature because this is currently the best method for defining rated speed. Using sales
and service literature eliminates the need to experimentally determine the speed. Manufacturers
may use the designed speed for peak torque and governed speed for the purpose of developing
the test cycle. EPA is not requiring manufacturers to account for engine to engine variability in
the development of the test cycle.
EPA recognizes that the definition of rated speed proposed in the NPRM and the definition
of rated speed adopted by IMO are different. However, this discrepancy does not pose a problem
for this rule, because the IMO program only covers engines over 130 kW. Therefore, EPA will
finalize the definition of rated speed as proposed. EPA may revisit the differences between the
definitions in the large CI marine rule.
f. Marine Engines
1) Marine Definitions
Summary of the Issue
In the proposed regulations, EPA defined propulsion marine diesel engine as "a marine
diesel engine that is intended to move a vessel through the water or direct the movement of a
vessel" and auxiliary marine diesel engine as "a marine diesel engine that is not a propulsion
marine diesel engine."
Comments
One commenter requested two clarifications regarding the propulsion marine diesel engine
definition. First, this commenter wanted to know if an engine driving a generator that provides
power to an electric distribution system that provides both general service electrical power and
propulsive power to a vessel would be considered a "propulsion marine diesel engine." Second,
this commenter requested an explanation of the phrase "direct the movement of a vessel,"
especially with regard to a diesel engine driving a generator producing power for the vessel's
steering system.
Analysis
Because of the many ways in which power is used on board a marine vessel, EPA
acknowledges the need to clarify the definitions for propulsion marine diesel engine and auxiliary
marine diesel engine. However, it should be noted that the marine engines subject to this rule are
very small (less than 37 kW). Consequently, EPA may revisit the following explanations in the
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context of the large CI marine rule, when more comments are expected regarding their
application. Finally, it should also be noted that the application of these definitions is important
primarily insofar as it affects the duty cycles on which the engines must be certified. The
stringency of the numerical emission limits is not a function of engine application.
With regard to the first point raised by the commenter, it is EPA's intention that any engine
for which the primary function is to provide mechanical power to propel or direct a vessel would
be considered a propulsion engine, regardless of whether that power is applied directly to the
propeller shaft or indirectly by way of an electrical system. The clearest example of the proposed
definition is an engine which is directly connected to the propeller shaft and for which the sole
function is to provide mechanical power to turn that shaft. However, diesel engines on some
vessels are used both to propel and position the ship. This is the case for vessels that have
primary propulsion azimuthal screws. EPA intends that these engines also be considered
propulsion engines, even though they propel "directional propellers" because the primary
function of the engine is to propel/position the vessel. Similarly, some large ocean-going vessels
have supplemental "shaft generators" that can be clutched to the main propulsion shaft once the
engine is up to full speed. These shaft generators are also intended to be considered propulsion
engines because their primary function is to propel the vessel.
Some vessels are propelled by engines that are used as generators, with the power being
provided to the propeller shaft indirectly through an electrical circuit. This is often the case on
large passenger vessels (e.g., cruise ships), which may be fitted with a bank of several diesel
engines that provide electricity both for propulsion and for general service. In this case, each of
those engines would be considered a propulsion engine because the vessel cannot be propelled
without the operation of at least one of them.
On the other hand, engines that provide power to thruster systems (i.e., bow and stern
thrusters) are intended to be considered propulsion engines only if they provide power to those
systems via a circuit that is normally not connected to the ship's auxiliary electrical system.
Typically, however, thruster systems are powered via the ship's auxiliary electrical system. In
this case, the fact that the auxiliary engine is used to provide power to a thruster system will not
qualify the engine as a propulsion engine, unless the auxiliary engine also provides power to the
ships propeller.
With regard to the second comment, the phrase "direct the movement of a vessel," is not
intended to cover auxiliary diesel engines which drive a generator that furnishes power to an
electrical system that also provides power for the vessel's steering system. However, an
important exception are those engines described above that provide power to bow thrusters.
Engines that provide power to parts of the vessel's steering system (e.g., power systems that are
connected to rudders or that regulate the speed or direction of bow thrusters) and that are used for
other auxiliary power purposes are not intended to be propulsion engines.
As a final point of clarification, EPA intends a marine auxiliary engine to be a diesel engine
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installed on a vessel that is not a propulsion engine. An auxiliary engine will be considered to be
installed if its fuel, cooling, or exhaust system are an integral part of the vessel or require special
mounting hardware. A portable auxiliary engine of any size not installed on a marine vessel
(e.g., a hand-held auxiliary engine or an auxiliary engine mounted on a pallet that can be easily
removed from a vessel) is not considered to be an auxiliary engine; instead, such an engine will
be subject to the land-based nonroad requirements, regardless of its use on a marine vessel. This
approach is intended to reduce the certification requirements; by considering auxiliary engines
that are not installed on board a vessel as land-based nonroad engines, engine manufacturers will
not be required to recertify them as marine engines.
2) Streamlined Certification
Summary of the Issue
During outreach efforts with small businesses, several post-manufacture marinizers
expressed concern over the new certification burden they would be facing as a result of the
proposed emission control program. They requested EPA to explore ways to reduce this burden,
possibly through the development of a streamlined certification process. One suggestion would
allow a small marinizer to rely on the original engine manufacturer's certificate of conformity,
provided that the marinizer demonstrates it has not altered the engine's performance or
combustion parameters.
Consequently, EPA raised the idea of streamlined certification for marinizers in the NPRM.
However, EPA noted at least two problems with the above suggestion that would need to be
resolved before such a provision could be finalized. First, there may be a compliance problem in
that the original engine manufacturer may challenge its presumed liability in an EPA
enforcement action directed at these engines. Second, a simple demonstration of equivalent
emissions performance on pre- and post-marinized engines would not be sufficient to address the
Agency's primary concern, which is the possibility of degradation of in-use emission
performance over time. Nevertheless, EPA expressed interest in pursuing such a solution, and
sought comment on how the certification process could be streamlined.
Comments
EPA received only one comment on the issue of streamlined certification for post-
manufacture marinizers. This commenter, however simply expressed support for the suggestion
that post-manufacture marinizers be allowed use the original engine manufacturer's certificate.
The commenter also asked that post-manufacture marinizers be exempt from testing their engines
and only be required to meet minimum record keeping requirements.
Analysis
While EPA acknowledges the desirability of streamlined certification for post-manufacture
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marinizers, it continues to believe that any program that would allow a post-manufacture
marinizer to rely on another manufacturer's original engine compliance certificate must be
designed to mitigate the concerns EPA raised in the NPRM regarding manufacturer liability and
potential emission deterioration. The program suggested during small business outreach and
discussed in the NPRM continues to suffer from these and other critical problems.
First, for such a program to work it would be necessary for EPA to evaluate whether the
processes performed by a post-manufacture marinizer are likely to alter engine emission
performance. It is not clear how this could be done, particularly since the same alteration may
have different emission effects on different engines.
Second, marine diesel engines are expected to comply with the numerical emission limits
throughout their useful life. By allowing a post-manufacture marinizer to rely on the base engine
certificate to demonstrate compliance, EPA will be creating a presumption that emissions will
not, in fact, increase over time. At this time, however, EPA is not convinced that this is the case.
On the contrary, the marinizer may replace or modify original components, or otherwise modify
the engine in ways that will reduce emissions durability. Evidence of such deterioration will not
be immediately available, and would likely have to be addressed through a compliance action.
Consequently, such a program could be less protective of the environment.
Finally, even if the above two concerns could be resolved, an enforcement problem would
continue to exist. Specifically, in a compliance action, both the base engine manufacturer and
the post-manufacture marinizer would be motivated to argue that the emission violation is the
result of processes performed by the other. Because the enforcement action would occur years
after the engine is manufactured, it may not be possible to determine which party is at fault.
Consequently, EPA will not be finalizing streamlined certification provisions for post-
manufacture marinizers at this time, although it will consider revisiting the issue in the large CI
marine rule. Any post-manufacture marinizer who adds, replaces, adjusts, or modifies any
engine component that may have an impact on emissions (including, but not limited to, cooling
system, fuel system, turbocharger, and electronic controls) will need to recertify the engine as
meeting the requirements of this emission control program. On the other hand, those companies
whose "marinization" process consists solely of activities that do not violate the diesel engine
anti-tampering provisions will not have to recertify, provided the original engine certification
label remains on the engine.
3) Standards for Marine Engines Not Exclusively Engaged in Domestic Voyages
Summary of the Issue
The proposed numerical emission limits are intended to apply to all engines entered into
commerce in the United States. With regard to marine engines, all engines installed on vessels
registered or flagged in the United States must meet the requirements.
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Comments
One commenter expressed concern regarding the equity and potentially anti-competitive
effects of EPA imposing standards that are more stringent than those adopted by IMO on engines
used on U.S. vessels engaged in international and offshore operations. Engines installed on
foreign-flagged vessels would not have to comply with EPA's requirements, even though they
may be larger contributors to U.S. air quality problems than engines installed on U.S. vessels that
go abroad. The commenter argued that unless similar requirements are imposed on non-U. S.
vessels, EPA should differentiate its requirements between U.S. vessels operating under
"registry" and those in domestic service as identified by the vessel documentation laws.
Analysis
EPA does not believe that the requirements of this rule impose an undue burden on U.S.
ships that engage in international voyages. This is primarily because the requirements of this rule
cover only marine engines under 37 kW. Given the relatively low costs associated with the
purchase of compliant engines and the fact that these vessels are unlikely to have large numbers
of these small engines, this rule should not affect operating costs and thus competition with
vessels that are not subject to these requirements.
g. Incorporation By Reference of ISO Test Procedures
Summary of the Issue
EPA did not propose to adopt by reference the test procedures adopted by ISO TC70/SC8
committee. EPA instead proposed to continue to rely upon the existing federal test procedures
with some modifications.
Comments
The manufacturers commented that EPA should adopt by reference the emission
measurement procedures of ISO 8178 Part 1. They argued that EPA is required by the National
Technology Transfer and Advancement Act (NTTAA) to adopt such "voluntary consensus"
standards. EMA did recognize that "some minor issues may need to be addressed in the ISO
8178 language", and stated that it was willing to work with EPA to resolve them. Some
manufacturers also stated that if EPA does not incorporate the ISO procedures by reference, then
it should makes its test procedures identical to the ISO procedures.
Analysis
Section 12(d) of the National Technology Transfer and Advancement Act of 1995
(DNTTAAD), Pub. L. No. 104-113, § 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary
consensus standards in its regulatory activities unless to do so would be inconsistent with
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applicable law or otherwise impractical. Voluntary consensus standards are technical standards
(e.g., materials specifications, test methods, sampling procedures, and business practices) that are
developed or adopted by voluntary consensus standards bodies. The NTTAA directs EPA to
provide Congress, through OMB, explanations when the Agency decides not to use available and
applicable voluntary consensus standards. While ISO's test procedures may be considered
voluntary consensus standards, EPA has decided not to adopt these procedures in this final rule.
The Agency has identified several aspects of the existing ISO procedures which it believes are
inappropriate and would make use of these procedures impractical. For example, the ISO
procedures do not have test fuel specifications for representative in-use fuels. The ISO
procedures also specify a minimum stabilization time of ten minutes for each test mode, while
EPA has specified a minimum time of five minutes. In other areas, such as the engine intake air
specifications, the ISO procedures are too vague. In general, the ISO procedures as currently
specified are better suited for research applications than for in-use compliance purposes. EPA
considered taking the approach recommended by EMA, that is adopting the ISO procedures
"with adjustments." However, under the NTTAA this would be equivalent to EPA continuing to
rely on its own existing procedures. EPA has determined that it is more appropriate at this time
to continue to use the existing EPA procedures.
EPA believes that it is an important fact that the procedures included in this final rule are
part of the current nonroad rule and were adopted before ISO procedures existed. It is equally
important to note that this decision by EPA to not incorporate the ISO test procedures by
reference at this time is not a final decision on the use of ISO procedures. This decision does not
prevent EPA from allowing ISO procedures to be used by manufacturers as alternate test
procedures. Moreover, EPA continues to believe that the test procedures should be harmonized
to the greatest extent possible, and is committed to working with the ISO committee to address
the outstanding issues. It is very possible that EPA and the ISO committee will be able to
resolve these issues, and that EPA will thus be able to incorporate the ISO procedures by
reference at some later date.
h. Nonmethane Hydrocarbon Measurement
Summary of the Issue
EPA proposed to allow three options for determining NMHC emissions: 1) assume that
NMHC emissions are equal to calculated THC (total hydrocarbon) emissions; 2) assume that
NMHC emissions are equal to 98 percent of the calculated THC emissions; or 3) measure
NMHC using a manufacturer-specified method with prior approval from the Administrator.
Comments
Cummins recommended allowing manufacturers to use "any NMHC measurement method,
based upon good engineering judgement, without a need to seek EPA approval". EMA also
supported such an allowance. CARB recommended that EPA adopt a gas chromatographic (GC)
approach, such as the one that they currently use for diesel vehicles. Westerbeke specifically
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supported the option of assuming that NMHC emissions are equal to 98 percent of the calculated
THC emissions.
Analysis
The Agency has determined that there is no single method that has been proven to accurately
measure NMHC emissions from nonroad diesel engines, and is thus not finalizing any specific
method in these regulations. EPA does not agree with the recommendation that manufacturers be
allowed to use NMHC measurement method without a need to seek EPA approval. NMHC
measurement procedures can potentially have an effect on the stringency of the standards, and
therefore, the Agency must approve such procedures in advance. EPA recognizes that it could be
inconvenient to require each manufacturer to individually seek approval for a specific new
method, and therefore will generally issue guidance to all manufacturers when it approves a
specific method for measuring NMHC emissions. For example, while EPA it not currently
convinced that the CARB method will work for all diesel engines, it could approve it, at some
later time, and allow it for all nonroad diesel engines so that manufacturers would not need to
petition the Agency separately. Finally, EPA has decided to combine options 1 and 2 (as
described above) into a single option; that is to allow a manufacturer to assume that NMHC
emissions are equal to 98 percent or more of the calculated THC emissions. EPA expects that,
under this option, manufacturers will assume in nearly all cases that NMHC emissions are equal
to 98 percent of the calculated THC emissions, but the Agency does not want to prohibit a
manufacturer from assuming that NMHC emissions are equal to 100 percent of the calculated
THC emissions (as was allowed by the proposal).
i. Engine Family Definition
Summary of the Issue
Engines are grouped into families which are expected to have similar emissions
characteristics throughout their useful lives. EPA's regulations list a number of characteristics,
including bore and stroke, which distinguish engine families.
Comments
EMA commented that EPA should revise the current engine family definition to allow
engines with a per cylinder displacement within a range of 15% to be in the same family. EMA
commented that this would harmonize the definition with California and Europe. Wis-Con Total
Power requested expanding the engine family definition to allow engines which are marginally
outside a specific horsepower category to be allowed to certify in an adjacent category, where
these engines are similar enough to engines in the adjacent category that they would otherwise be
grouped together. They argued that not providing this flexibility would cause costly design
changes to engines rated at under 37 kW that are subject to EPA's Tier 1 standards with short
leadtime schedules.
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Analysis
EPA's current regulation allows engines which differ in any of the listed specifications,
including cylinder displacement, to be grouped in the same engine family if their useful life
emission characteristics are shown to be similar. Provided this is demonstrated, a manufacturer
can have an engine family certified for EPA, California, and Europe without need for a 15%
displacement discriminator in the regulations. EPA will retain the current definition.
EPA is sympathetic to manufacturer concerns about the costly multiplying of engine
families due to power category definitions that were created to aid implementation of the
standards, although the Agency notes that only one manufacturer commented on this and this
manufacturer was concerned about one specific engine model rated under 37 kW. The Agency
believes that this issue has particular relevance for Tier 1 engines below 37 kW because of the
short leadtime provided for the certification of these engines, and because this group is
comprised of 3 rather narrow power bands. Although these categories have an approximate
connection to meaningful groupings, the exact cutpoints are somewhat arbitrary. On the other
hand, a very flexible approach to creating engine families would likely lead to abuse. A
manufacturer could group engines to take advantage of the least stringent emission standards
applicable to the engines in the "family." This could also create competitive disadvantages for
manufacturers who produce similar engines but whose engine ratings do not allow an opportunity
to group families in this way.
Therefore, EPA is allowing the creation of Tier 1 engine families that straddle the power
band cutpoints at 8, 19, and 37 kW, subject to EPA approval. To avoid potential abuse of this
provision by a manufacturer attempting to take advantage of the least stringent emission
standards applicable to the engines in the family, such grouping will be allowed only if: (1) most
of the engine family's sales in each year are from engines with rated power in the power band
with which the engine family is certified, and (2) all power ratings in the engine family that are
not within the power band with which the engine family is certified are within 10 percent of one
of the two power levels that define this power band. The limitations would not apply if the
emission standards for the power band in which the engine family is being certified are at least as
stringent as those of the power band that the included engines would otherwise be in. EPA may
extend this provision beyond Tier 1 in a future action, but first wishes to examine its
effectiveness over time in providing sufficient flexibility without leading to abuse.
j. Conversion of Horsepower Ratings to Kilowatt Ratings
Summary of the Issue
EPA proposed to apply its emission standards to nonroad engines based on their rated
power expressed in kilowatts (kW), but did not specify how manufacturers who define their
products in terms of horsepower (hp) should convert their hp ratings into kW ratings.
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Comments
Cummins recommended that rated horsepower values be multiplied by 0.7457 to convert
them to kW values. They also recommended that the resulting kW value should be rounded to
the nearest whole kW using ASTM rounding protocol.
Analysis
EPA agrees that it is appropriate to convert hp to kW using a 0.7457 conversion factor and
ASTM rounding protocol.
k. Technical Amendments
1)	Oxygen Calibration Gas Purity
Summary of the Issue
§89.312 specifies a purity for oxygen calibration gases.
Comments
EMA commented that this reference should be deleted and the section reserved.
Analysis
Paragraph (b)(2) is reserved to remove references to 02 gases. Oxygen analysis is not
required.
2)	Tables 3 and 4 of Subpart D
Summary of the Issue
Table 3 of Subpart D specifies measurement accuracies and calibration frequencies. Table 4
contains fuel specifications.
Comments
EMA commented that a number of the changes described in the technical amendment
support document for the NPRM had not been made in the two tables.
Analysis
EPA agrees with this comment. The items corrected are listed below for each table.
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Table 3
The changes to items 2, 7, 8, 12, 15, and 21 correct errors in the NPRM. The technical
amendment support document for the NPRM documented these changes, however, they did not
appear in the NPRM .
Table 4
The changes to the cetane, 10 % point, 50% point, and API gravity did not make it into the
NPRM but were in the technical amendment support document. Additionally, the ASTM
D5186-91 is added as optional method to determine percent aromatics in the fuel. This method
was also inadvertently left out of the NPRM but was included in the support document.
3)	Measurement of Fuel Flow
Summary of the Issue
§89.401 and §89.404 specify the measurement of fuel flow.
Comments
EMA commented that the reference to fuel flow should be struck.
Analysis
Determination for fuel flow is required for raw analysis only. The term raw analysis is
added in parentheses after fuel flow for clarification.
4)	Test Segment Zero Trace
Summary of the Issue
§89.405 specified the identification of the zero trace for each test segment.
Comments
EMA commented that the term segment should be omitted.
Analysis
EPA agrees with this comment. The zero and span may be checked at the beginning and end
of the test. The wording is changed to identify the zero and span for each range used.
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5)	Emissions Sampling Calculations
Summary of the Issue
In §89.418, EPA lists the equations for raw emissions sampling calculations.
Comments
EMA commented on the position of the equation for determining fuel air ratio. EMA
commented that this equation should be moved to after the definition of a. Also EMA suggested
the addition of two equations, one for Gaird and the other for Gexhw.
Analysis
EPA agrees with these comments and the changes are made. These changes do not change
the required calculations. They make the section easier to read and add intermediate steps in the
calculations.
6)	NOx Correction Equations
Summary of the Issue
EPA proposed to eliminate one of the NOx correction equations in §89.418. EPA retained
the equation which was originally for use in uncontrolled conditions as the only NOx correction
equation both for raw and dilute sampling.
Comments
EMA commented that EPA's proposed NOx correction factor equation added unnecessary
complications for those manufacturers who are using the dilute sampling method. EMA also
commented that the equation which calculated fuel air ratio from exhaust concentrations is
appropriate only for raw analysis. Therefore, manufacturers doing dilute sampling would also
have to measure fuel flow and air flow rates.
Analysis
EPA agrees that the use of the NOx correction factor in the NPRM would add complications
for manufacturers doing dilute sampling. The proposed NOx correction factor requires
calculation of the fuel to air ratio. The equation for calculating fuel to air ratio from exhaust
concentrations is appropriate only for raw sampling. Therefore, EPA is finalizing the NOx
correction equation which is dependent only on intake humidity. This equation will be used for
both raw and dilute sampling. Laboratories may get approval for the use of other equations under
the alternate test procedure provision.
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7)	Emission Results Summation
Summary of the Issue
The equation for calculating emission results in §89.418 and §89.424 contains a summation
to i=n-l.
Comments
EMA commented that this equation needs to be corrected so that the summation is now i=n.
Analysis
EPA agrees with this comment and makes the necessary correction which should have been
made in the NPRM. The summation of i=n-l does not correctly sum power for constant speed
engines.
8)	HC Analyzer Zeroing and Spanning
Summary of the Issue
§89.412 requires the HC analyzer to be zeroed and spanned through the overflow sampling
system for raw gas analysis.
Comments
EMA commented that the requirement for overflow zeroing and spanning will consume
excessive amounts of calibration gas during raw sampling.
Analysis
EPA agrees with this comment. Zero and spanning can now also be done through the
analyzer port.
9)	Background Sample
Summary of the Issue
§89.420 describes the method for obtaining a background sample.
Comments
EMA commented that background sampling should occur simultaneously with dilute
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sampling.
Analysis
EPA agrees with EMA's comment and the change is made.
10)	CFV Calibration Parameters
Summary of the Issue
§89.422 includes a table of CFV calibration parameters.
Comments
EMA commented that this table is not consistent with recent technical amendments to the
on-high way rule.
Analysis
EPA agrees with this comment. The table is changed to agree with the on-highway
requirements. This will allow one test cell to meet the same requirements for on-highway and
nonroad engines.
11)	Definition of M1
Summary of the Issue
§89.424 defines the term M1.
Comments
EMA commented that this term should be defined as the fuel consumed for each mode.
Analysis
EPA agrees that M1 is the fuel consumed in each mode not the fuel consumed for the test.
The change is made.
12)	Concentration Conversion Equations
Summary of the Issue
EPA proposed equations to convert dry concentrations measured during dilute sampling to
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wet concentrations.
Comments
EMA commented that EPA should adopt ISO equations which correct for both humidity in
the dilution and ambient air.
Analysis
Correcting for the humidity in the intake and dilution air is technically correct. The
appropriate equations are added to §89.424.
13) Test Cycle in Subpart E Table 4
Summary of the Issue
EPA proposed a new test cycle in Table 4 in Appendix B to Subpart E.
Comments
EMA commented that the power for mode 4 should be 25% not 10%.
Analysis
EPA agrees with this comment. The test cycle is the same as ISO test cycle E3. The correct
power for mode 4 is 25%.
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9. Other Regulatory Issues
a.	Nonroad Statement of Principles
Summary of the Issue
EPA worked with the California Air Resources Board, and nonroad diesel engine
manufacturers on a joint Nonroad Statement of Principles (Nonroad SOP) as a way to develop a
framework for a proposed rule. After releasing the text of the SOP in a supplemental advance
notice of proposed rulemaking, EPA received and addressed comments in developing the NPRM.
During the development of the NPRM and the FRM, the Agency followed all required notice and
comment procedures and met with all key parties in the rulemaking, several more than once.
Comments
Environmental groups expressed concern that the SOP process may not meet the
requirements of the Administrative Procedures Act, and regardless, they believed that EPA
"ended up with poorer public process and a weaker rule which limits the agency's ability to
protect public health." EMA and California ARB expressed their view that the NPRM is
generally consistent with SOP framework, although they point to several issues in their
comments where they believe the NPRM needs to be adjusted for full consistency with the SOP.
Analysis
The SOP provided a vehicle for developing a framework for an NPRM, but had no binding
influence on the Agency during the formal rulemaking process. EPA has adopted many
provisions in the final rule that are consistent with the SOP, where the rulemaking record
indicates this is the most appropriate course, and has adopted provisions that differ from the SOP
in some other cases where comments were persuasive. The Agency distributed the SOP as a part
of a Supplemental ANPRM (62 FR 199, January 2, 1997) and accepted extensive comment
before formally proposing a program based on the SOP. The Supplemental ANPRM, NPRM,
and now this final rule reflect a process of continuing refinements based on broad public input.
The Agency believes that the Nonroad SOP was an appropriate and useful step in this process.
b.	Hobby Engines
Summary of the Issue
The proposal would establish regulations for nonroad CI engines of all sizes. Many
extremely small engines used to power model airplanes, model boats, and other such hobby
equipment fit the proposed definition of a nonroad compression ignition engine. Regulation of
these engines raises some special concerns.
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Comments
Commenters claimed that manufacturers of hobby-type engines would have great difficulty
in testing, designing, and producing compliant engines under the proposed program. They
described differences between these engines and larger engines used in other applications that
could cause emission controls to be infeasible, therefore greatly impacting the ability of people to
pursue this hobby. These differences include the need for extremely small size and light weight,
high compression ratios and engine speeds, simple fueling and starting systems, frequent repair
and adjustment by the user, and unique fuel compositions. They commented that these engines
have a low average annual hours of usage. This, combined with their extremely low power
output, would result in their contributing very little to the emissions inventory.
Analysis
EPA is unable to establish an emission standard for these small hobby engines at this time.
The Agency agrees that these engines are designed and operated very differently than larger
engines used in other applications and is not aware of information about them that would allow
an assessment of the feasibility of the proposed standards, or help to establish feasible alternative
standards, taking into consideration the factors relevant under section 213(a)(3) of the Act. Also,
it is not clear whether such small engines could be appropriately and consistently tested with
existing equipment, or, if so, whether any of the available test cycles would adequately represent
the in-use operation of these engines. Furthermore, EPA could not realistically impose the
proposed useful life requirements or the warranty and maintenance interval provisions on these
engines given their limited durability and frequent adjustment by the user.
Although there are many distinguishing features of this class of engines, the comments
received indicate that per-cylinder displacement provides an adequate and simple basis for
distinguishing it from other types of engines. Even though the Agency lacks the information that
would allow a precise determination of the displacement level above which the proposed
standards can be considered feasible, a displacement of 50 cubic centimeters per cylinder is well
above the displacement level that is typical of this class of engines, and well below that of the
smallest engines outside this group. Therefore, the final rule excludes engines with a
displacement of less than 50 cubic centimeters per cylinder from the emissions standards in Part
89.
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10. Emissions Modeling
a. General Comments
Summary of the Issue
EPA developed a computer model as part of the NPRM for predicting the emissions benefit
of the proposed standards. The model relied primarily on information from the NEVES report
and information from a nonroad database developed by PSR. EPA developed its own model in
support of the NPRM because EPA did not have an official model for predicting nonroad
emissions similar the MOBILE model which is EPA's official model for predicting on-highway
emissions.
Comments
EPA received a number of general comments on the emissions model used to develop the
environmental impact results for the NPRM. Environmental groups commented that EPA should
improve the estimates of number, type and age of nonroad engines/equipment. They noted that
EPA should assess the seasonal flux in activity patterns for construction equipment, especially in
urban areas. In addition, they said EPA should characterize engine population data according to
fleet size, end-use, and use patterns. Last, environmental groups commented that EPA should
develop a national vehicle population database using common classification schemes.
American Augers submitted comments questioning the validity of the database EPA used to
create the computer model for predicting nonroad emissions. They provided no further details in
support of their concerns.
EMA commented that EPA should reassess its assumptions concerning the emissions
inventory and provide adequate data to support those assumptions during the 2001 feasibility
review.
Analysis
In the time since the NPRM was published, EPA has been developing a new emissions
model for the purpose of predicting the in-use emissions inventories for nonroad engines and
equipment. This model, known as the NONROAD model, is expected to be officially released
by EPA late in 1998. For the final rulemaking, EPA has used the draft version of the
NONROAD model to predict the emissions impact of the new standards. The NONROAD
model uses the same methodology for predicting nonroad CI emissions as the model developed
for the NPRM. However, the NONROAD model has been updated with new information on
emission levels of more recent pre-control engines, as well as updated nonroad equipment
populations from the PSR database as commenters suggested. At this time, EPA is not aware of,
and commenters have not identified, any other nationwide source of detailed information on
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nonroad equipment other than the PSR database. Therefore, the NONROAD model continues to
use the PSR database as the source of population and all activity and usage values with the
exception of median useful life. Values for the median useful life were taken from a February
1997 report entitled, "Documentation of Input Factors for the New Off-Road Mobile Source
Emissions Inventory Model," which was prepared by Energy and Environmental Analysis, Inc.
(EEA) for the California ARB. The median useful life values developed by EEA were based on
information contained in the PSR data base. The Final RIA contains more information on the
NONROAD model and the updated emissions modeling performed in support of today's action.
The results from the draft NONROAD model presented in the final rulemaking do not
present any seasonal breakdown of benefits. It should be noted that the final release version of
the NONROAD model will allow users to determine emissions on a seasonal basis as well as on
a geographical basis.
In response to EMA's comment regarding the 2001 feasibility review, EPA intends to
update its assessment of the environmental impact of the nonroad standards as part of that
review. This reassessment will, as EMA recommended, involve a revised inventory analysis.
Because the inventory analysis will not be performed for at least another two years, EPA expects
to have a large amount of new information that can be factored into that analysis. The public will
have the chance to provide comments on that analysis as a part of the normal rulemaking process
following the review.
b. Growth Rates
Summary of the Issue
In the NPRM analysis, EPA presented two sets of emission inventories based on different
assumptions regarding future growth in the use of nonroad equipment. The first growth scenario
was based on economic statistics developed by the Department of Commerce's Bureau of
Economic Analysis (BEA). The growth rates used in the first scenario varied by nonroad
segment (e.g., agricultural and construction) and ranged from 0.9% to 1.7% for all years. The
second scenario used one growth rate for all segments of 3% for all years. This higher growth
rate assumption was developed based on growth in diesel fuel sales to the off-highway sector and
information from the PSR database showing nonroad equipment sales to be increasing at rates
higher than those predicted by BEA.
Comments
EMA commented that the growth of nonroad equipment, which is primarily agricultural and
construction equipment, will remain fairly flat. They noted that farming acreage in the United
States is not getting larger and that the construction activity of the last 20 years, which was
marked by flat nonroad equipment usage and growth, is unlikely to increase in the future.
American Augers questioned EPA's growth assumptions noting that fleets are continuously
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replacing old products because new products render old products non-economical for continued
use. They did not provide any supporting information on alternative growth rates.
Analysis
EPA continues to believe that there is growth in the nonroad market. The prospective
growth indicators developed by BEA and EPA's more recent analysis of nonroad equipment
population estimates from the PSR database show growth in the various nonroad segments.
Without any detailed information to support an alternate rate, EPA is continuing to present
emission inventories under two different growth scenarios. The first scenario continues to use
growth rates based on an updated analysis of the BEA information. The annual growth rates
based on BEA vary from 1.0% to 7.4% per year depending on the market segment (e.g.,
agriculture, construction, etc.). The second scenario is based on the growth in nonroad
equipment populations based on a retrospective analysis of populations for the years 1989 to
1996, as determined from the PSR database. The PSR-based growth rates tend to be higher than
the BEA-based growth rates and vary from 3.1% to 9.1% depending on the market segment. The
RIA for the final rulemaking contains a more detailed description of the growth assumptions
used in the analysis as well as the actual emission inventories under the two growth scenarios.
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11. Cost Effectiveness
a. Discount Rate
Summary of the Issue
To determine the cost effectiveness of the proposed standards, EPA divided the discounted
lifetime cost of complying with the standards by the discounted lifetime emission reductions
from a typical piece of nonroad equipment. EPA used a discount rate of seven percent in
determining the discounted cost of complying with the standards and a discount rate of three
percent in determining the discounted lifetime emission reductions.
Comments
EMA, EMI and Ingersoll-Rand commented that EPA should use consistent discount rates
for both the cost and emission reduction calculations when determining cost effectiveness. The
methodology used by EPA leads to cost effectiveness values that are lower than if the same
discount rate is used for both cost and emission reductions calculations. They did not
recommend one rate over the other, just that EPA should use a consistent rate.
Analysis
EPA agrees with the commenters that it is appropriate to use a consistent discount rate for
both cost and emission reduction calculations when determining the cost effectiveness of the
standards. EPA believes the seven percent discount rate used in the NPRM analysis for the cost
analysis is the appropriate rate to use for all calculations. (As noted in the comments, the cost
effectiveness value will be the same if EPA uses either the three percent or the seven percent rate
consistently in all calculations.) The seven percent rate is representative of the opportunity cost
of raising capital whereas the three percent rate is meant to represent the consumption rate of
interest. Because the opportunity cost of raising capital is tied to real-world interest rates, EPA
has revised its cost effectiveness analysis to use a seven percent discount rate for both cost and
emission reduction calculations.
b. Emission Reductions Attributable to Other Factors
Summary of the Issue
In determining the cost of compliance, EPA predicted the menu of technologies that
manufacturers would use to meet the proposed standards. EPA then determined the cost of each
of the individual technologies. For some of the technologies, EPA assumed that manufacturers
would have used those technologies even in the absence of tighter emission standards. For those
technologies, EPA adjusted the cost downward by a certain fraction to reflect the cost of
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compliance attributable to the standards only and not the cost of ongoing improvements in
general engine design. EPA did not make any similar adjustments to the emission reductions
attributable to the standards.
Comments
EMI commented that if EPA plans to continue adjusting the cost of compliance downward
for the market-driven technologies, EPA should also make a consistent adjustment to the
emission reductions when determining the portion of emission reductions attributable to the
emission standards. They noted that the methodology used by EPA leads to lower cost
effectiveness than if consistent adjustments to both the cost and emission reductions were used.
Analysis
In concept, EPA agrees with the comment submitted by EMI. Any emission reductions that
would normally have occurred with improvements in technology should not be considered in
determining the cost effectiveness of new emission standards. However, EPA believes that as
manufacturers modernize and improve the technologies used on nonroad engines, they are faced
with many choices on how to employ the new technologies to the greatest advantage for their
customers. Many times, in the absence of requirements to meet tighter emission standards, the
manufacturer will design the parameters of a new technology, or similarly, redesign the existing
engine, to minimize fuel consumption or some other desirable trait, while not taking advantage of
the emissions control capability of the new technology.
In the cost analysis for the final rulemaking, EPA has assumed that the cost of the following
technologies can be attributed, in part, to benefits unrelated to emissions: engine modifications,
electronic controls, improved fuel injection systems, and turbocharging. EPA believes that
without new emission standards, however, manufacturers will design these technologies, or
redesign other engine parameters to maximize engine performance without regard to emission
levels. Because none of these technologies leads to inherently lower emissions, EPA will not
make any adjustments to the emission reduction calculations to account for emission benefits that
would have occurred independent of the new standards.
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