[Federal Register Volume 59, Number 216 (Wednesday, November 9, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-27401]


[[Page Unknown]]

[Federal Register: November 9, 1994]


_______________________________________________________________________

Part III





Environmental Protection Agency





_______________________________________________________________________



40 CFR Parts 89 and 91




Control of Air Pollution; Emission Standards for New Gasoline Spark-
ignition and Diesel Compression-ignition Marine Engines; Proposed Rules
ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 89 and 91

[FRL-5102-2]
RIN 2060-AE54

 
Control of Air Pollution; Emission Standards for New Gasoline 
Spark-ignition and Diesel Compression-ignition Marine Engines

AGENCY: Environmental Protection Agency.

ACTION: Notice of proposed rulemaking.

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SUMMARY: Today's notice proposes emission standards for new gasoline 
spark-ignition and diesel compression-ignition marine engines. This 
action is required by section 213(a)(3) of the Clean Air Act as 
amended. The proposed standards for gasoline spark-ignition marine 
engines are expected to result in a 75 percent reduction in hydrocarbon 
(HC) emissions from outboard and personal watercraft engines. EPA 
proposes to phase-in HC emission standards for gasoline spark-ignition 
outboard and personal watercraft engines over a period of 9 years. The 
emission standards would be phased-in by equal yearly percentage 
emission reductions from a baseline curve (g HC/kW-hr vs. engine power) 
beginning with the 1998 model year through the 2006 model year. For 
gasoline spark-ignition sterndrive/inboard engines the emission 
standards would also become effective during the 1998 model year. 
Emission standards for oxides of nitrogen (NOX) and carbon 
monoxide (CO) are also proposed for gasoline spark-ignition marine 
engines. EPA proposes to include marine diesel compression-ignition 
engines under the same regulatory framework as the land-based nonroad 
compression-ignition engines at or above 37 kW, with comparable 
NOX reductions per engine of about 37 percent. Emission standards 
for HC, CO, NOX, particulate matter (PM), and smoke are also 
proposed for compression-ignition marine engines.

DATES: Comments must be received on or before January 9, 1995. A public 
hearing will be held December 9, 1994, at 10 a.m.; requests to present 
oral testimony must be received on or before November 29, 1994.

ADDRESSES: Interested parties may submit written comments (in 
triplicate, if possible) for EPA consideration by addressing them as 
follows: EPA Air Docket (LE-131), Attention: Docket Number A-92-28, 
room M-1500, 401 M Street, SW., Washington, DC 20460. Materials 
relevant to this rulemaking are contained in this docket and may be 
reviewed at this location from 8:00 a.m. until noon and from 1:30 p.m. 
until 3:30 p.m. Monday through Friday. As provided in 40 CFR part 2, a 
reasonable fee may be charged by EPA for photocopying. Unless otherwise 
notified through a notice in the Federal Register, the public hearing 
will be held in the conference room at the National Vehicle and Fuel 
Emissions Laboratory, 2565 Plymouth Road, Ann Arbor, MI 48105.

FOR FURTHER INFORMATION CONTACT: Kenneth L. Zerafa, Office of Mobile 
Sources, Certification Division, (313) 668-4331.

SUPPLEMENTARY INFORMATION:

I. Obtaining Copies of the Regulatory Language

    EPA has not included in this document the proposed regulatory 
language. Electronic copies (on 3.5'' diskettes) of the proposed 
regulatory language may be obtained free of charge by visiting, 
writing, or calling the Environmental Protection Agency, Certification 
Division, 2565 Plymouth Road, Ann Arbor, MI 48105, (313) 668-4288. 
Refer to Docket A-92-28. A copy is also available for inspection in the 
docket (see ADDRESSES).
    The preamble, regulatory language and regulatory support document 
are also available electronically on the Technology Transfer Network 
(TTN), which is an electronic bulletin board system (BBS) operated by 
EPA's Office of Air Quality Planning and Standards. The service is free 
of charge, except for the cost of the phone call. Users are able to 
access and download TTN files on their first call using a personal 
computer and modem per the following information.

TTN BBS: 919-541-5742 (1200-14400 bps, no parity, 8 data bits, 1 stop 
bit) Voice Helpline: 919-541-5384
Also accessible via Internet: TELNET ttnbbs.rtpnc.epa.gov Off-line: 
Mondays from 8:00 AM to 12:00 Noon ET

    A user who has not called TTN previously will first be required to 
answer some basic informational questions for registration purposes. 
After completing the registration process, proceed through the 
following menu choices from the Top Menu to access information on this 
rulemaking.

 GATEWAY TO TTN TECHNICAL AREAS (Bulletin Boards)
 OMS--Mobile Sources Information
 Rulemaking & Reporting
<6> Non-Road
<2> File area #1 . . . Non-Road Marine Engines

    At this point, the system will list all available files in the 
chosen category in chronological order with brief descriptions. To 
download a file, select a transfer protocol that is supported by the 
terminal software on your own computer, then set your own software to 
receive the file using that same protocol.
    If unfamiliar with handling compressed (i.e. ZIP'ed) files, go to 
the TTN top menu, System Utilities (Command: 1) for information and the 
necessary program to download in order to unZIP the files of interest 
after downloading to your computer. After getting the files you want 
onto your computer, you can quit the TTN BBS with the  oodbye 
command.
    Please note that due to differences between the software used to 
develop the document and the software into which the document may be 
downloaded, changes in format, page length, etc. may occur.

II. Table of Contents for Rest of Preamble
III. Statutory Authority and Background
    A. Statutory Authority
    B. Background
IV. Requirements of the Proposed Rule
    A. Overview
    B. Definition of Marine Engine
    C. General Enforcement Provisions
    D. Program Description and Rationale
      1. Applicability
      2. Emission Standards for Gasoline spark-ignition Outboard and 
Personal Watercraft Engines
      3. Emission Standards for Gasoline spark-ignition Sterndrive 
Inboard Engines
      4. Emission Standards for Compression-ignition Marine Engines
      5. Crankcase Emission Controls
      6. Compliance with Gasoline spark-ignition Marine Engine 
Emission Standards
      7. Effective Dates for Certification
      8. Model Year Designation
      9. Engine Family Categorization
      10. Certification Testing
      11. Engine Family Certification
      12. Durability Demonstration Requirements
      13. Certification Test Procedure for HC, CO, NOX, and PM
      14. Certification Test Procedure for Smoke from Marine 
Compression-ignition Engines
      15. Certification Test Fuel Requirements
      16. Labeling Requirements
      17. Manufacturer Self-Audit Program
      18. Selective Enforcement Auditing Program
      19. In-use Enforcement and Recall
      20. Defect Reporting and Warranty Requirements
      21. Tampering Enforcement
      22. Importation of Nonconforming Marine Engines
V. Discussion of Issues
    A. Choice of Exhaust Constituents to be Regulated
      1. Gasoline spark-ignition Engines
      2. Compression-ignition Engines
    B. Water Quality Impacts/Scrubbing
    C. Certification Durability Demonstration
      1. Self Approval/In-use Testing Feedback Requirement Program
      2. New Engine Standards/In-use Testing Requirement Program
      3. Specified Service Accumulation Program
      4. No Certification Durability Demonstration
    D. Use of an HC Emission Standards Curve for Outboard and 
Personal Watercraft Engines
    E. Options for Averaging Sets and Effect on HC Standards for 
Gasoline spark-ignition Marine Engines
    F. Electric Outboard Motors
    G. Level of HC Standard for Spark-ignition Outboards and 
Personal Watercraft Engines
      1. Marginal Cost-Effectiveness Curve
      2. Elasticity Effects
      3. Leadtime and Phase-In Considerations
      4. Level of NOX Standard
      5. Proposed Standards Fit Statutory Criteria
    H. NOX Emission Standards for Gasoline spark-ignition 
Engines and NOX/HC Tradeoff
    I. Effect of Available Technologies on Emissions and Performance 
from Gasoline spark-ignition Engines
      1. Spark-ignition Outboard and Personal Watercraft Engines
      2. Spark-ignition Sterndrive and Inboard Engines
    J. Effect of Available Technologies on Emissions and Performance 
from Compression-ignition Engines
      1. Types of Compression-ignition Marine Engines
      2. Leadtime and Cost
      3. Test Procedure
    K. Representativeness of the Test Procedures
      1. ISO E4 Cycle for Gasoline spark-ignition Marine Engines
      2. ISO E5 Cycle for Propulsion Compression-ignition Marine 
Engines
      3. ISO C1 Cycle for Marine Non-Propulsion Compression-ignition 
Engines
    L. Safety/Noise/Energy Issues
      1. Noise
      2. Energy
      3. Safety
    M. Banking of Emission Credits for Gasoline Spark-ignition 
Marine Engines
      1. Banking Unused Credits During the Phase-in Period for 
Future Use
      2. Early Banking (Banking Prior to Phase-in Period)
      3. Credit Life
      4. Determiniation of Amount of Credit: Year of Use v. Year of 
Generation
      5. Banking Restriction for Outboard/Personal Watercraft 
NOX Emissions
    N. Tracking Engine Sales to Point of First Retail Sale
    O. Nonconformance Penalties for Marine Engines
    P. New Vessels Must Incoporate New Engines
    Q. Emerging Market Segments
VI. Cost Analysis
    A. Gasoline Spark-ignition Engine Cost Analysis
      1. Aggregate Annual Cost
      2. Consumer Cost Summary
    B. Compression-ignition Engine Cost Analysis
VII. Environmental Benefit Assessment
    A. Gasoline Spark-ignition Engine HC Reduction
    B. Diesel Compression-ignition Engine NOX Reduction
    C. Health and Welfare Effects of Troposhperic Ozone
    D. Roles of VOC and NOX in Ozone Formation
    E. Smoke
VIII. Cost-Effectiveness
    A. Gasoline Spark-ignition Engines
    B. Diesel Compresion-ignition Engines
IX. Public Participation
    A. Comments and the Public Docket
    B. Public Hearing
X. Administrative Requirements
    A. Executive Order 12886
    B. Reporting and Recordkeeping Requirements
    C. Impact on Small Entities

III. Statutory Authority and Background

A. Statutory Authority

    Authority for the actions proposed in this notice is granted to EPA 
by sections 203, 204, 205, 206, 207, 208, 209, 213, 215, 216, and 
301(a) of the Clean Air Act as amended [42 U.S.C. 7522, 7523, 7524, 
7525, 7541, 7542, 7543, 7547, 7549, 7550, and 7601(a)].
    Section 213(a) of the Clean Air Act (CAA) directs EPA to: (1) 
conduct a study of emissions from nonroad engines and vehicles; (2) 
determine whether emissions of carbon monoxide (CO), oxides of nitrogen 
(NOX), and volatile organic compounds (VOCs) from nonroad engines 
and vehicles are significant contributors to ozone or CO in more than 
one area which has failed to attain the national ambient air quality 
standards (NAAQS) for ozone or CO; and (3) if nonroad emissions are 
determined to be significant, regulate those categories or classes of 
new nonroad engines and vehicles that contribute to such air pollution. 
Under CAA section 213(a)(4), EPA may also regulate emissions other than 
CO, NOX, and VOCs from new nonroad engines or vehicles if EPA 
determines that such other emissions contribute to air pollution that 
may reasonably be anticipated to endanger public health or welfare.
    The Nonroad Engine and Vehicle Emission Study (hereafter, ``Nonroad 
Study'') required by section 213(a)(1) was completed in November 1991. 
The Nonroad Study is available in docket A-92-28. The determination of 
the significance of emissions from nonroad engines and vehicles in more 
than one NAAQS nonattainment area, required by section 213(a)(2), was 
published on June 17, 1994 (59 FR 31306). At the same time, the first 
set of regulations for a class or category of new nonroad engines that 
contribute to air pollution, required by section 213(a)(3), was 
promulgated. That rule controlled emissions from new nonroad 
compression-ignition engines (excluding marine engines) at or above 37 
kilowatts (kW). EPA also has proposed emission standards for nonroad 
gasoline engines less than 19 kW used in lawn and garden equipment and 
in utility applications (May, 16, 1994, 59 FR 25399). Today's action 
continues to implement section 213(1)(3) and (4), by proposing emission 
standards for gasoline spark-ignition and diesel compression-ignition 
marine engines.

B. Background

    Based on the results of the 1991 Nonroad Study, EPA has determined 
that emissions of VOCs, NOX, and CO from nonroad engines and 
vehicles contribute significantly to ozone or CO levels in more than 
one NAAQS nonattainment area (see 59 FR 31306, June 17, 1994). As 
presented in the Nonroad Study, nonroad engines and vehicles contribute 
an average of 10 percent of summer VOCs in the 19 ozone nonattainment 
areas included in the study. Gasoline spark-ignition marine engines 
make up nearly 30 percent of these summertime nonroad VOC emissions and 
three-quarters of these gasoline spark-ignition marine engine HC 
emissions are from 2-stroke outboard engines. EPA therefore has 
determined that it is required to regulate new gasoline spark-ignition 
marine engines under Section 213(a) of the Clean Air Act.
    EPA held a public workshop on July 29, 1992, to solicit information 
on technical characteristics, emissions, and general regulatory issues 
related to marine engines. Public notice of the meeting and comments 
submitted by interested parties can be found in the docket for this 
rulemaking (see ADDRESSES section at beginning of notice). Subsequent 
to the public workshop, EPA met several times with the National Marine 
Manufacturers Association (NMMA). NMMA has encouraged federal 
regulation of marine engine emissions, stating that the U.S. government 
should take the lead in developing emission standards and test 
procedures that could be a model for other countries. One of the marine 
industry's major concerns is that without such a U.S. federal effort, a 
patchwork of different emission standards and test procedures would 
proliferate throughout the world, subjecting the manufacturers to 
excessive costs and administrative burdens resulting from the lack of 
harmonized standards and procedures. The marine engine manufacturers 
have been very helpful in providing EPA with information and data used 
in the development of a number of emission control options presented in 
this notice. Also, NMMA has presented to EPA their analysis of 
potential emission reduction strategies for marine engines. The 
documentation of NMMA's analysis can be found in the public docket.
    The settlement of Sierra Club v. Browner, Civ. No. 93-0197 NHJ 
(D.D.C. 1993), requires EPA to propose emission standards for marine 
engines by September 30, 1994 (extended to October 30, 1994), and to 
promulgate final regulations by November 22, 1995. The time schedule 
resulting from this settlement has influenced a number of EPA decisions 
regarding regulatory options and proposals which are discussed in more 
detail in this notice.
    In this notice, EPA is also proposing to set emission standards for 
new diesel compression-ignition marine engines. EPA promulgated rules 
for nonroad compression-ignition engines above 37 kW (59 FR 31306, June 
17, 1994), but this rule did not include marine engines. During the 
development of that rulemaking, EPA decided to exclude marine 
propulsion engines and marine auxiliary engines because little 
information was available at the time to determine whether the test 
procedure was sufficiently representative of the operating cycle of 
marine engines and also because of uncertainty of how such regulations 
may impact, or conflict with, the U.S. Coast Guard safety requirements. 
EPA now believes that marine compression-ignition engines should be 
covered by the same regulation as other compression-ignition engines 
over 37 kW, with appropriate amendments pertaining to testing 
procedures.
    EPA proposes to amend 40 CFR part 89 to include all marine 
compression-ignition engines below 560 kW manufactured after January 1, 
1999 and all marine compression-ignition engines equal to or above 560 
kW after January 1, 2000. Many of the marine engines used for auxiliary 
power are very similar in design and operation to land-based nonroad 
engines that are required to be certified under the existing nonroad 
large compression-ignition engine regulations. However, marine 
compression-ignition engines used for propulsion may be less similar in 
operation and design than land-based compression-ignition nonroad 
engines and require additional considerations for possible inclusion in 
40 CFR part 89. These issues are discussed in greater detail in the 
issues section of this notice.
    The International Maritime Organization (IMO), a subgroup of the 
United Nations is currently developing an agreement (in the form of the 
addition of a new annex to the Marine Pollution Convention (MARPOL 73/
78)) to control emissions from ships on international voyages. Such an 
agreement would provide important measures to control emissions from 
ships that are outside U.S. territorial waters for which national 
standards could not apply. Efforts are being made by the EPA and the 
U.S. Coast Guard (who represents the U.S. at IMO) to ensure that test 
procedures and certification procedures are harmonized between the IMO 
regulations and national regulations. The IMO annex will cover new 
diesel marine propulsion and auxiliary engines used on ships on 
international voyages. The current proposal at IMO covers engines over 
100 kW used on such ships. The current draft IMO annex is contained in 
the docket.

IV. Requirements of the Proposed Rule

    The general provisions of the regulation are briefly described in 
the following section, and the rationale for key parts of the proposal 
is discussed. A more thorough discussion of issues raised in the 
rulemaking follows in Section V.

A. Overview

    EPA proposes to regulate the emissions of exhaust pollutants for 
both new gasoline spark-ignition marine engines and new diesel 
compression-ignition marine engines. For gasoline spark-ignition marine 
engines, the primary focus of the regulations is to significantly 
reduce hydrocarbon (HC) emissions. For gasoline spark-ignition outboard 
and personal watercraft engines, EPA proposes average HC emission 
standards that are a function of the rated power of the engine and will 
result in a 75 percent reduction in HC emissions from current 
technology 2-stroke marine engines. A more complete explanation for 
this form of emission standard is given in Section IV(D)(2) of this 
preamble. For gasoline spark-ignition sterndrive and inboard engines, 
EPA proposes an average HC emission standard of 8.0 g/kW-hr. EPA also 
proposes average emission standards for oxides of nitrogen (NOx) of 6.0 
g/kW-hr and 6.5 g/kW-hr for outboard/personal watercraft and 
sterndrive/inboard engines respectively. These standards are discussed 
in more detail in Section V. A carbon monoxide (CO) cap of 400 g/kW-hr 
is also proposed, although CO is of secondary importance for gasoline 
spark-ignition marine engines.
    For new diesel compression-ignition marine engines, EPA proposes 
appropriate amendments to the existing nonroad compression-ignition 
engine regulations (40 CFR part 89) to include marine engines. This 
approach would thus subject marine compression-ignition engines to the 
same emission standard levels as required for other nonroad 
compression-ignition engines. The proposed emission standards are 9.2 
g/kW-hr for NOx, 1.3 g/kW-hr for HC, 11.4 g/kW-hr for CO, 0.54 g/kW-hr 
for PM, and smoke standards of 20/50 maximum percentage opacity for 
acceleration/peak operating modes. These standards would apply to all 
new compression-ignition marine propulsion engines and auxiliary 
engines, regardless of power rating.
    Today's proposal includes a compliance program involving pre-sale 
certification, assembly line testing, and in-use enforcement for both 
gasoline spark-ignition and compression-ignition marine engines. The 
proposed program would be similar to the existing compression-ignition 
nonroad regulatory program and include:
     designation of product line into groups of engines with 
similar emission characteristics (such groups are called engine 
families),
     averaging and trading program elements modified to suit 
the proposed emission standard levels and industry structure,
     manufacturer emission testing of selected engines with the 
specified test procedure to demonstrate compliance with emission 
standards,
     labeling of engines from each engine family,
     submission of application for certification for each 
engine family by model year,
     issuance of an emission compliance certificate for each 
engine family,
     prohibition against U.S. sale of engines not certified by 
EPA,
     recordkeeping and reporting requirements,
     EPA confirmatory certification testing,
     banking of unused emission credits for use in future model 
years,
     manufacturer production line testing backed-up by EPA 
Selective Enforcement Auditing (SEA),
     in-use testing and enforcement,
     warranty and prohibition on tampering, and
     importation provisions.
    For new gasoline spark-ignition marine engines, EPA proposes that 
the effective date of the emission control requirements of these 
regulations begin in model year 1998. For gasoline spark-ignition 
outboard and personal watercraft marine engines, the stringency of the 
HC standards is proposed to be proportionately phased-in each year 
through model year 2006. Engines on average, will be required to meet a 
consistently lower standard for each year from model year 1998 to 2006.
    For new diesel compression-ignition marine engines, the standards 
would be effective for engines up to 560 kW on January 1, 1999; for 
engines including and above 560 kW, the proposed effective date is 
January 1, 2000.

B. Definition of Marine Engine

    EPA proposes to define marine engines as any engine which is used 
on a ``vessel'' as defined in 1 U.S.C.S. 3 (1992) for the purposes of 
propulsion and/or auxiliary power. The word ``vessel'' includes every 
description of watercraft or another artificial contrivance used, or 
capable of being used, as a means of transportation on water. This 
definition applies equally to gasoline spark-ignition and diesel 
compression-engines unless specifically stated otherwise.
    Pursuant to section 203(b)(1) of the CAA, the Agency proposes 
categories of exemptions from new marine engine regulations similar to 
the existing exemptions for new nonroad compression-ignition engines at 
or above 37 kW (50 horsepower) (see 40 CFR, Part 89, Subpart I). These 
include exemptions for purposes of research, investigations, studies, 
demonstrations, training, or for reasons of national security. 
Exemptions are obtained either categorically, that is without 
application to the Administrator, or by submitting a written 
application to the Administrator. Export exemptions and manufacturer-
owned engine exemptions are granted without application. Testing 
exemptions, national security exemptions, and exemptions for engines 
used solely for competition are obtained by application.
    Exemptions are justified in these cases because the sources are 
limited in number or scope so no environmental harm results; the 
particular use of the source is determined to further air quality 
research; and/or the exemption is vital to the security of the nation. 
(See 39 FR 10601, March 21, 1974, for history of on-highway exemptions 
policy.)

C. General Enforcement Provisions

    Any manufacturer of a gasoline spark-ignition or diesel 
compression-ignition marine engine would be responsible for obtaining 
from the Administrator a certificate of conformity covering any engine 
introduced into commerce in the United States before such an engine is 
sold, offered for sale, introduced or delivered for introduction into 
commerce, or imported into the United States. All such engines must 
comply with the standards promulgated in EPA's final regulations.
    Section 213(d) of the Clean Air Act states that the Agency shall 
enforce new nonroad engine and vehicle standards in the same manner as 
on-highway vehicle and engine standards are enforced.\1\ Therefore EPA 
is authorized to submit nonroad engines to certification requirements, 
assembly line testing, and in-use enforcement that apply to on-highway 
engines, with modifications that EPA deems appropriate. Section 213(d) 
also grants EPA the authority to revise or promulgate regulations as 
may be necessary to determine compliance with, and to enforce the 
nonroad standards. Further, EPA is authorized to prohibit certain acts, 
such as tampering with a certified engine.
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    \1\Section 213(d) of the Act provides that the standards under 
213 ``be subject to sections [206, 207, 208, and 209], with such 
modifications of the applicable regulations implementing such 
sections as the Administrator deems appropriate, and shall be 
enforced in the same manner as standards prescribed under section 
[202]. The Administrator shall revise or promulgate regulations as 
may be necessary to determine compliance with, and enforce, 
standards in effect under this section.'' Section 206 specifies 
requirements for motor vehicle and motor vehicle engine compliance 
testing and certification; Section 207 requires manufacturers to 
warrant compliance by motor vehicles and motor vehicle engines in 
actual use among other things; section 208 requires recordkeeping by 
manufacturers of new motor vehicles or new motor vehicle engines and 
authorizes EPA to require testing, collect information and require 
reports; and section 209 preempts states and political subdivisions 
from adopting or enforcing standards relating to emission control, 
certification, or inspection of new motor vehicles or new motor 
vehicle engines, and from adopting or enforcing emission control 
standards for certain new nonroad engines or new nonroad vehicles, 
unless specifically authorized to do so by EPA.
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    Pursuant to this authority, the Agency is proposing today to 
require marine engine manufacturers to obtain certification and to 
subject them to manufacturer assembly line testing backed-up by 
selective enforcement auditing and in-use enforcement. The Agency is 
also proposing regulations for marine vessels that are similar to those 
for on-highway vehicles under sections 203, 204, 205, and 208 of the 
Act.\2\ These general enforcement regulations include prohibitions 
contained in section 203(a); prohibited acts, if committed, subject 
persons to the assessment of civil penalties under section 205. As 
applied to nonroad engines under section 213(d), such acts include, but 
are not limited to, the introduction into commerce in the U.S. of 
marine engines which are not covered by a certificate of conformity 
issued by EPA, tampering with emission control devices or elements of 
design installed on or in a certified marine engine, and failing to 
provide information to the Agency if requested. The Agency is also 
proposing regulations under the authority of section 205 of the Act 
which sets forth the maximum statutory penalties for violating the 
prohibitions.
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    \2\Section 203 specifies prohibited acts and exempted motor 
vehicles; section 204 provides for federal court injunctions of 
violations of section 203(a); section 205 provides for the 
assessment of civil penalties for violations of section 203; and 
section 208 provides the Agency with information collection 
authority. The general enforcement language of section 213(d) 
provides the Agency's authority for applying sections 203, 204, 205, 
and 208 of the Act to nonroad engines and vehicles.
---------------------------------------------------------------------------

    The Agency is proposing general information collection provisions 
similar to current on-highway provisions under section 208 of the Act 
which include, but are not limited to, the manufacturer's 
responsibility to provide information to the Agency, perform testing if 
requested by the Agency, and maintain records. In addition, EPA is 
proposing emission defect reporting regulations which require 
manufacturers to report to EPA emission-related defects that affect a 
given class or category of engines. The emission defect reporting 
regulations also specify procedural and reporting requirements for 
manufacturers that initiate voluntary emission-related recalls. The 
general information collection provision will also provide authority 
for EPA enforcement personnel to gain entry and access to various 
facilities under section 208.
    EPA is authorized under section 217 of the CAA to establish fees to 
recover compliance program costs associated with sections 206 and 207. 
EPA will propose to establish fees for today's marine engine emission 
compliance program at some future time, after the program has been 
promulgated and associated costs are determined.

D. Program Description and Rationale

    This section describes several features of EPA's marine engine 
emission compliance program and EPA's rationale for including these 
features in the program. Specific issues related to the proposed 
program which require in-depth discussion are presented in Section V 
``Discussion of Issues.''
1. Applicability
    i. Gasoline Spark-ignition Engines. Under the proposed regulations, 
all gasoline spark-ignition marine engines for a given manufacturer are 
included in determining compliance with the average standards for each 
year. Compliance is determined taking into account any trading or 
banking of emission credits.
    ii. Diesel Compression-ignition Engines. Today's proposal covers 
all compression-ignition marine engines regardless of rated power. EPA 
proposes to require compression-ignition marine engines to meet the 
standards that new nonroad large compression-ignition engines at or 
above 37 kW are required to meet, with appropriate changes to test 
procedures as discussed in Section V.
    EPA has not proposed to set a lower power rating limit of 37 kW or 
an upper power rating limit for marine engines. EPA solicits comments 
regarding whether such limits should be set and, if so, the levels at 
which they should be set and the reasons why they should be set at 
those levels.
    As described in the background section of this preamble, the 
International Maritime Organization (IMO) is developing an agreement to 
control emissions from ships on international voyages. The largest 
diesel marine engines will most likely be covered by the IMO annex, as 
these engines are typically used on ocean going vessels which traverse 
international waters. However, some large engines and auxiliary power 
engines may be used on U.S. flag vessels that remain in internal waters 
(e.g., Great Lakes freighters). There is no clear engine cut-point in 
terms of power (kW) above which the IMO annex will cover and below 
which the national marine regulations will cover. Therefore, EPA is not 
proposing an upper limit for the application of the national 
regulations to control emissions from compression-ignition marine 
engines. EPA requests comments on whether an upper limit should be 
established and, if so, at what level and why.
    iii. Alternative-fueled Marine Engines. EPA does not believe that 
new emission standards for marine engines will require increased use of 
alternative fuels. Test procedures and standards for alternative fuels 
require significant effort, which could not be completed by the court 
deadline for this rulemaking. Therefore, EPA proposes not to include 
test procedures or emission standards for alternative-fueled marine 
engines. EPA requests comment on the need for regulations and the 
potential for increased market share for marine engines that operate on 
alternative fuels such as electricity, natural gas, methanol, ethanol, 
or other alternative fuels. Commenters encouraging EPA to adopt 
alternative fuels standards and test procedures in this rule should 
review the alternative fuels rules for on-highway engines for 
information regarding how such rules would work.
2. Emission Standards for Gasoline Spark-ignition Outboard and Personal 
Watercraft Engines
    i. Hydrocarbon Standards. EPA is proposing that manufacturers 
comply with corporate average emission standards requiring a 75 percent 
reduction in HC emissions from 1990 outboard and personal watercraft 
base levels when fully implemented. The standards would be phased-in 
over 9 years. Each year a manufacturer's fleet would need to meet a 
lower average emission standard. The standard would be a work specific 
emission rate limit (g/kW-hr) which is a function (curve) that varies 
with engine power. Compliance by a manufacturer's fleet as a whole is 
determined by comparing each engine family against the curve and 
summing the differences.
    To derive the yearly compliance curves for the emission standards, 
EPA first had to calculate a base HC emission standards curve from 
which equally proportional reductions would be taken over the phase-in 
period. EPA proposes the following equation as the base HC emission 
standards curve:

HCbase=151+557/P0.9 or 300 g/kW-hr, whichever is lower

where:

HCbase=hydrocarbon base emission standard in g/kW-hr P=rated power 
of the engine family in kilowatts.\3\

    \3\Refer to issues section V.D. for a discussion of the HC 
baseline emission function.
---------------------------------------------------------------------------

    This function best fits the data provided by manufacturers for 
marine outboard and personal watercraft engines. With this functional 
format, the HC base emission standard is a function of the power rating 
of the engine family. However, EPA is also proposing that HCbase 
is not to exceed 300 g/kW-hr. The HC baseline curve is shown in Figure 
1; also shown are the standard curves for the phase-in years, which are 
described in the following paragraphs.

BILLING CODE 6560-50-P

TP09NO94.000


BILLING CODE 6560-50-C
    The average HC standard curve for a given model year is determined 
by the product of the HCbase curve function and the model year 
factor as shown in Table 1. The model year factor reflects equal 
percentage reductions per year from the baseline over the nine year 
phase-in period, resulting in a 75 percent decrease when fully 
implemented. For example, the average HC emission standard in 2004 is 
the product of the 2004 HC model year factor, 0.417, and the 
HCbase function. The resulting average emission standard function 
for model year 2004 is as follows:

TP09NO94.002

    Also, given the limitation on HCbase of 300 g/kW-hr maximum, 
the 2004 emission standard may not be greater than 0.417 x 300=125.1 g/
kW-hr.

    Table 1.--Gasoline Spark-Ignition Marine Engines Average Emission   
                                Standards                               
------------------------------------------------------------------------
                                                               HC model 
                         Model year                          year factor
------------------------------------------------------------------------
1998.......................................................        0.917
1999.......................................................        0.833
2000.......................................................        0.750
2001.......................................................        0.667
2002.......................................................        0.583
2003.......................................................        0.500
2004.......................................................        0.417
2005.......................................................        0.333
2006 and after.............................................        0.250
------------------------------------------------------------------------

    ii. Oxides of Nitrogen Standards. EPA is also proposing NOX 
emission standards for gasoline spark-ignition outboard and personal 
watercraft engines. EPA believes that the proposed corporate average 
standard level of 6.0 g/kW-hr is at a level appropriate for the types 
of technologies that will be used for meeting the stringent proposed HC 
standards. EPA proposes full implementation of the NOX standard 
beginning with the 1998 model year without phase-in. However, EPA 
requests comment on whether or not a phase-in period would be 
appropriate, and if so, what length and why. However, EPA requests 
comment on whether or not a phase-in period would be appropriate, and 
if so, what length and why. EPA proposes not to allow banking of 
NOX credits for outboard/personal watercraft engines during the 
phase-in years 1998 through 2005 (this is discussed in more detail in 
the issues section, item M(5)).
    iii. CO standards (cap). EPA is also proposing to cap CO emissions 
at 400 g/kW-hr. This standard is the standard proposed for many utility 
engines (see 59 FR 25399, May 16, 1994). While some marine engines 
currently have CO emissions higher than this level, EPA expects that 
the standard can be met with small adjustments. When engines are 
controlled for HC, this CO standard will be easier to achieve. 
Therefore, every engine must meet the CO emission standard. The CO 
emission standard remains constant over the phase-in period and is set 
only to eliminate very high CO levels, which generally are far above 
the CO emission levels of most other engines sold. Most of the NAAQS 
nonattainment episodes for CO occur in the winter, while most boating 
activity in the U.S. occurs during the summer months, when CO air 
quality standards are rarely in nonattainment. However, very high 
levels of CO can have severe impacts on the health of users of such 
engines and in these cases boat design must be taken into account. 
Therefore, EPA requests comment on the need for CO control and on the 
proposed cap standard level.
3. Emission Standards for Gasoline Spark-Ignition Sterndrive/Inboard 
Engines
    For gasoline spark-ignition sterndrive/inboard engines, the 
proposed corporate average standards for HC and NOX are 8.0 g/kW-
hr and 6.5 g/kW-hr respectively. These proposed standards are discussed 
in greater detail in Section V. As with outboard and personal 
watercraft engines, and for similar reasons, EPA is proposing to cap CO 
levels from such engines at 400 g/kW-hr.
4. Emission Standards for Diesel Compression-Ignition Marine Engines
    EPA is proposing appropriate amendments to the existing nonroad 
compression-ignition engine regulations (40 CFR Part 89) to include all 
marine compression-ignition propulsion and auxiliary engines, 
regardless of power rating. This approach would thus subject marine 
compression-ignition engines to the same emission standard levels as 
required for new nonroad compression-ignition engines at and above 37 
kW. The proposed emission standards are 9.2 g/kW-hr for NOX, 1.3 
g/kW-hr for HC, 11.4 g/kW-hr for CO, 0.54 g/kW-hr for PM, and smoke 
standards of 20/50 maximum percentage opacity for acceleration/peak 
operating modes.
5. Crankcase Emission Controls
    In addition to the numerical exhaust emission standards, EPA 
proposes to prohibit direct emissions of crankcase vapors into the 
atmosphere for both gasoline spark-ignition and compression-ignition 
marine engines. Motor vehicles have been subject to an analogous 
requirement since the first steps of emission control regulation.
6. Compliance with Gasoline Spark-ignition Marine Engine Emission 
Standards
    Compliance with the HC and NOX emission standards is based on 
an averaging, banking and trading (ABT) provisions determined by 
calculating the lifetime engine emissions difference between the engine 
family emission level and the standard (compliance curve). At the end 
of each model year, each manufacturer must have as many or more 
emissions below the standards than above the standards for the 
manufacturer's product line (with allowances for trading and banking).
    For a given engine family, the amount of emission credit or 
shortfall will be based on the difference in emission rate (g/kW-hr) 
between the family emission level (FEL) which is determined with the 
deterioration factor applied and the emission standard level (STD). The 
HC emission standard level for outboard and personal watercraft engines 
is calculated using the model year specific emission standard function. 
The function utilizes the rated power for the engine family to 
determine the emission standard level, in conjunction with the HC model 
year factor given in Table 1. The NOX emission standard level for 
outboard and personal watercraft engines is proposed to be 6.0 g/kW-hr. 
For sterndrive and inboard spark-ignition engines, the emission 
standard levels (STD) are proposed to be 8.0 g/kW-hr for HC and 6.5 g/
kW-hr for NOX. The emission rate difference between the family 
emission level (FEL) (with deterioration factor applied) and the 
emission standard level (STD) is used to calculate the lifetime 
emission credit. To calculate lifetime emission credits, the following 
variables are necessary.
     FEL: Engine family emission limit
     STD: The model year specific emission standard level
     power: Power rating of the engine family
     load factor: Fraction of rated engine power utilized in-
use, assumed to be 0.207 for all gasoline spark-ignition engines
     max useful life: Maximum useful life specific to the power 
rating and the application
     hours per year: Usage rate specific to the application
     sales: Consumption of engines in the U.S. for the engine 
family
     0.03: Discount rate for all emissions
     S(t): Cumulative fraction survived at time t
    The following equation is used to calculate credit generation and 
usage for a given engine family.

TP09NO94.003

Credits are generated when the FEL is lower than the emission standard 
and are represented by positive numbers, while shortfalls (or credit 
usage) occurs when the FEL is above the emission standard and are 
represented by negative numbers.
    EPA requests comment on the individual elements used in the 
equation above, specifically the following: estimates of maximum useful 
life according to power rating, survival probabilities, discount 
rate,\4\ hours per year, and identification of U.S. sales. Refer to the 
benefits chapter of the Regulatory Impact Analysis for further 
information on useful life, survival probability, discount rate, and 
hours per year.
---------------------------------------------------------------------------

    \4\Discount rate, as used here, refers to an appropriate rate 
for calculating present value of the useful life stream of emission 
credits generated. A discount rate of 3% is proposed because these 
are consumption goods.
---------------------------------------------------------------------------

    Manufacturers choose the FEL for each engine family based on 
testing and their estimate of deterioration. Each engine family must 
certify to the chosen FEL, and the FEL would be treated as the 
enforceable emission limit for certification, manufacturer assembly 
line testing, Selective Enforcement Auditing, and in-use testing.
    Compliance with the emission standards will be determined by 
summing the positive and negative emission credits for all the 
manufacturer's engine families. For each model year, the manufacturer, 
at the models year's end, must have as many or more positive credits as 
negative for the manufacturer's product line. In other words, each 
manufacturer must maintain a positive or zero balance in their emission 
account with EPA.
    Manufacturers would prepare an overall compliance strategy and 
submit an initial credit generation or usage report along with the 
application for certification for each engine family. To demonstrate 
compliance with the standards, the manufacturer would have to submit an 
end of the year report within 90 days of the end of the model year. The 
manufacturer would be allowed an additional 180 days after the end of 
the year reports are due to submit a final report for credit counting 
and calculation revisions. The end of the year report will contain the 
manufacturer's data on U.S. engine family sales to the point of first 
retail sale. EPA would adjust the manufacturer account balances to 
reflect the sales numbers contained in the final report. Certificates 
awarded to a manufacturer for its engine families could be rendered 
void ab initio if the manufacturer does not achieve an emission account 
balance greater than or equal to zero at the end of this time period.
    When credits are generated and traded in the same model year, EPA 
proposes to make both buyers and sellers of credits potentially liable 
for accurate credit estimation, except in cases of fraud. This policy 
would provide additional incentives for buyers and sellers to take the 
steps necessary to ensure the integrity of the transactions and to 
place contractual liability on the appropriate party. EPA requests 
comment as to whether it should allow trading of emission credits 
during the model year in which they are generated. If credits are 
traded only after the end of year reports are finalized, the risk that 
the seller of credits would not have the full amount contracted in the 
account would be virtually eliminated.
    In order to maintain the integrity of the balance of emissions for 
the new engine fleet, manufacturers must use accurate sales data when 
calculating credits which represent United States consumption of 
engines. Since engines sold to other countries, including Canada and 
Mexico, are excluded from this program, manufacturers are required to 
obtain data pertaining to engine sales to calculate accurate credit 
generation and usage. However, to ease the burden on manufacturers of 
tracking engines to the end user, manufacturers would only need to 
track engines to the location where the completed vessel or outboard 
engine is purchased, otherwise known as a point of first retail sale. 
In cases where the end user purchases the completed vessel directly 
from the manufacturer, the end user is the point of first retail sale. 
Alternatively, a boat dealer may be the point of first retail sale. 
Engine sales data pertaining to engines that have already been shipped 
to a point of first retail sale is also known as ``first delivery'' 
information.
7. Effective Dates for Certification
    For gasoline spark-ignition outboard and personal watercraft 
engines, EPA proposes to phase-in average HC emission standards 
beginning with model year 1998. The HC emission standards would be 
phased-in through model year 2006, becoming more stringent each year. 
The definition of model year is discussed in the following section. The 
HC emission standards for gasoline spark-ignition sterndrive/inboard 
engines, along with the NOX and CO emission standards for all 
gasoline spark-ignition marine engines are proposed to be effective 
with the 1998 model year, with no phase-in. However, EPA requests 
comments on whether or not the emission standards for gasoline spark-
ignition sterndrive/inboard engines should include a phase-in period, 
and if so, what length and why.
    In the NPRM for the Federal Implementation Plan for California (59 
FR 23264), EPA proposed to allow personal watercraft manufacturers one 
additional year of leadtime. However, the standards proposed in today's 
notice were developed by analyzing emissions from outboard and personal 
watercraft as one category with a consistent phase-in period. 
Therefore, EPA is not proposing an additional year of leadtime in 
today's proposal for outboard/personal watercraft engines, but EPA is 
requesting comment on the necessity of an additional year of leadtime 
given the standards structure which contains provision for averaging 
and trading of emission credits with outboard manufacturers.
    EPA proposes that diesel compression-ignition engines less than 560 
kW meet the emissions standards beginning January 1, 1999, and those 
560 kW and above meet the standards beginning January 1, 2000.
8. Model Year Designation
    Section 202(b)(3)(A)(i) of the Clean Air Act defines the term 
``model year'' with reference to any specific calendar year as ``the 
manufacturer's annual production period (as determined by the 
Administrator) which includes January 1 of the calendar year. If the 
manufacturer has no annual production period, the term `model year' 
means the calendar year.''
    In connection with the certification of on-highway engines and 
vehicles, EPA interprets the Act to define a model year as a period 
determined on an engine family by engine family basis including only 
one January 1.\5\ EPA believes this meaning of model year is also 
appropriate for marine engines, because it allows manufacturers to 
retain the flexibility to introduce models at different times of the 
year. EPA includes this more detailed model year definition in the 
proposed regulations [Sec. 91.2] and requests comments on the 
appropriateness of this definition for marine engines. EPA requests 
comment on the relationship between the proposed model year definition 
and inventory issues, particularly left over inventory of engines at 
the end of the model year in the engine manufacturers possession. On-
highway guidance documents on related stockpiling issues are contained 
in the docket for the readers reference.
---------------------------------------------------------------------------

    \5\Bertelsen, Bruce I. Memo to Eric O. Stork, March 3, 1978.
---------------------------------------------------------------------------

9. Engine Family Categorization
    For the purpose of demonstrating emission compliance, manufacturers 
of on-highway motor vehicles and/or large nonroad compression-ignition 
engines currently divide their product line into groups of engines 
called engine families. Engine families are composed of engines which 
have similar emission characteristics over their useful lives. EPA is 
proposing that gasoline spark-ignition marine and diesel compression-
ignition marine engine families be determined using the same criteria 
(type of fuel, method of air aspiration, number of cylinders, and so 
forth) currently used to define on-highway engine families. EPA 
includes a more detailed description of engine family determinants in 
the proposed regulations [Sec. 91.116-98], and requests comments on the 
appropriateness of these determinants for marine engines.
    For the same reasons, as explained in the nonroad large 
compression-ignition engine rule (59 FR 31306), a compression-ignition 
marine engine manufacturer could choose not to use the criteria to 
separate engines by number of cylinders and cylinder arrangement unless 
a manufacturer employs an aftertreatment device on its compression-
ignition marine engines (see 40 CFR 89.116-96). This is necessary 
because the performance of an aftertreatment device can vary with the 
space velocity through the device. The space velocity will vary as the 
number of cylinders and cylinder arrangement vary. However, 
manufacturers have indicated aftertreatment devices will not be needed 
to meet the requirements in this proposal for compression-ignition 
marine engines.
10. Certification Testing
    To obtain a certificate of conformity, all of the configurations 
within an engine family would be expected to meet each emission 
standard or family emission limit. Since it would be unreasonable to 
require that manufacturers emission test all engine configurations 
within an engine family to demonstrate compliance with the standards, 
EPA is proposing that one test engine from each engine family be 
selected and tested by the manufacturer. Choice of that test engine is 
discussed below.
    i. Gasoline Spark-Ignition Engines. For gasoline spark-ignition 
marine engines, the engine selected for testing should be from the 
engine configuration the manufacturer expected to be the worst case 
hydrocarbon emitter. Since it may be difficult to determine which 
configuration is the worst case hydrocarbon emitter, EPA is proposing 
to use the criteria of brake-specific fuel consumption (BSFC) to 
determine which engine configuration within an engine family will be 
selected as the certification test engine. EPA believes that an engine 
configuration with high BSFC will generally emit higher levels of 
hydrocarbons and carbon monoxide than other configurations in the same 
engine family which exhibit lower BSFC. EPA solicits comments on the 
appropriateness of BSFC as the criterion to be used for selecting the 
certification test engine for a given engine family.
    Although not proposed in today's notice, EPA also considered 
another alternative which would require the manufacturer to select and 
test the engine configuration expected to exhibit the highest 
hydrocarbon emission level using their own sound technical 
justification. EPA could verify the test results by confirmatory 
testing of this engine. EPA would also have the option to test or 
require testing of any available test engine representing other 
configurations in the engine family and review a manufacturer's 
technical justification to verify worst case selection. EPA solicits 
comment on the appropriateness of this approach for selecting the worst 
case hydrocarbon emitter.
    ii. Diesel Compression-Ignition Engines. For diesel compression-
ignition marine engines, EPA is proposing that the manufacturer must 
select one engine from each engine family which, at maximum power, has 
the greatest amount of fuel injected per injection stroke. This is the 
same criteria currently used for test engine selection for nonroad 
large compression-ignition engines used in land-based applications. EPA 
solicits comment on the appropriateness of this method of test engine 
selection for marine engines.
    Before emission testing is carried out on marine compression-
ignition engines, the manufacturer would perform service accumulation 
on each emission test engine over the dynamometer cycle of its choice 
based on good engineering practice (for example, a cycle representative 
of typical ``break-in'' operation of a new production engine in actual 
use). For each engine family, the manufacturer would determine the 
number of hours required to stabilize the emissions of the test engine. 
However, the number of hours which the manufacturer chooses may not be 
more than 125 hours. This limitation is necessary because on-highway 
experience has demonstrated that NOX will decrease with hourly use 
for some engine family designs. The manufacturer should maintain, and 
provide in its application to the Administrator, a record of the 
rationale used in making the dynamometer cycle selection and the 
rationale used in making the service accumulation hours determination 
for emission testing.
    iii. Both Gasoline Spark-Ignition and Diesel Compression-Ignition 
Engines. EPA proposes to allow manufacturers the flexibility to submit 
emission test data used to certify engine families in previous years in 
lieu of actual testing for current model year certification. This can 
be done to certify engine families similar to the previously certified 
engine family, provided these data show that the test engine would 
comply with the applicable regulations. This allows manufacturers the 
ability to ``carry across'' test data between similar engine families 
or to ``carry over'' test data from the same engine family from one 
year to another.
    As in the case for on-highway vehicles and engines, the proposed 
regulations make it illegal for any person to use a device on a nonroad 
engine which senses operation outside normal emission test conditions 
and reduces the ability of the emission control system to control the 
engine's emissions. Such ``defeat'' devices would render the proposed 
test procedures inadequate to predict in-use emissions. To guard 
against use of these devices, EPA would reserve the right to audit test 
a certification test engine, or require the manufacturer to perform 
such testing over a modified test procedure if EPA suspects a defeat 
device is being used by an engine manufacturer on a particular engine.
    Engines equipped with adjustable operating parameters would have to 
comply with all the regulations with the parameters adjusted to any 
setting in the full range of adjustment. For example, a maximum fuel 
system pressure screw that is readily adjustable with a screwdriver or 
wrench could be adjusted by EPA to any setting within its adjustable 
range for emission testing. This ensures that changes to the adjustable 
operating parameters that can readily occur in-use will not cause the 
engine to fail to comply with these regulations.
11. Engine Family Certification
    Upon approval by the Administrator, an emission compliance 
certificate would be issued by EPA for each engine family. The engine 
manufacturer must submit an application to EPA requesting a certificate 
of conformity for each engine family every model year, as required by 
the CAA.\6\ Applications must be submitted every model year even when 
the engine family does not change from the previous certificate, 
although representative test data could be reused in the succeeding 
year's application. However, EPA is proposing the option of a letter 
notifying EPA of carryover and the next year's projected sales in lieu 
of the full certification application.
---------------------------------------------------------------------------

    \6\Section 206 of the Clean Air Act requires certification on a 
yearly basis. This has been interpreted to mean certification for 
each model year, as defined in section 202(b)(3)(A)(i) of the CAA 
and in Sec. 91.1 of the proposed regulations.
---------------------------------------------------------------------------

    The application would give EPA sufficient information regarding 
test results, deterioration factors, emission control system 
description, and other information necessary for determining compliance 
with the emission standards. The application would allow EPA to 
determine compliance with the applicable emission standards in a timely 
manner. It is important that the engine manufacturer succinctly, fully, 
and accurately submit all pertinent information to EPA and maintain 
internal records which can be easily accessed if such access is 
determined necessary by EPA.
    If changes to an engine family configuration occurred that caused 
the changed version to be the engine family's worst case emitter, then 
emission testing of the changed version would be required. 
Manufacturers would be expected to conduct emission testing if proposed 
changes could cause an increase in emissions. Additionally, the 
Administrator could require a manufacturer to conduct testing to 
demonstrate compliance.
12. Durability Demonstration Requirements
    Marine engines for which a certificate of conformity has been 
granted are expected to meet the emission standards not only when the 
engines are new, but also throughout their useful lives. Therefore, as 
described in the following, EPA is proposing emission control 
durability requirements as part of the certification process.
    i. Gasoline Spark-ignition Engines. For gasoline spark-ignition 
engines used for on-highway applications, EPA's experience indicates 
that emission control efficiency generally decreases with the 
accumulated use of the engine. However, it is believed that much of 
this deterioration results from deterioration of the catalysts that are 
used on these vehicles. EPA does not have sufficient data for 
determining if the types of marine emission control technologies 
expected to be used to meet the requirements of this rule (such as, 
direct injection) will be durable during the useful life of the 
engines. Since EPA views this rulemaking as a long term strategy to 
reduce emissions from gasoline spark-ignition marine engines, and new 
technologies with unknown emission control durability will be used by 
manufacturers to meet the standards, a demonstration of emission 
control durability is necessary during the certification process.
    For gasoline spark-ignition marine engines, EPA is proposing a 
durability demonstration program similar to that used for gasoline 
spark-ignition on-highway heavy-duty engines. This program includes a 
requirement that for each engine family, the manufacturer shall 
determine emission deterioration factors for each pollutant based on 
testing of engines, subsystems, or components and/or sound technical 
judgment. The deterioration factors would be submitted to EPA and 
applied to the new engine emission results (as proposed in 91.105 of 
the regulations) to determine compliance with the emission standards. 
The deterioration factors would be required to simulate deterioration 
for 350 hours of use for all gasoline spark-ignition marine engines. 
These factors would also be expected to simulate deterioration over a 
period of 10 years for all gasoline spark-ignition engines except 
personal watercraft, which would be expected to simulate 5 years. As a 
check of the adequacy of the methodologies used to determine the 
deterioration factors, EPA will use data from the recall testing 
program. See section 19 regarding in-use testing and recall for further 
discussion of these program elements.
    EPA has considered an additional feature, although not proposed in 
today's notice, which would require the engine manufacturer to procure 
and test a sample of in-use engines covered by a certificate and submit 
the data to EPA as a condition of certification. The in-use data would 
be used to assess the adequacy of the methodology used by the 
manufacturers to determine deterioration factors.
    Under this feature, a manufacturer's failure to fully execute the 
in-use tests will be considered a failure to satisfy the conditions 
under which the certificate is issued. An engine will be considered to 
be covered by the certificate only if the manufacturer fulfills the 
conditions upon which the certificate was issued. Thus, failure to 
satisfy the conditions of the certificate for this reason may subject a 
manufacturer to similar penalties as any other type of violation of the 
certification conditions. Although not proposed in today's notice, EPA 
requests comments on requiring an in-use testing program as a condition 
of certification as well as the appropriateness of such a program for 
the stated purposes.
    ii. Diesel Compression-ignition Engines. EPA is proposing no 
requirements for the submission of durability demonstration test data 
or use of a deterioration factor when certifying engine families that 
do not employ aftertreatment. For on-highway vehicle certification, EPA 
has found that NOx emissions from compression-ignition engines 
experience very little, if any, increase over time. Therefore, EPA 
believes that requiring durability demonstration test data and 
deterioration factor requirements during certification would impose an 
unnecessary cost burden on manufacturers.
    Should a manufacturer choose to use exhaust aftertreatment to meet 
the emission standards for any engine family, deterioration factors 
would have to be determined and applied in the same manner as is 
currently done for on-highway compression-ignition engine durability 
demonstration. However, no durability demonstration or deterioration 
factors are required by this rule when an engine that was certified 
without aftertreatment is later retrofitted with an aftertreatment 
device or package. These retrofits are not designed to interfere with 
the original design and, therefore, should not result in worse 
emissions than the original design. Since the engine has already been 
demonstrated to be in compliance without the aftertreatment device, 
demonstration of the durability of a retrofitted aftertreatment device 
is not necessary.
13. Certification Test Procedure for HC, NOX, CO, and PM
    The proposed marine engine certification test procedure for 
gasoline spark-ignition engines will be based on the steady state test 
cycle developed by the International Council of Marine Industry 
Associations (ICOMIA) as described in Society of Automotive Engineers 
(SAE) Paper 901597. This cycle is named E4 by the International 
Standards Organization (ISO) and is contained in test procedure ISO 
8178-4. EPA requests comments on the appropriateness of the E4 cycle 
for testing gasoline spark-ignition marine engines.
    The proposed test cycle for diesel compression-ignition marine 
propulsion engines is the ISO E5 steady state test procedure developed 
from operational data supplied by Volvo and the Norwegian government. 
However, as more fully described in Section V, EPA requests comments on 
the appropriateness of the ISO E3 cycle for compression-ignition marine 
engines. Although the E5 cycle is proposed in today's notice, EPA is 
also seriously considering the E3 cycle, and the final rule may require 
the E5 or the E3 depending on the analysis of comments received on this 
issue in response to the proposed rule.
    EPA is proposing the ISO C1 cycle for compression-ignition marine 
auxiliary engines. EPA believes that this cycle is more representative 
of the type of operation these engines experience in use than the E5 or 
E3 cycles. However, as described in more detail in Section V, EPA 
requests comment on the appropriateness of the ISO D2 cycle for both 
compression-ignition marine auxiliary engines and compression-ignition 
generator sets used for nonroad land-based applications.
    EPA believes that most marine engine operation is well represented 
by steady state test cycles. However, preliminary data shows that 
certain emissions, such as hydrocarbons from inboard/sterndrive 
(gasoline spark-ignition) marine engines, are highly sensitive to 
transient operation. EPA has not yet gathered enough data to determine 
whether a transient test procedure would be appropriate for marine 
engines. For this reason, the marine steady state test cycles are being 
proposed for this rulemaking. EPA requests comments on all the test 
cycles proposed in today's notice as well as other test cycles that may 
be appropriate with a discussion of why they may be more appropriate 
than those proposed.
    EPA is proposing to allow the use of either the raw gas (raw) or 
constant volume sampling (CVS or dilute) method of emission sampling 
for exhaust gas emission measurement from gasoline spark-ignition 
marine engines.
    EPA's past experience with automotive engines has been to perform 
emission testing using the CVS method. For engine exhaust gas testing 
in general, EPA believes the CVS method to be more accurate and 
repeatable. EPA recognizes the difficulties of dilute sampling for 
outboard marine engines and recognizes that all marine engine 
manufacturers testing laboratories are currently using raw sampling to 
measure emissions from outboards. These difficulties include possible 
compromising of the exhaust tuning and the unknown effects on emission 
results of the cooling water mixing with the exhaust. Therefore, this 
proposal will allow raw sampling for these engines. Although, EPA is 
unaware of any dilute testing having been performed on an outboard 
marine engine, dilute testing of outboard exhaust is still being 
considered as an option. One suggestion is that the power-head could be 
removed from the gearbox for emission testing. If the appropriate 
exhaust backpressure were known and applied to each test mode, then 
dilute sampling would be feasible. EPA requests comments on the 
appropriateness of power-head testing for outboard marine engines.
    Testing at EPA's National Vehicle and Fuel Emissions Laboratory 
(NVFEL) has shown that inboard marine engines can be tested using 
dilute sampling by blocking off (and re-routing) the cooling water in 
the exhaust manifold and extracting the total exhaust. However, EPA 
recognizes that all of the marine data used in generating the baseline 
emissions inventory for sterndrive and inboard engines, as well as 
outboard and personnel watercraft engines, is based on emission 
measurements taken using the raw gas sampling method. EPA believes it 
would be inappropriate to require marine engines to be sampled using 
the CVS method at this time without additional data which indicates 
marine engines can not be sampled accurately using the raw gas method.
    EPA requests comments on the appropriateness of dilute or raw 
sampling for emission testing of marine engines.
14. Certification Test Procedure for Smoke from Diesel Compression-
ignition Marine Engines
    EPA is proposing that compression-ignition marine engines comply 
with the proposed smoke standards by using a smoke test procedure 
similar to the current on-highway heavy-duty engine smoke test 
procedure described in 40 CFR part 86, subpart I. Though, specifically 
designed for on-highway truck engines, at this time is the most 
applicable test.
    The subpart I smoke test procedure cycle consists of an idle mode 
followed by an acceleration and deceleration, followed by another 
acceleration and an engine loading mode down to peak torque. This 
simulates a truck starting from rest, performing a gear shift, and then 
pulling a heavy load up a reasonably steep grade. EPA does not consider 
this ``lugging'' mode to be representative of in-use marine operation. 
Therefore, the smoke test procedure will be modified so that the 
lugging mode will not be applied to marine engines. In this aspect, the 
smoke test procedures are modified in this regulatory proposal.
    EPA believes that these modified subpart I procedures are 
reasonable for compression-ignition marine engine smoke control within 
the proposed timeline. While marine applications experience some 
differences in operation compared to on-highway applications, EPA has 
determined that the same technologies will be used to control smoke in 
nonroad applications as are used in on-highway applications. EPA has 
determined that the modified subpart I procedures will provide the 
smoke reduction desired from certified marine engines. Therefore, the 
differences in marine and on-highway operation with respect to smoke 
generation are not large enough to hold up this proposal for the 
significant time period required to make changes.
    EPA proposes this procedure for marine engines because it brings 
these engines under the same regulatory framework that currently 
governs nonroad compression-ignition engines at or above 37 kW. EPA 
requests comments on the appropriateness of applying this procedure to 
marine engines. Particularly, EPA requests comment on the need for a 
smoke test procedure for compression-ignition marine auxiliary engines. 
EPA may consider excluding such engines from the smoke requirements 
pending the response to today's proposal.
15. Certification Test Fuel Requirements
    EPA is proposing test fuel properties that will ensure that fuel 
used for emission testing is representative of commercially available 
marine fuel. Because most of the fuel used in gasoline spark-ignition 
marine engines is the same fuel sold for automotive applications, the 
certification test fuel for gasoline spark-ignition marine engines will 
be similar to the baseline gasoline fuel defined in section 211 of the 
1990 Clean Air Act Amendments. For two-stroke gasoline spark-ignition 
engines, when required, two-stroke oil will be mixed into the 
certification fuel according to the ratio recommended by the engine 
manufacturer. The oil grade for testing two-stroke engines will be TCW3 
provided that the manufacturer recommend this oil in the owner's 
manual, otherwise, TCW2 oil shall be used. For compression-ignition 
engines, the grade of diesel fuel commercially designated as ``Type 2-
D'' would be used, as is the regulatory requirement for other nonroad 
compression-ignition engines.
    The manufacturer would be required to ensure that the properties of 
the test fuel used for all certification and compliance testing be 
within the ranges specified in Sec. 91.308 of the proposed regulations. 
A manufacturer could use any commercially available marine fuel that 
stays within the proposed regulatory specifications for its 
certification tests. However, the engine family would be required to be 
able to comply with the proposed emission standards when any other 
commercially available marine fuel within these specifications is used. 
Therefore, EPA would reserve the right to choose any commercially 
available marine fuel within the regulated specifications for 
certification, manufacturer assembly line, SEA, or in-use compliance 
testing.
16. Labeling Requirements
    EPA is proposing that manufacturers label each engine and that the 
label meet the same requirements with respect to durability, 
visibility, and information as required in the current on-highway 
heavy-duty engine and the nonroad large compression-ignition engine 
certification label requirements.\7\ In addition, EPA is proposing that 
each engine must have a unique engine identification number which may 
be part of the engine label or engraved on the engine. Such 
identification is necessary for tracking engines for the manufacturer 
assembly line testing, the Selective Enforcement Auditing, import, and 
recall programs. EPA requests comment on this proposal as well as on 
current engine identification practices within the industry.
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    \7\See 34 FR 12633 (August 2, 1969) where labeling requirements 
for new motor vehicles and new motor vehicle engines were originally 
proposed.
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    EPA is also proposing a voluntary labeling program for 
manufacturers of gasoline spark-ignition engines who produce engines 
that meet or exceed the final model year 2006 phase-in period HC 
emission standards. A label such as this could assist states and local 
areas in the development of programs to encourage the turn-over of 
older, higher polluting engines, since this label would identify the 
cleanest engines to replace older engines. This label would contain the 
words ``Green Engine'' and would state that the engines emissions are 
below the federal standard for HC planned for model year 2006. EPA 
requests comment on how such a voluntary labeling program could be 
implemented and on the content of the label.
17. Manufacturer Self-Audit Program
    EPA is proposing that manufacturers of spark-ignition marine 
engines and compression-ignition marine engines perform self-audits of 
new marine engines. The self-audit program would be an emission 
compliance program for new production marine engines in which 
manufacturers would be required to test engines as they leave the 
assembly line, without EPA oversight. The objective of the self-audit 
program is that manufacturers and EPA could determine, with reasonable 
statistical certainty, whether or not new engines are in compliance 
with the regulations.
    The manufacturer self-audit program would be the main assembly-line 
emission test program for marine engines. The Selective Enforcement 
Auditing (SEA)\8\ program will serve a spot-check function and enable 
EPA to evaluate testing practices used by the manufacturer and follow-
up on concerns EPA may have with regard to a particular engine family.
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    \8\SEA is a program in which EPA selects engines from one engine 
family configuration, directly from the assembly line, for emissions 
testing.
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    EPA believes that a post-production compliance program is necessary 
to verify that production engines comply with applicable regulations. A 
reliable new engine testing program is particularly vital in a 
regulatory situation in which manufacturers participate in an 
averaging, banking, and trading program and receive usable or salable 
credits for declaring FELs below standard. A self-audit program would 
reduce the need for an SEA program by providing a means to test a 
portion of production engines from each manufacturer as they came off 
the assembly line. All self-audit emission test results, statistical 
calculations to determine compliance levels, and quarterly production 
figures would be reported electronically to EPA. EPA would review self-
audit data and procedures used in acquiring the data to assess the 
validity and representativeness of each manufacturer's self-audit 
program.
    One new engine testing scheme which would be acceptable to EPA for 
any manufacturer is CARB's current Quality Audit Program for new 
utility and lawn and garden engines. This program assures that engines 
from each engine family will be tested periodically and their 
compliance evaluated on a quarterly basis. This program also provides 
for greatly reduced testing when sufficient engines are within 
standards to pass a statistical evaluation or when the production 
volume of an engine family is below a prescribed minimum level.
    EPA recognizes the need to develop a testing scheme or several 
schemes to provide assurance that new engines are meeting standards 
while minimizing burden on the manufacturers. Marine engine 
manufacturers have indicated that unique characteristics of the 
industry may warrant testing schemes that reflect this diversity. EPA 
intends to develop manufacturer self-auditing programs which take into 
account the needs of this industry. This testing scheme or set of 
schemes could replace CARB's Quality Audit Program which is outlined in 
subpart F: ``Manufacturer Self-Auditing'' of the draft regulatory 
language. EPA believes that alternative plans may be developed that 
better account for the needs of this industry.
    EPA would prefer to implement one or a few testing schemes which 
accommodate production differences between manufacturers or across 
engine families where the validity of the scheme(s) is established 
prior to promulgation. This will provide greater assurance to the 
public that this rule will result in new engines that meet standards 
and provide more consistency and equity between similarly situated 
manufacturers.
    EPA recognizes that unique circumstances surrounding a low 
production engine family or a very specialized engine family could 
necessitate an individual plan. Consequently, we are providing an 
option in this proposal for such a plan in special cases.
    In any manufacturer self-audit program, if an engine family is 
found to be in noncompliance or the engine manufacturer's submittal 
revealed that the assembly-line self-audit tests were not performed in 
accordance with the applicable testing scheme, the Administrator may 
suspend or revoke the manufacturer's certificate of conformity in whole 
or in part for that engine family. The manufacturer must then address 
the engines produced prior to the suspension or revocation of the 
certificate of conformity. EPA will notify manufacturers of the 
suspension or revocation of the certificate of conformity within 10 
days of the nonconformity determination. To have the certificate 
reinstated subsequent to a suspension, or reissued subsequent to a 
revocation, the manufacturer would be required to demonstrate through 
its self-audit program, that improvements, modifications, or 
replacement had brought the engine or family into compliance. The 
proposed regulations include hearing provisions which allow the 
manufacturer to challenge EPA's suspension or revocation decision based 
on application of the statistical criteria or the manner in which tests 
were conducted.
    EPA does not intend to routinely test, under the SEA program, the 
engines of a manufacturer that has a comprehensive and effective self-
audit program. The Agency requests comment on possible designs of 
assembly-line testing programs that may reduce the testing burden on 
manufacturers, be more effective and less costly.
18. Selective Enforcement Auditing Program
    EPA is proposing to implement a Selective Enforcement Auditing 
(SEA) program of spark-ignition and compression-ignition marine engines 
as authorized by section 213 of the Clean Air Act. The marine engine 
SEA program would be a secondary emission compliance program for new 
production marine engines in which manufacturers would be required to 
test engines as they leave the assembly line, with EPA oversight.
    The SEA program would typically be employed when EPA determines 
that the results of the manufacturer self-audit program reveal 
noncompliance or when EPA determines that other evidence of suspected 
noncompliance by the manufacturer exists. In addition, SEAs will be 
utilized as a spot-check to enable EPA to evaluate testing practices 
used by the manufacturer, follow-up on concerns reported to EPA, and 
address any configurations not covered by manufacturers in their self-
audit testing program. The SEA program strives to encourage 
manufacturers to perform proper self-auditing and promptly remedy an 
emission noncompliance that it may discover.
    Manufacturers would be notified of an SEA by means of a test order. 
This test order would specify the engine family to be audited. EPA 
might also specify one or more engine configurations from a family to 
be audited. To minimize the burden on manufacturers, EPA would consider 
requests by manufacturers to exclude particular engines or engine 
configurations from a test sample. Justification for such requests 
could be a manufacturer's desire to avoid a delay in shipment of urgent 
customer-ordered engines or to minimize test cell set-up time by 
selecting engines of similar physical configurations.
    Test orders would include information relevant to the SEA. The test 
order would indicate any specific procedures, such as the time to begin 
selecting engines, to be followed during the course of the audit. 
Additionally, the test order would authorize EPA enforcement officers, 
upon presentation of enforcement credentials, to inspect engine 
production, test facilities, storage facilities, and records necessary 
to demonstrate compliance with marine regulations.
    Engines for SEA would typically be selected from a point of final 
engine assembly or from a storage or shipping facility. Most often, 
this selection point would be at the end of the engine assembly line. 
The location of these selections could be designated by the 
manufacturer to minimize disruption and shipping costs.
    EPA proposes to include ports of entry or storage locations in the 
United States as locations for EPA selection of foreign-produced marine 
engines for SEA emission testing at laboratories in the United States. 
In this rule, EPA is proposing that SEAs will not likely be conducted 
unless a manufacturer's self-audit program indicates non-conformity or 
unless EPA has reason to believe that test procedures are not in 
accordance with the applicable testing scheme. If EPA initiates an SEA 
of a foreign manufacturer, these audits will be most easily and 
expeditiously conducted in the U.S. EPA anticipates that engines would 
be selected at a port of entry and the foreign manufacturer would then 
conduct emission testing at its test facility in the U.S. or be 
responsible for contracting for testing at a U.S. facility. EPA would 
allow the manufacturer reasonable time to locate a contract testing 
facility in the U.S. and to schedule such testing. EPA requests 
comments on the port selection aspect of the SEA program.
    Engines for SEA could not receive any additional inspections or 
quality control other than that of normal production engines and pre-
test safety checks. Engines would be tested in the same order as they 
were selected.
    Prior to testing SEA engines, manufacturers could operate engines 
to break-in engine components. This break-in or service accumulation of 
an SEA engine family would follow the same procedures as certification 
and could be up to the same number of break-in hours accumulated for 
that family's emission data engine during certification.
    Audit engines would be tested using the same test cycle as was used 
in certification; however, deviations allowed in certification from the 
full test procedures would not necessarily be permitted in SEAs.
    EPA is proposing that marine engines will be selected for SEA tests 
at a rate of at least four engines per day, unless production is less 
than four engines per day. To minimize delays in shipment of engines to 
customers, manufacturers could test the first engines selected for an 
audit while additional engines were produced.
    The total number of engines tested in an SEA would be dictated by 
the number of engines required to reach the statistically acceptable 
pass/fail decision within the sampling plan applied. EPA is proposing a 
sequential sampling plan for marine engine SEAs. These sampling plans 
have been designed to meet a 40 percent Acceptable Quality Level (AQL) 
and to ensure low statistical risks of incorrect pass/fail 
determinations. The maximum theoretical percentage of failing engines 
for passing an SEA is 40 percent. EPA is proposing a 40 percent AQL for 
the marine engine SEA program. EPA has used this AQL since the 1970s 
for the on-highway program, and has also promulgated it in the large 
compression-ignition nonroad engine rule. EPA currently has no reason 
to propose a different AQL for this program. EPA is proposing that the 
marine engine SEA program use the same sampling plans used for the on-
highway heavy-duty engine and nonroad large compression-ignition engine 
SEA programs.
    EPA proposes that engine manufacturers with projected United States 
annual sales of 7,500 or greater must complete a minimum of two engine 
tests per day during an SEA. Engine manufacturers with projected United 
States annual sales of less than 7,500 would be required to complete a 
minimum of one engine test per day during an SEA. A valid emission test 
or a voided test would each count as one test toward meeting the 
requirement. EPA requests comments on this aspect of the proposal.
    A test engine's pass or fail determination would be made by 
comparing final test results to the applicable federal emission 
standard. Within five working days of the conclusion of an audit, 
manufacturers would be required to submit a report to EPA summarizing 
engine test results, test procedures, and audit events such as the 
date, time, and location of each test, repairs to engines, and the 
reason for the repair.
    Failure of an SEA could result in suspension or revocation of the 
certificate of conformity for that family. To have the certificate 
reinstated subsequent to a suspension, or reissued subsequent to a 
revocation, the manufacturer would be required to demonstrate, by 
showing passing data through a re-audit, that improvements, 
modifications, or replacement had brought the family into compliance. 
The proposed regulations include hearing provisions which allow the 
manufacturer to challenge EPA's suspension or revocation decision based 
on application of the sampling plans or the manner in which tests were 
conducted.
    To maintain uniformity among all nonroad SEA regulations, 
procedures for marine engine SEA will parallel those in the large 
nonroad compression-ignition engine rule (59 FR June 17, 1994), with 
appropriate modifications.
19. In-Use Enforcement and Recall
    EPA believes that a critical element in the success of its marine 
program is ensuring that manufacturers build engines that continue to 
meet emission standards beyond certification and production stages. 
Section 213(d) of the CAA specifically subjects nonroad engines to the 
recall provision of section 207(c).\9\ EPA has authority to subject 
manufacturers to in-use testing (conducted by the Agency or by the 
manufacturer under section 208 of the Act) and recall for the full 
useful life of an engine. EPA's authority to recall engines which do 
not comply with emission standards in-use provides an important 
incentive to manufacturers to design and build durable engines and 
vehicles. The in-use enforcement and recall programs for spark-ignition 
and compression-ignition marine engines are described in the remainder 
of this section.
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    \9\Section 207(c) of the Act authorizes EPA to enforce 
compliance by vehicles and engines to applicable standards in actual 
use. Manufacturers are subject to recall ``[I]f the Administrator 
determines that a substantial number of any class or category of 
vehicles or engines, although properly maintained and used, do not 
conform to the regulations * * * when in actual use.* * *.''.
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    The current in-use liability period for on-highway heavy-duty 
engines holds an engine manufacturer subject to recall testing for 
approximately 75 percent of an engine's full useful life.\10\ Spark-
ignition marine engines covered by this proposal have an average useful 
life period of between 14 and 27 years depending on the engine power. 
This period is substantially longer than other engines. EPA is 
proposing an in-use testing and recall program for spark-ignition 
marine engines under which a manufacturer would test marine engines for 
the purpose of determining recall liability for a period of 10 years or 
350 hours of operation (whichever occurs first), except personal 
watercraft, which would be 5 years or 350 hours of operation (whichever 
occurs first). While this period is somewhat longer than the in-use 
testing period for on-highway heavy-duty engines and large compression-
ignition nonroad engines, EPA believes it is reasonable due to the long 
useful lives and the difficulties involved in finding engines for 
testing or repair beyond this period. For compression-ignition marine 
engines, EPA proposes the same recall liability period as for land-
based large compression-ignition nonroad engines (see 59 FR 31306). EPA 
requests comment on this recall testing liability proposals.
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    \10\48 FR 52170, 52173, November 16, 1983.
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Manufacturer in-use testing
    EPA is proposing pursuant to section 208 of the CAA an in-use 
compliance (recall) program based primarily on testing conducted by the 
manufacturers of spark-ignition and compression-ignition marine 
engines. Although the program will have many similarities to EPA's 
current motor vehicle program, it will contain elements designed to 
minimize the burden on the industry while maintaining a strong 
incentive to build engines that meet applicable standards when in 
actual use.
    In addition, EPA proposes that in-use compliance with emission 
standards would be determined based on test results using the same 
basic test procedure that is used for certification purposes with an 
opportunity for alternative test schemes to be approved in advance by 
the Administrator. Manufacturers of spark-ignition marine engines would 
be subject to recall testing up to 10 years or 350 hours of operation 
whichever occurs first, except in the case of personal watercraft, 
which would be subject to testing for 5 years or 350 hours of 
operation. Manufacturers of compression-ignition marine engines would 
be subject to the same recall liability period as those in the current 
nonroad compression-ignition engine rule (59 FR 31306). Actual repair, 
however, would not be limited by actual years or hours. For example, 
compliance testing of an engine family might be limited to 10 years, 5 
years, or 350 hours of operation; however, any resulting recall repair 
would be required to be applied to all engines of that family, 
regardless of the years or hours on an individual engine. This is 
consistent with EPA's recall repair policy for on-highway vehicles and 
engines and on large compression-ignition nonroad engines.
    Under this proposed testing scheme, EPA will specify the engine 
families to be tested each year, with selection based on criteria such 
as production quantity, past emission performance, and engine and 
emission control technology. Manufacturers will perform testing on the 
engine families selected by EPA up to a total of 25 percent of a model 
year's engine families. EPA requests comment on the level of testing 
burden which would be appropriate to assure in-use compliance giving 
consideration to the industry's limited resources and the substantial 
research and development effort it will require to comply with the 
declining certification standards over the nine year phase-in period 
(applicable to spark-ignition outboard and personal watercraft engines) 
of this rule. Additionally EPA requests comment on whether it would be 
appropriate to phase-in in-use liability through a graduated or tiered 
level of testing plan for the period of the new standards phase-in.
    An example of one proposed in-use engine testing scheme which would 
be acceptable to EPA for any manufacturer is described in the following 
paragraphs. This scheme provides that each engine family will be tested 
periodically and provides for greatly reduced testing if the initial 
engines tested are clean enough to indicate compliance. The Agency 
acknowledges that this testing scheme may not be appropriate for all 
marine manufacturers and requests comment on what segments of the 
marine industry would find it inappropriate and why.
    EPA's current motor vehicle program tests approximately ten 
vehicles or engines of a specific engine family when determining in-use 
compliance. To satisfy our goal of establishing a strong enforcement 
program while minimizing the burden on manufacturers, EPA is proposing 
a sampling process which is designed to provide adequate data on which 
to make compliance decisions while allowing the testing of families 
which are found to emit below the standard to be concluded as 
expeditiously as possible.
    EPA requests comment on alternatives to this testing scheme. NMMA 
member manufacturers or other engine manufacturers may wish to provide 
examples of the in-use testing programs they would recommend as 
alternative testing schemes. EPA would like to have a more detailed 
description of what NMMA has referred to as an in-use testing program 
which would provide a ``reasonable degree of certainty'' as to whether 
the engine family at issue complies with applicable regulations. The 
Agency requests a description of what circumstances exist or are 
anticipated which would create the need for individual test plans. It 
would be helpful to learn whether a limited menu of plans would 
possibly meet these needs.
    NMMA has suggested that upon approval of a manufacturer's testing 
plan by the Administrator a manufacturer be allowed to use fleets 
instead of individually owned engines for in-use compliance testing. 
The Agency is aware that manufacturers have access to fleets of marine 
engines as a source for the procurement of in-use engines. These 
engines will accumulate hours of use before most other engines because 
they are used for significantly more hours per year than individually 
owned engines. Thus, testing on these engines could highlight problems 
long before they would become widespread in engines owned by individual 
purchasers. Although these fleet engines may not have experienced 
maintenance and usage patterns identical to private owners, the Agency 
recognizes value in the accelerated usage patterns that these engines 
experience. While the Agency is inclined to accept the use of fleets in 
an in-use testing program conducted by engine manufacturers, EPA wishes 
to evaluate the relationship between the emissions performance of such 
fleets and the in-use performance of individually owned and maintained 
engines. The Agency is interested in an engineering analysis and/or 
data which indicates that a fleet engine family which indicated passing 
emissions performance would be representative of an engine family in 
non-fleet service. In addition, the Agency is interested in any 
criteria, which if applied to fleets, would better assure that their 
performance adequately reflected real world performance of marine 
engines (such as, required storage periods).
    In addition to recommending the use of fleets to EPA, NMMA has 
suggested that manufacturers be permitted to develop, and submit for 
approval, within 120 days of a request for in-use testing from EPA, 
individual in-use testing programs for fleet marine engines tailored to 
the specific circumstances of the particular manufacturer. NMMA's 
proposal would be subject only to the requirements that the programs be 
designed to demonstrate with a reasonable degree of certainty whether 
or not the engines are in compliance. Under this proposal, EPA will 
approve or disapprove the program within 60 days of submission. A 
disapproved program must be revised and resubmitted to EPA within 60 
days. An approved program must be implemented, and testing must be 
completed, within eighteen months of approval of the program by EPA. 
The proposal suggests that the Agency be willing to consider extensions 
to the requirements when the manufacturer presents circumstances that 
warrant such extensions. The manufacturer would be required to submit 
to the Administrator within three months of completion of testing, all 
emission testing results generated from the in-use testing program.
    While the length of time a manufacturer is afforded by NMMA's 
schedule to complete in-use compliance testing is in the range of 
acceptability to EPA, the Agency is concerned that because there are 11 
different gasoline marine engine manufacturers, NMMA's suggestion would 
create at least 11 different plans for gasoline manufacturers and more 
for diesel manufacturers. As with new engine testing, EPA would prefer 
to implement one or a few testing schemes which accommodate production 
differences between manufacturers or across engines families where the 
validity of the scheme(s) is established prior to final promulgation. 
This would provide greater assurance to the public that this rule will 
result in new engines that meet standards and provide more consistency 
and equity between manufacturers. EPA realizes that unique 
circumstances surrounding a very low production engine or a very 
specialized engine could necessitate an individual plan. Consequently, 
if manufacturers comments warrant, it may be appropriate to consider an 
additional regulatory provision which would accommodate special 
circumstances on a case-by-case basis.
    Under section 207(c) of the CAA, the Administrator requires 
manufacturers to submit a remedial plan to recall applicable engines if 
a determination is made that a substantial number of properly 
maintained and used engines do not conform with the requirements 
prescribed under section 202 of the Act (an administratively ordered 
situation). Other statutory requirements include submittal of the 
manufacturer's remedial plan for EPA approval, procedures for 
notification of engine owners, submittal of quarterly reports on the 
progress of the recall campaign, and procedures to be followed in the 
event that the manufacturer requests a public hearing to contest the 
Administrator's finding of nonconformity.
    Number and types of engines to be tested: Under EPA's currently 
proposed testing program, a manufacturer would be required to test in-
use engines from an engine family specified by EPA when that family 
reached an appropriate age (in calendar age and/or usage hours). If an 
engine family did not change from one model year to the next, testing 
requirements would be reduced. The number of marine engines of a 
targeted family to be tested by a manufacturer would be determined by 
the following method:
    1. A minimum of four (4) engines per family per year for each 
family that reaches the minimum age specified, provided that no engine 
fails any standard. For each failing engine, two more engines would be 
tested until the total number of engines equals 10.
    2. For engine families of less than 500 engines per year or for 
engine manufacturers of less than 2,000 engines per year, a minimum of 
two (2) engines per targeted family per year, provided that no engine 
fails any standard. For each failing engine, two more engines would be 
tested until the total number of engines equals 10.
    3. If an engine family has not changed from one year to the next 
or, has been certified using carryover emission data or, has been 
previously tested under options 1 or 2 and, EPA has not ordered or 
informed the manufacturer of an emission concern with that family, then 
only one engine per family per year must be tested. If that one engine 
fails for any pollutant, testing must be conducted as outlined in 1 or 
2, whichever is appropriate.
    A manufacturer may test more engines than the minimums above or may 
concede that the engine family fails to comply with applicable 
standards before reaching engine number 10. EPA will consider failure 
rates, average emission levels, and the existence of any defects, among 
other things in determining whether to pursue remedial action. EPA may 
order a recall before testing reaches the maximum number of engines.
    As discussed above, EPA will consider requests for approval of 
alternate proposals for assuring in-use engine family compliance. 
Alternative proposals might be particularly appropriate in cases where 
(1) annual production is very low; or (2) engines cannot be obtained 
for testing because they are used substantially in craft which are not 
conducive to engine removal, such as large vessels where the engine 
cannot be removed without dismantling either the engine or the vessel; 
or (3) other compelling circumstances associated with the structure of 
the industry and uniqueness of marine engine applications.
    Collection and testing of in-use engines: While certification 
testing demonstrates the effectiveness of prototype designs and 
manufacturer assembly-line testing and SEA demonstrate the performance 
of newly assembled engines, only an in-use test program can determine 
the effect that actual engine use has on emission performance. Under 
the current proposal, an engine manufacturer would, therefore, be 
required to procure a representative sample of in-use engines which 
have been operated up to the recall liability period (in calendar time 
or in hours of usage). EPA would likely target primarily one past model 
year each year. An engine manufacturer could test more than one model 
years' engines in a given year, provided the engines had been operated 
for up to the recall liability period. Manufacturers would be 
responsible for assuring that they met their testing responsibilities 
for all families of all model years.
    While EPA determines the schedule for testing engine families in 
its on-highway program, the marine manufacturers will be afforded 
maximum flexibility in determining the test schedules for their own in-
use testing programs so that these programs may be coordinated with 
other manufacturer activities. However, the Agency will require that 
the testing of a selected engine family begin within twelve months 
after receiving testing notification from the Agency and that this 
testing be completed within a twelve month period. Testing of an engine 
family in the on-highway program is usually completed within a three 
month period. The Agency is aware that marine engine manufacturers may 
have difficulty procuring engines which could lengthen the time needed 
to complete the testing of an engine family. The Agency believes that 
providing manufacturers with twelve months to complete this testing 
provides the manufacturers flexibility in conducting their test 
programs and adequately addresses most difficulties which would arise. 
Furthermore, the Agency is willing to consider extensions to this 
requirement when the manufacturers represent circumstances which 
warrant such extensions.
    Typically a test engine would be procured from sources independent 
from and unrelated to the engine manufacturer or equipment 
manufacturer. With prior approval of the Administrator, an engine 
manufacturer with annual sales of less than 50,000 engines might obtain 
in-use engines associated with itself or its equipment manufacturer. 
Furthermore, as discussed above, the Agency is inclined to accept the 
use of fleets in an in-use testing program conducted by manufacturers.
    A test engine would be required to have a maintenance and use 
history representative of a properly maintained and used engine. To 
comply with this requirement a manufacturer would question the end user 
regarding the accumulated usage, maintenance, operating conditions, and 
storage of the test engine.
    The manufacturer would perform minimal set-to-spec maintenance on a 
test engine. Such maintenance would include no more than what is listed 
in the owner's instructions for engines with the amount of service and 
age of the acquired test engine. One valid emission test conducted 
under the Federal test procedure established for marine engines would 
be required for each in-use engine.
    EPA recognizes the need to develop a testing scheme or limited set 
of schemes to provide assurance that in-use engines are meeting 
standards while taking into account the diverse needs of marine engine 
manufacturers. To this end, EPA requests comments and specific 
proposals for in-use engine test schemes that will address the concerns 
described above and on any possible alternative designs of in-use 
testing programs (such as independent third party testing paid for by 
manufacturers or their associations) or enforcement that may be more 
effective. The Agency will work with manufacturers during the comment 
period to create a limited menu of optional test plans which will meet 
the needs of the entire industry. However, any alternatives must 
produce a compliance scheme that provides EPA with an enforceable 
program which provides substantial incentive to manufacturers to 
produce clean, durable engines.
    In-use test program reporting requirements: Under the current 
proposal, the manufacturer would be required to submit to the 
Administrator within three months of completion of testing, all 
emission testing results generated from the in-use testing program. EPA 
envisions that manufacturers will simply provide quarterly statements 
of all emission results obtained during the previous quarter, including 
a summary table of any engine family that has completed testing during 
that quarter. At the Administrator's request, a manufacturer would be 
required to provide documents used in the procurement process, 
including criteria used in the procurement screening process and 
information from the end user(s) related to use, maintenance, and 
storage of the selected engines.
    NMMA suggested that when a determination of nonconformity is made 
(a class is ordered to be recalled) that a manufacturer have the option 
of an alternative remedial action or a recall. According to NMMA, an 
alternative remedial action might include re-certification of the 
nonconforming engine at the higher emission level, and use of the 
averaging, banking, and trading program elements to demonstrate 
manufacturer compliance with the emission standards on a corporate 
average basis. Alternatively, the manufacturer could implement a recall 
and repair program. A recall program, or an alternate remedial action, 
must achieve emission reductions sufficient to demonstrate compliance 
with the national standard on a corporate average basis.
    For the reasons described below NMMA's suggestions as we understand 
them are either inconsistent with the Clean Air Act or with essential 
tenets of both certification and ABT. The issue of whether the Agency 
can allow some alternative to recall and repair after a determination 
of nonconformity has been made was litigated in Center for Auto Safety 
v. EPA, 747 F2d 1 (D.C. Cir. 1984), where the court concluded that ``* 
* *section 207(c) requires recall and repair as the only statutory 
remedy for nonconformity.'' Therefore, after a determination of 
nonconformity the Agency may not allow an alternative remedy such as 
NMMA suggested.
    NMMA has suggested that non-conformity determinations made in 
assembly line or in-use testing not require action by a manufacturer if 
the manufacturer had or could obtain credits from averaging, banking or 
trading to cover the nonconformity and still maintain a corporate 
average below standard.
    As was stated in the assembly line testing discussion above, EPA 
believes that such an option runs counter to essential tenets of both 
certification and ABT. For an engine family involved in ABT, the FEL 
takes the place of the standard for certification, assembly line and 
in-use testing. For reasons stated earlier, the FELs must remain firm 
for those engines already introduced into commerce, otherwise, a 
manufacturer could certify to an overly optimistic FEL, knowing that if 
the engines drifted over the FEL either in assembly line or in-use 
testing, it need only cover a credit shortfall and not recall engines.
    If a determination of nonconformity with the requirements of 
section 213 of the Act is made (that is, if EPA orders a recall under 
the provisions of section 207(c)), the manufacturer would not have the 
option of an alternate remedial action and an actual recall would be 
required.
    Alternatives to Recall and Repair: EPA also requests comment 
regarding the circumstances under which alternatives to conventional 
recall would be considered as a voluntary action. These alternatives 
would be required to have the same or greater environmental benefit as 
conventional recall and provide equivalent incentives to manufacturers 
to produce engines which durably and reliably control emissions. For 
instance, a manufacturer might establish or increase the size of an in-
house engine fleet designed to quickly accumulate usage. This fleet 
would be tested for emissions and any failures diagnosed would provide 
the manufacturer with information on needed design or calibration 
changes. EPA requests comment on how manufacturers who have repeated 
nonconformities should be handled as compared to those who only 
occasionally have problems. The Agency invites comment on this 
alternative as well as others and on the factors the Agency should 
consider in evaluating proposed alternatives.
    EPA is aware that the program described above may not be 
appropriate for all marine manufacturers or circumstances. More 
information is needed to evaluate the appropriateness of today's 
proposal for this industry. EPA believes that today's proposed in-use 
testing and recall program is one appropriate way to enforce in-use 
compliance. However, as this is EPA's first regulation of marine 
engines, EPA requests comment on additional or alternative ways of 
enforcing in-use compliance or remedying noncompliance. EPA also 
requests comments on the legal authority for any suggested 
alternatives.
20. Defect Reporting and Warranty Requirements
    While the Agency is not wedded to the number 25, EPA is proposing 
that manufacturers of marine spark-ignition and compression-ignition 
engines file a defect information report whenever a manufacturer 
identifies the existence of a specific emission-related defect in 25 or 
more engines manufactured in the same model year. However, no report 
would need to be filed if the defect was corrected prior to the sale of 
the affected engines to the ultimate purchaser. These proposed 
reporting requirements are similar to the requirements found in the on-
highway program and in the nonroad large compression-ignition engine 
program. EPA is considering a revision of the on-highway reporting 
program. Any new regulations may encompass both on-highway and the 
nonroad sector. The Agency invites comment on the appropriate numerical 
trigger and an estimation of how many reports a commenter would expect 
to be generated by such a suggested trigger.
    NMMA suggested that having 25 defects of a component of system 
trigger a reporting requirement would be too onerous. NMMA would prefer 
to have as a trigger the identification of a specific defect in one 
percent or more engines of the same engine family manufactured in the 
same model year, or 25 engine or more of the same engine family 
manufactured in the same model year. Because the production volume of 
heavy-duty manufacturers is similar to the marine industry, EPA has 
examined the level of reporting which currently is shouldered by the 
onroad heavy-duty manufacturers. As a result of that review, EPA 
estimates that the marine industry, as a whole, will only be expected 
to file 5-15 defect reports per year with EPA. A fuller analysis can be 
found in the ICR supporting this regulation. In addition to currently 
believing that 25 is not a burdensome trigger, EPA would be concerned 
that limiting the counting of defects to an engine family or model year 
could mask wider spread defects which occur in a part or component 
which is installed in several model years or several engine families in 
a given model year.
    EPA is also proposing a warranty period under authority of section 
207(a) of the CAA for spark-ignition marine engine emission-related 
parts of 4 years. This is the average period that the first owner 
possesses the engine as indicated by the engine manufacturers. EPA 
requests comments on the appropriateness of the length of the warranty 
period and also if the period should restrict the hours of use. EPA is 
currently developing more detailed regulations that will further 
clarify manufacturers' responsibilities under section 207(a) for both 
on-highway and marine engines. EPA will rely on the existing 207(a) 
practices until those regulations are finalized.
    An advisory parts list issued by EPA on July 15, 1991, gives 
manufacturers notice of EPA's current view concerning the emission-
related parts that must be covered by warranty under section 207(a). A 
copy of this list is in the docket for this rulemaking. This list will 
also cover marine engines.
21. Tampering Enforcement
    As required under sections 213(d) and 203 of the CAA, it will be 
illegal for any person to tamper with any engine emission-related 
component or system installed on or in a marine engine in compliance 
with this proposal. EPA is proposing that existing on-highway tampering 
provisions apply to marine engines covered by this rule.\11\
---------------------------------------------------------------------------

    \11\Office of Enforcement and General Counsel; Mobile Source 
Enforcement Memorandum No. 1A, June 25, 1974.
---------------------------------------------------------------------------

    EPA is aware that original nonroad equipment manufacturers often 
supply the engine accessories designed for their specific applications. 
At the same time, it is required that the engine tested to certify an 
engine family represent the worst-case configuration of that family. 
EPA requests comment on how to establish specific criteria or 
parameters under which a manufacturer would be allowed to continue to 
modify an engine without (1) jeopardizing the integrity of this 
proposed emission control program, and (2) causing the equipment 
manufacturer to have to recertify or risk being in violation of the 
tampering provisions of EPA's tampering guidance in Memorandum 1-A.\12\
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    \12\Mobile Source Enforcement Memorandum No. 1A.
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22. Importation of Nonconforming Marine Engines
    EPA is proposing to prohibit the importation of nonconforming 
marine engines originally manufactured after the effective date of this 
rule, except as provided below. Such prohibition is based in part on 
the existing regulations for the importation of nonconforming motor 
vehicles and motor vehicle engines (on-road program) and nonroad large 
compression-ignition engines.
    For the on-road program, Independent Commercial Importers (ICIs) 
are responsible for all aspects of compliance required of the original 
manufacturers for their U.S. market production (for example, 
certification, testing, labeling, warranty, recall, maintaining 
records). While EPA provides for an ICI program for motor vehicles and 
motor vehicle engines, EPA is not proposing to have an ICI program for 
marine engines. EPA believes that an ICI program for marine engines 
would not be cost-effective because of the expected low volume of 
importations of nonconforming marine engines and the high costs 
associated with an ICI program. Therefore, unless otherwise exempted or 
excluded, nonconforming marine engines may not be imported into the 
U.S. In such cases, a marine vessel containing a nonconforming marine 
engine must have the marine engine replaced with an EPA certified 
marine engine in order to be imported. EPA requests comment on the 
absence of an ICI program for marine engines.
    This proposal provides for certain exemptions to the prohibition 
against importing nonconforming marine engines. These include temporary 
importation exemptions for repairs and alterations, testing and 
display, and permanent importation exemptions for national security and 
certain marine engines proven to be identical, in all material 
respects, to their corresponding EPA certified versions. In previous 
rulemakings, EPA has provided for a permanent importation exemption for 
vehicles or engines greater than 20 original production years old. EPA 
is not proposing an exemption for marine engines greater than 20 
original production years old. EPA requests comment on the absence of 
such an exemption.
    Importation regulations are joint regulations between EPA and the 
United States Department of the Treasury (Customs Service). The 
citation for United States Customs Service, Department of Treasury 
regulations governing import requirements is reserved. The citation 
will be inserted upon promulgation by the United States Customs Service 
of the applicable regulations.
    EPA is also providing for the exclusion of nonconforming engines 
used solely in competition. EPA will exclude engines used in vessels 
whose use, because of features that are not easily removed in anything 
other than competition, would be unsafe, impractical or highly 
unlikely. EPA will employ a capability test as it has done with motor 
vehicles since the 1970s. Engines used in vessels that are incapable of 
uses other than competition will be excluded from the marine engine 
emission requirements.

V. Discussion of Issues

    This section contains further discussion on a number of issues 
raised during the development of this notice.

A. Choice of Exhaust Constituents to be Regulated

1. Gasoline Spark-ignition Engines
    EPA is proposing to regulate total exhaust hydrocarbons (HC), 
carbon monoxide (CO), and oxides of nitrogen (NOX) from gasoline 
spark-ignition marine engines. Standards for particulate matter (PM), 
carbon dioxide (CO2), and evaporative hydrocarbons are not being 
proposed in this rulemaking for gasoline spark-ignition engines for the 
reasons discussed below.
    PM emissions from gasoline engines are small when compared to 
emissions of HC, CO, and NOX. When compared to other sources, 
marine gasoline spark-ignition engines contribute between 0.0 percent 
and 0.3 percent of the PM inventory in cities studied by EPA.\13\ This 
regulation will reduce HC emissions from these engines and as a result, 
PM emissions should also decrease. The length of the test procedure 
would need to be greatly increased in order to collect a large enough 
sample on a particulate filter for an accurate measurement. At this 
time, EPA does not consider the benefits of a PM standard for gasoline 
engines to be sufficient to justify the increased costs of measuring PM 
emissions from gasoline spark-ignition marine engines. Therefore, EPA 
believes that separate emission standards for particulate emissions for 
gasoline spark-ignition marine engines are not appropriate at this 
time. EPA requests comments on this issue.
---------------------------------------------------------------------------

    \13\Nonroad Engine and Vehicle Emissions Study, November 1991, 
21A2001.
---------------------------------------------------------------------------

    The focus of this rulemaking is to reduce ground level ozone. 
Carbon dioxide is considered a ``greenhouse'' gas due to its role in 
global climate change. However, the HC emission standards of this rule 
are expected to result in significant improvements in fuel economy for 
marine engines and, therefore, significant reductions in CO2 
emissions. For these reasons, EPA is not proposing to regulate CO2 
from marine sources at this time. EPA requests comment on this issue.
    EPA requests comment on the possibility of adopting evaporative 
emission standards for gasoline spark-ignition marine engines. All on-
highway vehicles sold in the U.S. have been designed to control 
evaporative emissions for many years; however, the characteristics of 
marine engine operation may prevent the same level of control for these 
applications. Specifically, the carbon canister-based control systems 
used in motor vehicles depend on relatively frequent engine operation 
to restore vapor storage capacity. Marine engines are probably used too 
infrequently for such a design to be effective.
    Sealed fuel systems on the other hand would contain vapors 
otherwise generated by fuel heating (either from engine operation or 
from daily temperature swings). Coast Guard regulations discourage, but 
do not prohibit, pressurized fuel systems (33 CFR 183.524(c)). EPA 
therefore requests comment on the legality as well as the practicality 
of designing sealed fuel tanks to control evaporative emissions. A 
sealed tank would have to be designed with a valve to allow entry of 
makeup air as fuel volume decreased. The portable nature of gas tanks/
cans for outboard engines would perhaps require a more complex 
connection to the fuel line to allow for repeated opening and closing. 
If fuel tanks cannot be sealed during engine operation, it may still be 
possible to design the fuel system in a way that seals the fuel tank 
during engine-off periods.
    Fuel permeation is another issue related to evaporative emissions. 
Gasoline is known to permeate through plastic and rubber components to 
the atmosphere at surprisingly high rates. The technologies being 
developed for on-highway vehicles, primarily coextrusion for fuel tanks 
and fluorination for fuel lines and grommets, should also be feasible 
and effective in the marine environment. EPA requests comment on 
requirements to demonstrate reduced permeation losses from marine fuel 
systems.
2. Compression-Ignition Engines
    EPA proposes that all compression-ignition marine engines be 
included in the current regulations for new nonroad compression-
ignition engines, regardless of power rating or usage (both propulsion 
and non-propulsion). HC, CO, NOX, PM, and smoke are proposed to be 
regulated as in the current regulations. EPA is requesting comment on 
the appropriateness of removing the lugging mode from the smoke test 
for marine propulsion engines.
    EPA is proposing to regulate all compression-ignition marine 
engines in this rule. Given the coverage of the large compression-
ignition engine rule, this choice raises two issues. (1) Why regulate 
compression-ignition engines at this time and (2) why regulate even the 
smallest engines? The questions will be answered sequentially.
    EPA is proposing to regulate compression-ignition marine engines 
today although they were not regulated in the original large 
compression-ignition engine rule for several reasons. First, in 
developing inventories for the California Federal Implementation Plans, 
EPA found that these engines were a very significant source of 
emissions (1.65 tones NOX per summer day in Ventura in 1990). 
Second, the large compression-ignition nonroad engine rule had very 
favorable cost effectiveness and there was no reason to believe that 
benefit wouldn't carry over to marine engines. Third, the knowledge 
gained from working with the Coast Guard on the gasoline spark-ignition 
engines was appropriately carried over. Finally, the best reading of 
the Sierra Club lawsuit settlement requires EPA to regulate all marine 
engines.
    EPA chose to propose regulations of even the smaller compression-
ignition marine engines because they too seemed to fit under the 
settlement agreement. Further, these small diesels are generally used 
in outboards. EPA believes that diesel outboards are substitutable for 
some gasoline outboards. Thus the market for these engines could grow 
substantially after regulation. Given the extremely high relative 
NOX emission from these engines, EPA believed it was important to 
control the emissions.
    Smoke from marine engines is perceived as a significant local air 
pollution concern in many areas. These areas have developed local 
regulations to discourage smoking engines. However, the U.S. Coast 
Guard has informed EPA that, often, properly maintained compression-
ignition marine engines will fail local regulations. The continued 
smoking is not only unsightly, but it also created clean-up costs and 
may lead to health problems.
    The emissions of primary concern from diesel engines are NOX 
and PM/smoke. Only NOX causes tropospheric ozone formation that is 
significant from these engines. The standards therefore require a 
reduction in NOX. The HC and CO standards are included here to be 
consistent with the large compression-ignition nonroad engine rule. PM 
and smoke emissions are regulated for the reasons described above.

B. Water Quality Impacts/Scrubbing

    The primary focus of today's notice is on the effects of marine 
exhaust emissions on ambient air quality. As a result, regulatory 
efforts and testing programs focus on air effects. However, another 
aspect of marine exhaust emissions is their impact on water quality. 
While EPA acknowledges that marine engine emissions also have an impact 
on water quality, EPA proposes to measure all emissions as if they go 
into the air, and not to specifically address the impact these 
emissions have on water quality for this rulemaking. EPA believes this 
is appropriate for three reasons: (1) The efforts contained in this 
rulemaking for reducing air quality effects will also act to reduce 
adverse water quality effects; (2) it is difficult to determine how 
much of the unburned fuel and oil present in marine environments comes 
from marine engine sources; (3) prior research regarding the effects of 
marine exhaust on water quality generally conclude that marine exhaust 
may not be a significant problem. Each of these are discussed in 
further detail below.
    First, EPA believes that the cross-media effects on water are 
alleviated by this rulemaking. In fact, controls on exhaust emissions 
from marine engines designed primarily to reduce their effects on 
ambient air quality will also benefit water quality. Many of the 
pollutants associated with marine engine emissions are actually from 
unburned oil and fuel: current technology 2-stroke engines, the most 
popular kind for pleasure craft, discharge unburned oil and fuel into 
the water and the atmosphere along with other exhaust compounds. 
Today's proposal is expected to eliminate 85% or more of the sales of 
this old, 2-stroke technology from the marketplace. This will be 
replaced with technologies which do not emit significant amounts of 
unburned fuel and oil into the water or the atmosphere. Therefore, the 
overall emissions levels in both air and water will be significantly 
reduced as a result of this rulemaking.
    Second, many studies conclude that it is difficult, if not 
impossible, to ascertain how much of the unburned fuel and oil present 
in marine environments comes specifically from marine engine sources. 
An undetermined portion of fuel and oil pollutants comes from sources 
such as parking lots, especially around marinas, and storm water 
runoff. Thus, while the regulations contemplated in this rulemaking 
would significantly reduce discharges of unburned fuel and oil from 
marine engines, the overall effects of these pollutants will not be 
completely eliminated because of these additional sources.
    Third, most research studies of the impact of marine exhaust 
emissions on water quality indicate that these emissions have only 
moderate to small impacts on water.\14\ According to these studies, as 
much as 65 percent of the harmful pollutants released into the water 
from marine engines evaporate into the air, and the remainder are not 
present in large enough concentrations to be harmful to marine plants 
and animals. These studies seem to indicate that the gaseous exhaust 
emissions evaporated into the air are more voluminous than the 
concentrations of emittants in water. Further study would need to be 
done to definitively evaluate the contribution of exhaust emissions to 
water quality problems.
---------------------------------------------------------------------------

    \14\See Memo to Docket which summarizes several studies on the 
impact of marine emissions on water quality.
---------------------------------------------------------------------------

C. Certification Durability Demonstration

    One of the main goals of this regulation is to ensure that marine 
engines meet the emission standards throughout their useful lives while 
operating in-use. The objective of the certification process is to 
ensure that the designs of the emission control systems are capable of 
meeting the emission standards not only when such engines are new, but 
also during typical in-use operation through the engine's useful life. 
Given the long useful lives of marine engines, an up front 
determination of emission control durability is most important since 
problems may not be detected in-use for long periods of time. EPA 
considered a number of options regarding the demonstration of durable 
emission control systems for certification. The following discusses 
these options in more detail.
1. Self Approval/In-use Testing Feedback Requirement Program
    EPA is proposing this option in today's notice. This option 
consists of a self approval process with in-use testing feedback. Based 
on good engineering practice, the manufacturer would determine the form 
and the extent of engine and/or component selection and testing 
methodologies. The manufacturer would establish deterioration factors 
which would be applied to the new engine emission levels; the resulting 
emission levels, taking into account the deterioration factors, would 
be required to comply with the emission standards (or the family 
emission limits). The manufacturer would also be required to perform 
in-use testing for the recall program (see Section IV(D)(19) ``In-Use 
Enforcement and Recall''). EPA would use this in-use data to confirm 
the methodology for establishing deterioration factors. For example, if 
in-use testing indicates that an engine family's emission control 
system is deteriorating at a faster rate than predicted by the 
manufacturer's deterioration factor (DF), EPA would challenge the use 
of the manufacturer's methodology for determining DFs for that engine 
family as well as for other engine families. The manufacturer would 
have to revise its methodology for determining DFs or provide data and 
information to support the use of the DF generation methodology for 
other engine families. Failure of the manufacturer to correctly 
estimate the deterioration factor in the case of data indicating a 
faster rate of deterioration, would subject the manufacturer to the 
recall program penalties.
    EPA believes that this approach will best ensure that marine 
emission control systems will be designed and built to be durable. This 
program requires manufacturers to assess deterioration of emission 
control systems before such engines enter into commerce. Therefore, 
systems with inadequate durability can be identified and corrected 
before they are used on the waterways. Also, this approach provides a 
means of determining the adequacy of the deterioration factor 
methodology through actual in-use data.
2. New Engine Standards/In-use Testing Requirement Program
    This option would include emission standards for new engines and a 
data collection program for establishing a certification durability 
requirement at a future date. During certification, engine 
manufacturers would need only to demonstrate that new engines (perhaps 
after a break-in period) meet the new engine emission standards. 
However, as a condition of certification, the manufacturers would be 
required to agree to collect data on in-use engines. This data would be 
used to establish certification durability requirements at a future 
date when sufficient information exists on the durability of marine 
emission control systems.
    This program would significantly delay the establishment of a 
certification durability program. The average useful lives of current 
technology 2-stroke marine engines are estimated to be between 14 and 
27 years. Therefore, a substantial amount of time would pass before 
sufficient data were collected to establish a certification durability 
demonstration program. Therefore, EPA is not proposing this option. 
However, EPA requests comments on this type of program for 
certification durability demonstration.
3. Specified Service Accumulation Program
    Another option considered by EPA is a pre-production durability 
demonstration program for marine engines similar to that used for on-
highway light-duty vehicles. Such a program consists of operating 
engines to the end of their useful life over a specified accelerated 
service accumulation cycle to generate deterioration factors. The 
deterioration factors would then be applied to the new engine emission 
levels and the resulting emission levels would be required to comply 
with the emission standards (or the family emission limits). The 
advantages of this type of program are that the service accumulation 
and the deterioration factor generation methods would be consistent 
among manufacturers. Also, EPA has many years of experience in 
administering such a program.
    However, the main disadvantages are related to establishing a 
service accumulation cycle that is representative of actual in-use 
operation. EPA currently has insufficient information to develop a 
representative accelerated cycle for gasoline spark-ignition marine 
engines. Also, experience with the on-highway certification durability 
program has shown that such accelerated cycles alone do not do a good 
job of simulating the in-use conditions and operation that can lead to 
emission control deterioration. This option does not contain any in-use 
testing feedback, therefore, any proposed service accumulation cycle 
would go unchecked with respect to how well it represents conditions 
that can result in emission control deterioration. Therefore, EPA is 
not proposing this option in today's notice.
    EPA requests comments on whether this type of program is desirable 
for demonstrating the emission control system durability at the time of 
certification. Specifically, EPA requests comments on appropriate 
service accumulation cycles for this type of approach and on how this 
type of program could meet the goals of ensuring that emission control 
systems are designed and built to be durable while operating in-use.
4. No Certification Durability Demonstration
    One option considered by EPA would be to have no requirements for 
emission control durability demonstration for certification purposes. 
This approach would require manufacturers to demonstrate that new 
engines meet the emission standards but would not require further 
demonstration during the certification process that the emission 
control system designs are durable. Instead, this program would rely on 
in-use enforcement (recall) programs to ensure that manufacturers build 
durable systems.
    The advantages of this option are that it is simple and low cost. 
Also, it allows manufacturers to establish their own internal programs 
to ensure that emission control systems are durable and balance the 
associated risks of recall.
    However, the primary disadvantages of this approach relate to the 
long useful lives of the engines and the potential problems associated 
with in-use testing of marine engines. The average useful lives of 
current technology 2-stroke outboard marine engines are estimated to be 
between 14 and 27 years. Therefore, a substantial amount of time would 
pass before problems with emission control durability would surface as 
a result of in-use enforcement testing. During this time, there would 
be no assurance that emissions control systems were performing properly 
in-use. Also, in-use engines may be very difficult to track for in-use 
testing purposes, as previously discussed (see Section IV(D)(19) ``In-
use Enforcement and Recall''). Since this approach relies heavily on 
in-use testing as the incentive for manufacturers to build durable 
emission control systems, the potential problem of limited resources to 
perform testing on a sufficient number of engine families could 
undermine the objective of this approach.
    Due to the disadvantages discussed here, EPA is not proposing this 
approach in today's notice. However, EPA requests comment on the 
general approach of no durability demonstration requirements during the 
certification process. More specifically, EPA solicits comments on 
whether such an approach could be as effective as other options and on 
how the potential difficulties associated with this approach could be 
overcome.
    EPA requests comment on the appropriateness of the proposed option 
as well as the other options discussed or other options for 
certification durability demonstration.

D. Use of an HC Emission Standards Curve for Outboard and Personal 
Watercraft Engines

    EPA is proposing HC emission standards curves for spark-ignition 
outboards and personal watercraft specific to the power output of an 
engine as explained in Section IV(D)(2).
    EPA believes that a standards curve is necessary because of the 
wide range of engine sizes subject to this proposal. Current engine 
size availability ranges from 1.5 kW to over 250 kW for outboard 
engines. Historically, with this wide spread of engine sizes, EPA has 
considered different standard levels for different size ranges of 
engines. This has partly been due to separate regulatory efforts for 
engines of different size and partly due to different uses for 
different size engines. For example, gasoline on-highway engines are 
classified as light-duty or heavy-duty with separate emission standards 
for each. If EPA were to regulate outboard marine engines in this 
historical manner, the result would be a set of step function emission 
standards which would group engines by power rating and apply separate 
standards to each group. EPA requests comments on this traditional 
approach to emission regulation as it might apply to HC emissions from 
gasoline spark-ignition engines. Commenters should include 
recommendations for specific engine groupings, criteria for engine 
classification and standards levels for each group.
    As an alternative, EPA believes that the curve concept is much 
better suited for this regulation for several reasons. The curve 
eliminates the ``steps'' between emission standards and the associated 
problems of determining appropriate engine ranges for each step. 
Manufacturers could ``game'' step function standards by derating the 
power of engines so that they are classified into a group with higher 
emission standards. Another downside of step function standards is that 
for smaller (lower power) engines in a given step you are limiting the 
credit generation potential, while for larger (higher power) engines in 
the same range you are increasing the credit generation potential, 
compared to the inherent relationship between the work specific HC 
emission rate (g/kw-hr) and power. For large engines, the emission rate 
difference is marginal. But for the small engines, particularly below 
100 kW, the slope of the curve changes at an increasing rate and 
results in significant emission rate differences for small power 
changes. The use of a curve allows the optimization of the work 
specific emission rate-power relationship.
    Alternatively, having one HC standard for the entire power range of 
gasoline marine engines is not appropriate for the range of engine 
sizes proposed to be regulated. HC emissions on a work specific basis 
(g/kw-hr) inherently increase with smaller engines due to higher 
surface to volume ratios. The proposed standards curve concept takes 
into account these inherent differences in HC emissions for different 
size engines and requires equal percentage reductions of HC emissions 
from both large and small engines on a g/kw-hr basis. Therefore, the 
goal of reducing the emission rates for all engines is not compromised 
by the standards curve structure. In addition, this approach avoids 
setting rather arbitrary cutpoints for step change standards, thus 
eliminating the potential for mis-classifying engines by artificially 
changing their power ratings so that less stringent standards apply. 
EPA requests comments on the proposed standards curve for controlling 
HC emissions for outboard and personal watercraft engines. EPA also 
requests comments on other possible forms of the standards such as one 
level for all such engines.

E. Options for Averaging Sets and Effect on HC Standards for Gasoline 
Spark-ignition Marine Engines

    Based on the estimated potential emission reductions that are 
expected from feasible future technology, EPA is proposing to set 
emissions standards that will achieve a 75 percent reduction in HC 
emissions of 2-stroke outboard/personal watercraft engines. As 
discussed in Section IV(D)(2), the specific standards for each outboard 
and personal watercraft engine family are determined by the power 
output of the engine and must be met on a corporate average basis. For 
the purpose of determining compliance with the average HC standards, 
EPA proposes to construct two separate averaging sets; Set 1: Including 
outboard/personal watercraft engines and Set 2: including inboards/
sterndrive engines. EPA proposes to allow trading only within an 
averaging set, with no trading permitted between averaging sets. By 
constructing two averaging sets, EPA intends to generate two separate 
standards curves based on the emissions of the engines within each set. 
It is from these standards curves that emission credits and debits 
would be calculated for each engine family and corporate average 
compliance would be determined for each manufacturer. The mathematical 
formula for calculating the standards curve for Set 1 is discussed in 
section IV(D)(2) and reflects only the emissions of outboard/personal 
watercraft engines and the reductions that can be achieved from those 
engines through the application of expected feasible technology. Due to 
the narrower range in power output in the engines included in Set 2 and 
their more uniform emissions characteristics, the curve representing 
their emissions standard is flat. Therefore, EPA believes that a 
straight line standard is appropriate for determining compliance on 
average for these engines. EPA requests comments on the appropriateness 
of a straight line standard for Set 2.
    EPA considered several options in constructing averaging sets and 
standards curves, including combining all gasoline spark-ignition 
engines into a single averaging set and generating one standards curve 
based on the baseline emissions of all such engines. EPA decided 
against proposing the single set option for the following reasons.
    First, Section 213 of the Clean Air Act, directs EPA to set 
emissions standards for new nonroad engines that will achieve the 
greatest degree of emissions reduction achievable through the 
application of technology which the Agency believes will be available, 
taking several factors into account, including the cost of applying 
available technology. The emissions levels in the compliance curve 
generated in the single set option in the final year of phase-in are 
approximately 10-15 percent below the levels in the final standards 
curve describing the emissions of outboard/personal watercraft engines. 
To comply with the emissions levels in the single standards curve, 
outboard/personal watercraft engine manufacturers would have to achieve 
approximately a 90 percent reduction from current levels or purchase 
credits from other manufacturers of inboard/sterndrive engines. EPA 
believes that feasible technologies for outboard/personal watercraft 
engines will not achieve such levels without excessive NOX 
increases. Further, EPA acknowledges that for some applications, 
especially for engines between 10-50 kw, only outboard technology is 
appropriate.
    While the single set option results in a standards curve which is 
more stringent on its face, EPA believes that the real emissions 
reductions achieved will be the same under either the single set or two 
set options. If the single curve is promulgated, the outboard/personal 
watercraft engine manufacturers could most cost effectively achieve 
about a 75 percent reduction through application of the feasible 
technology and would be forced to buy credits to make up the 
difference. This would have the effect of making trading mandatory for 
some companies, creating the possibility for companies that generate 
credits to exploit this need. EPA is very concerned that the marine 
engine market is already oligopolistic and that the single curve option 
carries significant risk of further limiting the competition in the 
market.
    The effects of the single curve option in forcing the purchase of 
credits by manufacturers of outboard/personal watercraft engines are 
especially pronounced in the first years of the program. Using the 
single set option, the baseline standards curve in year one would be 
approximately 50 percent below the baseline compliance curve for 
outboards/personal watercraft under the two set option. Thus to comply 
with the baseline curve, manufacturers of outboard/personal watercraft 
would be forced to either (1) buy credits immediately , or (2) reduce 
emissions by 50 percent in year one. EPA does not believe reducing 
emissions by 50 percent in year one through application of new 
technology is feasible. Nor is it appropriate to in effect require 
outboard and personal watercraft manufacturers to purchase a large 
number of credits from inboard/sterndrive manufacturers in year one. 
The resulting market ramifications could be unacceptable.
    Because of this problem, EPA did consider a third option of 
maintaining separate averaging sets during the nine year phase-in and 
then combining all engines into a single set in year ten. However, 
analysis showed that after the proposed phase-in, outboard 
manufacturers would not be able to comply with a final year standards 
curve generated under the single set option through re-engineering of 
their products alone, and would still be forced to purchase credits. 
The concerns about competitiveness in the market remain under this 
third option, although to a lesser degree. Additionally, EPA believes 
that Sec. 213 requires the Agency to set standards that can be met 
either through existing or foreseeable technology. Therefore, EPA 
believes that two averaging sets with separate standards curves for 
each set is the most appropriate option for regulating HC emissions 
from gasoline spark-ignition marine engines.
    However, the single set option does have several advantages. It 
provides the greatest opportunity for trading and more accurately 
assigns relative values to emissions from various technologies in the 
market. This relative valuation maximizes the incentive to substitute 
potentially cleaner inboard/sterndrives where substitution is 
appropriate. Combining all gasoline spark-ignition marine engines into 
one set simplifies compliance and enforcement and minimizes the chance 
of confusion over engine classification as new engine types (i.e. ``jet 
drive'' engines) emerge.
    EPA is interested in encouraging the substitution of inboard/
sterndrive technology for outboard technology since the former is 
expected to emit lower hydrocarbon emissions than future technology 
outboards. If inboard/sterndrive engines are cleaner than future 
technology outboards, EPA would like to encourage marine engine 
manufacturers to sell inboard/sterndrive engines in place of outboard 
engines where such substitution is possible. However, EPA recognizes 
that such substitution may not be possible for some applications. EPA 
believes that the proposed two set option will also encourage such 
substitution, since outboard engines will reflect the cost of emission 
control strategies. The price of inboard/sterndrive engines should 
remain relatively constant in comparison, because these engines are 
expected to meet the standard without additional controls or with minor 
calibration adjustments. However, if a single set standards curve were 
adopted, inboard/sterndrive engines would potentially generate larger 
emission credits and become even less expensive relative to outboards, 
thus encouraging substitution with inboard/sterndrive engines to a 
greater degree than does the two set option.
    EPA understands that the proposed two set option may limit the 
emission trading pool, creating a smaller market than would occur with 
a broader, single averaging set. Credits could cost more and be traded 
less frequently than in a larger, more efficient market. In the long 
run, emission reductions could potentially be more expensive under the 
two set option than with the single averaging set. EPA understands that 
this argument is largely theoretical and requests comment on how 
markets would actually function under both averaging set options.
    EPA believes that the potential advantages of a single averaging 
set may not offset the problems inherent in requiring engines to meet a 
standard that cannot be met through feasible future technology as 
outlined in Section 213 of the Act. Further, EPA believes that 
constructing two averaging sets meets the Agency's emission reduction 
goals and still encourages substitution of the cleanest technologies. 
For these reasons and others discussed at the beginning of this 
section, EPA today proposes to construct two averaging sets with 
separate HC compliance curves for each set. However, EPA requests 
comment on the option of combining all gasoline spark-ignition marine 
engines into a single averaging set with one standard curve. 
Particularly, EPA is interested in comments regarding how the price to 
the consumer differs between the proposed option and the single set 
curve option. EPA also is interested in comments related to 
implementation of such a single curve from the onset of the proposed 
program as opposed to implementation of a single curve in the years 
after phase-in is complete. To facilitate comments, section IV(D)(6) 
contains a full discussion of how the proposed averaging sets and 
standards curves would be implemented.

F. Electric Outboard Engines

    EPA has not included electric motors in the baseline even though 
they are clearly substitutable and have the potential for further 
development as a marine power source. However, EPA lacks an appropriate 
emission factor to assign them. An emission factor is needed before 
including them in the baseline because electricity from a power plant 
must be used to recharge the battery. The appropriate emission factor 
is debatable. EPA requests comments on including electric motors in the 
baseline and on an appropriate emission factor for electric motors.

G. Level of HC Standard for Spark-ignition Outboards and Personal 
Watercraft Engines

    EPA is proposing an HC average emission standard, which when 
completely phased-in (model year 2006), will result in an overall 75 
percent reduction in HC emissions from spark-ignition outboard and 
personal watercraft engines from baseline levels. The HC emission 
reduction will come from the use of cleaner technologies, such as 2-
stroke direct injection, 4-stroke, catalyst or other technologies, for 
outboard and personal watercraft engines.
    The following issues are related to the level of the HC standard:

1. The marginal cost-effectiveness of emission control
2. Consideration of price elasticity effects
3. Spreading capital control costs over time
4. The level of the NOX standard
5. Adherence to statutory criteria

    EPA's proposal balances these concerns. Comments are requested on 
the proposed regulatory package, including comments on any individual 
element. If comments prompt EPA to change any individual element in the 
Final Rulemaking, changes in other elements may be necessary as 
outlined in the following sections.
1. Marginal Cost-Effectiveness Curve
    EPA used the marginal cost-effectiveness curve in Figure 2 as an 
analytical tool for choosing the target reduction from outboards and 
personal watercraft. EPA is proposing a 75 percent reduction in HC 
emissions from outboards and personal watercraft. EPA believes that the 
marginal cost-effectiveness of emission control begins to decrease 
dramatically after a 75-80 percent reduction. EPA believes that there 
is a confidence range around the marginal cost-effectiveness curve, 
because of the possibility that either the costs or the effectiveness 
of various technologies in reducing emissions is over or 
underestimated. If costs (and therefore engine prices) are higher than 
predicted, there could be a negative impact on turnover to clean 
engines. Consumers may choose to hold on to old higher emitting 
engines, and therefore expected benefits would not be achieved. The 
data on which the benefits have been estimated is new engine data. EPA 
and the manufacturers have little data on in-use deterioration in these 
engines and no data on in-use deterioration from engines equipped with 
certain future technologies (such as direct injection). EPA proposes 
that the emission levels required under the standards curve to be 
maintained in-use. Although EPA does not have hard data for in-use 
emissions for all technologies, EPA expects that some deterioration may 
occur. Therefore, setting the standards curve at a 75 percent reduction 
to account for in-use emissions seems reasonable. Requiring an 80 
percent reduction carries the risk that engines could not comply in-
use. EPA requests in-use testing data on all emission reduction 
technologies. EPA believes that an HC reduction level of 75 percent for 
outboards and personal watercraft allows for these uncertainties in 
predicted marginal costs and effectiveness.

BILLING 6560-50-P

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BILLING CODE 6560-50-C
    However, EPA believes that estimated benefits of control technology 
could be understated by the manufacturers. EPA's analysis of emission 
levels submitted by manufacturers found that for the different control 
technologies, a range of emission results were reported. While it is 
expected that costs should differ between manufacturer due to the 
industry structure, one would expect less variation in the emission 
results for the same control technology. There may be a learning curve 
for manufacturers in the calibration of control technology which 
explains the variation in controlled emission levels which EPA saw in 
the manufacturers data. A reduction of this variation, however, is only 
estimated to at best make 85 percent an appropriate HC reduction level 
based on the marginal cost-effectiveness curve.
    EPA is requesting comment on requiring a reduction of 80-85 percent 
for outboards and personal watercraft. Looking simply at the curve as 
shown in Figure 2, in EPA's judgement an 80 percent reduction reflects 
the level at which additional reductions are shown to become relatively 
expensive per unit of emission reduction achieved. Since the data was 
supplied by engine manufacturers, who do not have an interest in 
understating costs, EPA believes actual costs are close to these 
levels, if not lower. This data shows that the cost of additional 
control increases relatively quickly at the 80 percent point. However, 
the expected cost of control at 80 percent reduction is relatively 
moderate ($2,000/ton of HC reduced) compared to other programs EPA has 
implemented for HC control.
    Reductions beyond 80 percent from outboards/personal watercraft are 
possible, as are reductions from sterndrive/inboard engines. These 
reductions tend to be quite expensive as they involve engines which, 
due to their size, sales, or use are expensive to control. EPA requests 
comments on reductions at, and beyond the 75-80 percent level from 
outboard/personal watercraft.
2. Elasticity Effects
    Price elasticity is the economic term for the degree to which 
changes in product prices influence sales. Based on the best 
information available, EPA expects that a given percentage price 
increase due to production cost increases will have at least as large a 
corresponding percentage impact on sales. Such a response is customary 
with discretionary products and most marine engines are discretionary 
purchases.
    Two effects of the price increase expected due to this regulation 
should be recognized. First, as mentioned above, the price increase can 
be expected to lead to a decline in sales of new engines. Second, the 
decline in sales means either that people find new forms of recreation 
or buy used marine engines. EPA is not in a position to determine the 
extent to which people will substitute other forms of recreation, such 
as sailing, or will buy a greater number of used marine engines. 
Substitution of some forms of recreation, such as sailing, will likely 
benefit the environment. However, if the increased price of new marine 
engines results in increased demand for used marine engines, the 
environment may be harmed in the short run because people will not be 
buying the newer, cleaner engines to replace old engines. The useful 
life of unregulated engines may be extended.
    EPA is concerned about the effect of a price increase on new engine 
sales. If people continue to boat, it would be better for the 
environment if people buy and use new, clean, controlled engines rather 
than old, dirty, uncontrolled engines. Therefore, when setting the HC 
emission standard level, EPA has decided to err on the conservative 
side of the confidence range about the marginal cost-effectiveness 
curve and propose a level of 75 percent HC emission reduction for 
outboard and personal watercraft engines. The price effect for 
outboard/personal watercraft will be less than if EPA chose 80 percent 
or 85 percent HC emission reduction, as discussed previously regarding 
marginal cost-effectiveness.
    EPA requests comment as to whether price elasticity concerns should 
be used as a criterion for setting emission standards. Additionally, 
comment is requested on what the appropriate HC emission reduction 
target should be for outboards and personal watercraft if price 
elasticity is not a concern.
    Finally, EPA requests comments on programs which may be constructed 
to encourage turnover of the in-use fleet of marine engines. EPA 
believes that scrappage programs may be a way of influencing the 
attrition of old marine engines and the demand for new marine engines. 
It is conceivable that such a program could be constructed in 
conjunction with a national standard if issues surrounding surplus and 
quantification of emissions could be addressed. Interested readers 
should see EPA's MERC guidance for more information on this topic (Feb 
23, 1993; 58 FR 11134).
3. Leadtime and Phase-In Considerations
    EPA is proposing a phase-in of the required emission reductions for 
outboard and personal watercraft engines over a period of 9 model years 
beginning with model year 1998. EPA recognizes that this is a long 
phase-in period with a short leadtime period. However, it is justified 
by the standards structure, the large reduction in HC proposed, the 
expected costs of this to be imposed by regulation, and the related 
revolutionary changes to engines and production lines.
    The technologies needed to achieve the proposed HC emission 
reductions are revolutionary technologies for this industry. Sufficient 
time is necessary to allow industry to design engine models and alter 
production lines. Consumer acceptance of the new types of outboards and 
personal watercraft will be critical to future viability of the 
industry. This is because the engine technologies will be different and 
unfamiliar. The proposal takes the market in one step from 2-stroke 
technology, which has not changed since the 1950's, to technologies 
associated with 4-stroke hydrocarbon levels, which include 4-stroke, 
direct injection 2-stroke, or catalyst technologies. Further, for some 
types of engines, particularly larger outboard motors, technical 
difficulties exist in applying emission reduction technology which 
necessitate a longer phase-in (such as, development of direct injection 
2-stroke technology for large outboards).
    Compounding these concerns is the fact that industry is coming out 
of a recessionary period in 1991 and 1992 which drained resources. 
Companies are in the process of rebuilding financial resources after 
these setbacks. The economic recovery should allow companies to regain 
resources, although perhaps lagging behind the economy as a whole. In 
the future, with ample phase-in, companies should be in a good position 
to handle the product development and production line costs which will 
be incurred due to this regulation. EPA believes that spreading the 
cost increases due to the proposed regulations over a longer period is 
important for those reasons and because industry estimates indicate 
that consumers are price sensitive. Estimates indicate that shortening 
the phase-in period to 7 years would increase annual costs by over 30 
percent for the proposed level of reductions. Given that the emission 
reductions will result from new engine sales and not from the entire 
fleet, EPA believes that the small amount of reduction foregone by the 
long phase-in is worth the expected reduction in cost and price allowed 
by spreading the costs over a longer period. Allowing time for the 
market to adjust to a changing cost structure will help to maintain the 
economic vitality of the market and potentially mitigate large 
adjustments to sales volumes. Therefore, it is essential that ample 
time be given for industry and consumer adjustment to the new cost 
structure imposed by regulation.
    Moreover, nonattainment areas need to achieve emission reductions 
from gasoline marine engines as a long term attainment maintenance 
strategy. EPA is proposing a long term strategy that will achieve as 
much HC emission reduction as is relatively cost-effective from this 
source as explained above in the discussion of marginal cost- 
effectiveness. EPA is proposing a reduction level which pushes the 
limits of the marginal cost-effectiveness curve. It is EPA's opinion 
that the proposed emission reductions reflect the most aggressive 
emission reduction strategy feasible as an attainment maintenance 
strategy. Therefore, EPA is proposing a maintenance strategy, allowing 
a 9 model year phase-in period.
    In addition, incentives are proposed to facilitate early emission 
reductions beyond the requirements. Manufacturers have an incentive to 
achieve emission reductions in excess of the requirements, especially 
in the early years of the phase-in, because the average standard level 
is not as low in the early years of the phase-in as it is in the later 
years. Manufacturers have the opportunity of banking unused emission 
credits, thereby attaining reductions in excess of program targets. 
This issue is discussed further in issue section M. ``Banking of 
Emission Credits''.
    Additionally, the proposed phase-in regulatory structure has the 
advantage of requiring specific emission reduction progress each year 
of the phase-in. The regulatory structure requires that the new engine 
fleet for each model year of the phase-in reduce emissions by a set 
percentage from the baseline new engine fleet level.
    Last, leadtime has been reduced by the standards structure. 
Implementation begins only 2 years after scheduled final rule 
promulgation. This 2 year leadtime is significantly less than leadtime 
given in the past for on-highway motor vehicle regulations. The 
implementation date is sooner than it would have to be for a program in 
which all engines would meet a certain level, because EPA believes that 
averaging and trading affords early reductions for those engines which 
are most cost-effective to control.
    In light of these points, EPA believes that the 2 year leadtime and 
9 year phase-in period are appropriate and feasible for the proposed 
emission reduction requirements. Because EPA is taking comment on the 
level of the HC emission standard, it should be noted that deviations 
from the proposed level would impact the length of the phase-in period. 
For example, if EPA were to finalize a less stringent HC emission 
standard level in response to comment, then less costs would be imposed 
on industry and consumers, and regulatory costs could be spread over 
fewer model years. If EPA finalizes a more stringent HC emission 
standard level than that proposed, the additional costs imposed may 
require a longer phase-in period. However, EPA's opinion is that it is 
unlikely that the 2 year leadtime would need to be changed as the 
result of either a less or more stringent HC emission standard.
4. Level of NOX Standard
    EPA is proposing to set average NOX emission standards for 
outboard and personal watercraft engines at 6.0 g/kW-hr and for 
sterndrive and inboard engines at 6.5 g/kW-hr. The level of the HC 
standards impacts the level of the NOX standards. The types of 
technologies used to reduce hydrocarbons from current technology 2-
stroke engines will likely result in increased NOX levels. EPA 
believes that the proposed standards reflect the proper balance between 
HC and NOX standards: They achieve significant reductions in HC 
emissions while minimizing the increase in NOX emissions. 
Therefore, in considering different levels of HC standards from those 
proposed in today's notice, commenters must also consider the impact on 
NOX standards and inventory levels. EPA requests comments on 
NOX standards below, above, or at the proposed levels of 6.0 g/kW-
hr for spark-ignition outboard/personal watercraft engines and 6.5 g/
kW-hr for sterndrive/inboard spark-ignition engines. The HC/NOX 
tradeoff issues is an important issue which is discussed in much 
greater detail in several other sections of this preamble.
5. Proposed Standards Fit Statutory Criteria
    EPA believes that the proposed standards structure is consistent 
with the statutory requirements of Clean Air Act (CAA) section 213. The 
Act requires EPA to consider costs, leadtime, and other factors in 
making its determination of the ``greatest degree of emission reduction 
achievable through the application of technology which the 
Administrator determines will be available.'' Though the language of 
CAA section 213 is silent on the issue of averaging and trading, it 
allows EPA considerable discretion in determining what regulations are 
most appropriate for implementing CAA section 213. The statute does not 
require a specific standard or technology to be implemented. Further, 
the emission standards under CAA section 213(a)(3) are ``applicable to 
emissions from * * * classes or categories'' of new nonroad engines or 
vehicles. This indicates that EPA's regulations may apply to nonroad 
engine classes in the aggregate, and need not apply to each nonroad 
engine individually.
    At the same time, EPA believes that any averaging and trading 
program must be consistent with the statutory requirement that the 
standards reflect the greatest degree of emission reduction achievable 
through the application of available technology. EPA believes that the 
proposed standards are fully consistent with this requirement. The 
proposed emission standards have been established in light of averaging 
and trading program elements. EPA is proposing average emission 
standard levels that are set lower than they would be if all engines 
had to meet these standards because averaging and trading allow EPA to 
set a higher target level of reduction, yet still at a reasonable cost. 
In essence, the cost advantages of averaging and trading would be used 
to achieve a larger emission reduction.
    The averaging and trading program elements are inherent in the 
proposed standards structure and were not designed to simply increase 
regulatory flexibility to manufacturers and/or lower costs. EPA does 
not consider these program elements to be optional. While averaging and 
trading do increase flexibility and lower cost compared to command-and-
control, the command-and-control option is infeasible at the proposed 
standard levels due to the high costs of trying to achieve the proposed 
levels with every engine.
    The proposed standards structure contains emission standard levels 
determined by applying the concept of cost-effectiveness. This is 
explained previously in section IV(D)(2).
    EPA believes that the proposed standards level is consistent with 
the statutory requirements of CAA section 213. A discussion of the 
technologies and levels considered by EPA can be found in section V(I).

H. NOX Emission Standards for Gasoline Spark-Ignition Engines and 
NOX/HC Tradeoff

    The main focus of this regulation is to reduce the extremely high 
HC emission rates of current technology 2-stroke marine engines. 
However, EPA is striving to minimize any increase in NOX emissions 
which could occur as a result of the stringent HC standards. 
Information gathered during the development of this proposal suggests 
that for outboard engines, HC emission rates of 4-stroke outboards are 
roughly 10-14 times lower than current technology 2-stroke outboards. 
However, NOX emission rates are roughly 2-4 times higher for 4-
strokes than for 2-strokes. Direct injection 2-stroke technology is 
also expected to substantially reduce HC emissions while increasing 
NOX emissions beyond the levels emitted by the 2-stroke technology 
levels.
    The high HC and low NOX levels of current technology 2-stroke 
engines are inherent in the operation of such engines. For such engines 
the air/fuel intake mixture is used to push the exhaust gas out of the 
cylinder, resulting in a substantial dilution of the exhaust gases with 
unburned intake fuel. This ``scavenging'' of exhaust gases by fresh 
air/fuel charge results in a substantial portion of unburned fuel being 
pushed out with the exhaust gases. As a result, HC emissions are 
extremely high. However, NOX emissions are low due to the lower 
combustion temperature resulting from exhaust being mixed in with the 
air/fuel intake mixture and from low oxygen levels due to rich air/fuel 
mixtures. Any modifications that raise combustion temperatures would be 
expected to increase NOX levels.
    Most of the technologies being considered to reduce HC from spark-
ignition marine engines will result in NOX increases. For example, 
with 4-stroke technology, exhaust gases are pushed out of the cylinder 
by the piston during the exhaust stroke. Therefore, compared to the 
pre-combustion air/fuel mixture of a current technology 2-stroke 
engine, the mixture of a 4-stroke engine contains much less exhaust 
gas. This in turn results in higher combustion temperatures, and 
therefore higher NOX emissions from 4-stroke engines.
    EPA believes that the increased NOX emissions from 
technologies that will replace current technology 2-stroke engines can 
be somewhat offset by reductions in NOX emissions from 4-stroke 
spark-ignition sterndrive and inboard engines. These NOX 
reductions are available from at least three mechanisms: Exhaust gas 
recirculation (EGR), catalysts, and recalibration. In developing the 
standard to propose for these engines, EPA only considered 
recalibration and EGR because these changes can be performed by the 
manufacturer at reasonably low cost. Three way catalysts are more 
expensive equipment and their performance has not been demonstrated in 
the marine environment. EPA wants to ensure that inboard/sterndrive 
engines (which are relatively low emitting engines) will be attractive 
substitutes for outboards and personal watercraft in those applications 
where substitution is a viable option, and is therefore concerned that 
the regulations proposed today should not significantly increase the 
cost of inboard/sterndrive engines.
    EPA performed emission testing on 3 inboard marine engines which 
had a range of calibrations resulting in various levels of HC and 
NOX emissions. The HC vs. NOX emissions were plotted and a 
calibration was extrapolated which could potentially reduce NOX 
emissions with a slight penalty for HC emissions. As a result, EPA is 
proposing an average NOX standard of 6.5 g/kW-hr for spark-
ignition sterndrive and inboard engines, which represents about a 10 
percent reduction in NOX emissions from today's sterndrive and 
inboard engines. This results in an increase in overall NOX 
emissions from all gasoline spark-ignition marine engines of 32 
percent. If EPA did not require this 10 percent reduction in NOX 
emissions from 1990 sterndrive/inboard engine NOX emissions levels 
(which average at 7.0 g/kW-hr), the overall increase in NOX from 
all gasoline spark-ignition marine engines would be 38 percent. While 
the additional 6 percent reduction (32 percent versus 38 percent) may 
not appear to be significant, manufacturers claim that 1994 engines 
have significantly higher NOX than did 1990 engines due to 
recalibration to meet customer desires. Therefore, EPA may be 
mitigating larger NOX increases not reflected by the 1990 sales 
fleet of sterndrive/inboard engines by requiring the 6.5 g/kW-hr 
average NOX emission standard.
    Although not proposed in today's notice, EPA has also considered 
setting NOX levels below 6.5 g/kW-hr. EPA has estimated that to 
totally offset the increase in NOX from spark-ignition outboards 
and personal watercraft, a level of 3.9 g/kW-hr would be required for 
spark-ignition sterndrive and inboard engines. EPA rejected the 3.9 g/
kW-hr standard because EPA believes that there are substantial 
technological problems with achieving this level from these engines. 
For example, if this level were to be achieved by recalibration and or 
timing adjustment, HC and CO emissions would increase substantially for 
these engines. EPA believes that to meet such a standard and keep HC 
and CO low, all sterndrive and inboard engines would have to utilize 
closed loop fuel systems with three-way catalytic converters. The costs 
for such controls would not justify the relatively small benefit from 
these marine engines, which are already relatively clean.
    EPA has more seriously considered levels between 3.9 g/kW-hr and 
the proposed level of 6.5 g/kW-hr. A level of 6.0 g/kW-hr has been 
considered for inboards and sterndrives. This would result in an 
overall increase in NOX emissions from all gasoline spark-ignition 
engines of 25 percent as compared to 32 percent for the proposed 6.5 g/
kW-hr standard. EPA currently does not have sufficient information 
regarding the effects of calibrations and EGR to attain such standards 
on the drivability and durability of gasoline spark-ignition sterndrive 
and inboard marine engines. EPA requests information on such effects at 
the level of 6.0 g/kW-hr. It must be noted that any increase in 
NOX emissions from spark-ignition marine engines will be more than 
offset by the reduction in NOX expected from the proposed NOX 
standards for diesel compression-ignition marine engines.
    EPA requests comments on the feasibility of the proposed NOX 
emission standards for spark-ignition sterndrive/inboard engines and 
outboards and personal watercraft engines. EPA requests comments 
regarding the trade-off between HC reductions and NOX increases 
for marine engines. EPA also requests comments on whether or not the 
proposed NOX standards are appropriate, or if they should be 
higher or lower in light of the HC/NOX trade-off. Specifically, 
EPA requests comments on the proposed level and structure of the 
emission standards as a way of meeting the goal of significant HC 
reductions while minimizing NOX increases.
    While the NOX standards are different for outboard/personal 
watercraft and sterndrive/inboard categories, EPA is proposing to allow 
emissions averaging to achieve standards for the following reasons. 
First, an average standard may be set that results in greater economic 
efficiency than a cap type of standard which all engines must meet. 
Second, an average NOX standard provides incentives for the 
manufacturer to achieve levels lower than the standard using new 
technologies. These new technologies might be useful not only for 
reducing the emissions from the engine on which they are used but also 
for setting more stringent standards in the future in other rules.

I. Effect of Available Technologies on Emissions and Performance From 
Gasoline Spark-Ignition Engines

    Chapter 1 of the draft Regulatory Support Document describes the 
technologies EPA has determined will be capable of meeting the proposed 
standards. This section will discuss the emission reductions EPA 
believes can be expected from these technologies, and the impact of 
these technologies on performance. The discussion is organized by 
equipment types because the equipment type has a large impact on which 
control technologies are available.
    When considering an appropriate standard level for marine engines, 
CAA Section 213 requires EPA ``In determining what degree of reduction 
will be available, the Administrator shall first consider standards 
equivalent in stringency to standards for comparable motor vehicles or 
engines (if any) regulated under section 202, taking into account the 
technological feasibility, costs, safety, noise and energy factors 
associated with achieving, as appropriate, standards of such stringency 
and lead time.'' This section will discuss the automotive technologies 
considered, primarily four-stroke engines and catalytic converters, and 
why EPA is not purposing standards of equivalent numerical value to 
standards applied to motor vehicles. The use of catalytic converters on 
current two-stroke crankcase charge scavenged outboard and personnel 
watercraft engines is discussed, along with the technological 
difficulties associated with the application of catalytic converters to 
such engines. In addition, EPA considered the application of catalytic 
converters to four-stroke outboard and personnel watercraft engines as 
well as sterndrive and inboard engines. The technological difficulties 
of applying catalytic converters to marine engines, while not 
insurmountable, would be costly. When considering the level of the 
standard on a marginal cost effectiveness basis, the application of 
catalytic converters to four-stroke marine engines was found to be 
relatively expensive for the emission benefit derived from the 
technology.
1. Spark-ignition Outboard and Personal Watercraft Engines
    Several technologies were considered for reduction of HC emissions 
from current two-stroke outboard and personal watercraft engines: 
conversion to four-stroke, direct-injection two-stroke, recalibration 
of current two-strokes, and the use of catalytic converters. In 
determining the benefits from these technologies, EPA compared 
emissions rates (on a brake specific work basis) from current two-
stroke outboard and personal watercraft engines without these emission 
control technologies to estimates and test data from engines with these 
emission control technologies. Most of this data was received from the 
marine engine manufacturers. EPA has also made independent estimates as 
well and both are summarized in Table 2.

   Table 2.--EPA and Marine Engine Manufacturer Range of Estimates of   
 Potential Hydrocarbon Emission Reduction, per Engine, for Current Two- 
                Stroke Outboards and Personal Watercraft                
------------------------------------------------------------------------
                                                              HC percent
                                                              reduction 
                                                               estimate 
                                                             ranges, per
                         Technology                          engine mass
                                                               specific 
                                                               emission 
                                                               rate (%) 
------------------------------------------------------------------------
Conversion to Four-Stroke..................................        75-95
Two-stroke direct injection................................        75-90
Recalibration of current two-strokes.......................         8-20
Catalytic converters on current two-strokes................        65-75
Electronic Fuel Injection on current two-strokes (crankcase             
 injection)................................................        15-25
Electronic Fuel Injection w/ Catalytic converter on current             
 two-strokes...............................................        65-75
------------------------------------------------------------------------

    EPA's estimate for per engine mass emission rate reductions of 
carbon monoxide (CO) for personal watercraft and outboards ranges 
between 8 and 45 percent for most technologies, depending on the engine 
size. The direct injection two-stroke technology is the one exception. 
Due to the lean-burn nature of direct injection, EPA expects this 
technology to result in a per engine reduction in the brake specific 
emission rate of CO to be between 40 and 80 percent, depending on the 
particular engine size.
    One inherent characteristic of current air-fuel crankcase scavenged 
two-stroke engines is the low emission rate for oxides of nitrogen 
(NOX). The primary source of NOX in spark-ignition engines is 
the oxidation of atmospheric nitrogen. The chemical reactions for 
production of NOX have large activation energies, therefore 
NOX formation is strongly dependent on temperature. In addition, 
since NOX is formed by the oxidation of nitrogen (N2), 
NOX formation is also dependent on the availability of oxygen, 
(excess oxygen results from lean air-fuel ratios (A/F)). The condition 
at which the A/F ratio is chemically balanced for full combustion is 
called stoichiometry. At a rich A/F, when there is not enough oxygen 
present to fully burn the fuel, NOX formation will be low relative 
to the same engine running under lean A/F, when there is more oxygen 
than necessary to fully burn the fuel. The current state of the marine 
outboard and personal watercraft industry has developed around the two-
stroke crank-case charge scavenged gasoline spark-ignition power 
source. These engines are run at A/Fs on the rich side of 
stoichiometry, resulting in relatively low combustion temperature, 
incomplete combustion, and, therefore, low NOX production.
    However, the richness of the charge does not explain why current 
two-stroke engines have lower mass emission rates of NOX than 
comparably powered four-strokes running at the same A/F. The 
explanation lies in the exhaust remaining in the combustion chamber of 
two-stroke engines from the previous power stroke. This exhaust, which 
was not completely scavenged by the air-fuel intake mixture, acts as 
internal exhaust gas recirculation (EGR). EGR is a well documented 
technique used to lower NOX production in four-stroke gasoline 
spark-ignition engines. EGR acts as a diluent to the fresh charge in 
the cylinder, reducing peak burned gas temperatures, and thereby 
reducing NOX formation.
    Currently unregulated two-stroke crankcase charge scavenged 
outboard and personal watercraft engines have NOX emission rates 
which range from 0.5 g/kW-hr up to 4.0 g/kW-hr. EPA estimates that the 
two primary technologies which will be used to meet the proposed HC 
standard, conversion to four-stroke engines and two-stroke direct 
injection, will both result in an increase in the level of NOX 
produced by outboard and personal watercraft engines. In order to meet 
the proposed level of HC emissions, EPA estimates that manufacturers 
will need to recalibrate their engines to run at leaner air-fuel 
ratios, resulting in higher combustion temperatures, more complete 
combustion, and some increase in NOX formation. In addition, 4-
stroke technology has little ``internal EGR'' which could reduce 
NOX emission rates. On a per engine basis, depending on the engine 
size and technology used to meet the proposed HC standard, the mass 
specific emission rate of NOX will increase to values in the range 
between 4 and 12 g/kW-hr. However, EPA estimates the overall average 
NOX for all outboard and personal watercraft engines to be 6 g/kW-
hr after HC standards are met. Some of this increase in NOX 
emissions can be counter-balanced by use of external EGR technology.
    The primary performance effect from the conversion from 2-stroke 
crankcase charge scavenged engines to 4-stroke engines is the decrease 
in power to weight ratio. Based on information available on currently 
marketed 2- and 4-stroke outboard engines, EPA estimates the weight of 
the power unit for both outboards and personal watercraft will increase 
between 23 and 35 percent for a given rated power. Power to weight 
impacts resulting from the use of 2-stroke direct injection technology 
should be minimal. EPA estimates the additional weight increase from 
the added components necessary for 2-stroke direct injection technology 
will result in power unit weight increases between 5 and 10 percent for 
a given rated power.
    As discussed previously, EPA considers the use of catalytic 
convertors in certain applications (with limited conversion efficiency) 
on 2-stroke crankcase charge scavenged engines as a potentially 
feasible and cost effective control method for outboards and personal 
watercraft. The increase in packaging size will add some additional 
weight to the engine; however, EPA does not believe this weight 
increase will be as great as is involved with the conversion to four-
stroke engines. EPA does not believe there will be any significant 
performance changes to engines with the application of catalytic 
convertors other than the decrease in power to weight ratio. However, 
EPA requests comment on any safety or performance effects with the 
potential use of catalytic convertors on marine engines.
2. Spark-Ignition Sterndrive and Inboard Engines
    EPA has examined a range of technologies for the control of exhaust 
emissions from sterndrive and inboard spark-ignited engines. These 
technologies include the following; recalibration of current carbureted 
and electronic fuel injection (EFI) engines for maximum emission 
reduction benefit, conversion of current carbureted marine engines to 
electronic port fuel injection, and the application of oxidizing (or 
three-way) catalytic convertors to current 4-stroke spark-ignition 
marine engines. Table 3 shows the range of hydrocarbon reductions 
estimated by EPA and industry on a per engine basis for the three 
technologies investigated by EPA.

   Table 3.--EPA and Marine Engine Manufacturer Range of Estimates of   
    Potential Hydrocarbon Emission Reduction, per Engine, for Current   
                     Sterndrive and Inboard Engines                     
------------------------------------------------------------------------
                                                              HC percent
                                                              reduction 
                                                               estimate 
                                                             ranges, per
                         Technology                          engine mass
                                                               specific 
                                                               emission 
                                                              rate (%)  
------------------------------------------------------------------------
Recalibration of Current Engines...........................         8-20
Electronic Fuel Injection..................................         8-20
Application of Catalytic Convertors........................       65-75 
------------------------------------------------------------------------

    EPA has determined that recalibration of current engines is the 
most cost effective approach.

J. Effect of Available Technologies on Emissions and Performance From 
Compression-Ignition Engines

    EPA proposes that the existing nonroad compression-ignition 
regulations (40 CFR 89) to cover compression-ignition marine engines, 
with appropriate modifications to test procedures and implementation 
dates. Both the expansion to marine engines and the two areas of 
modification will affect to some extent the technologies which are 
available to control emissions. Interested readers should review the 
existing nonroad compression-ignition regulations (June 17, 1994; 59 FR 
31306) for more detailed information about the technologies needed. The 
discussion below considers the changes to technologies used due to the 
differences between this proposal and the existing nonroad regulations.
1. Types of Compression-Ignition Marine Engines
    EPA is proposing to regulate the two different types of 
compression-ignition marine engine applications: auxiliary power units 
and propulsion engines. Auxiliary power units are generally the same 
engines as those used as nonroad generator sets for land-based 
applications. Many marine propulsion engines also have similar land-
based engine counterparts, though marine engines often have cooling 
systems which take advantage of the abundant water supply. Since 
NOX is highly temperature dependant, the increased cooling 
availability should make achieving lower NOX standards simpler 
than it would be for other engines.
2. Leadtime and Cost
    EPA's existing nonroad compression-ignition engine rule phases in 
from 1996 through 2000 by different power categories. Today's rule is 
proposed to be effective for all except the largest marine engines on 
January 1, 1999. The standards are proposed to be effective for the 
largest marine engines (at or above 560 kW) on January 1, 2000, which 
is the same as the effective date for similar size new nonroad land-
based engines. The technologies that EPA expects to be used to meet the 
proposed compression-ignition marine engine standards are available 
technologies that can be applied within the proposed timeline and at 
low cost. These technologies have been used for on-highway engines for 
several years and are now being applied to nonroad engines in response 
to the California Air Resources Board's heavy duty off-road equipment 
and EPA's rules. Further, cooling is already more effective on marine 
engines than on other nonroad engines, since a ready supply of water is 
available. More cooling is needed since the engines are in a confined 
place. Therefore, compliance for these engines should be simpler than 
for other compression-ignition nonroad engines. However, in tropic 
regions, this cooling water may be as warm as 90-95 deg. F.
    The Agency is proposing that all compression-ignition marine 
engines comply with the proposed standards in 1999 except those over 
560 kW, which would be required to comply in 2000. This would allow 
marine engine manufacturers to continue their development plans for 
nonroad engines generally, while requiring them to apply it to marine 
engines as soon as possible. EPA believes that the larger engines 
should be able to comply with the standards on the same timeline as 
other nonroad engines because 5 years leadtime is quite generous given 
that no new technology is required to meet the standards proposed.
    EPA believes, however, that allowing this much leadtime is not 
excessive because many of the manufacturers of these engines are the 
same manufacturers who must also comply with the 1998 on-highway engine 
standard and the other nonroad engine standards. While the various 
engines are similar and the technologies needed are available, 
engineering effort is needed to accommodate the differences between 
engines.
    As discussed at length in the existing nonroad compression-ignition 
engine rule, the technologies determined by EPA to be feasible to meet 
the proposed standards will be available for reasonably low cost, at 
approximately $110 per engine, and will have high cost-effectiveness, 
at approximately $86 per ton of NOX reduction. EPA expects that 
these cost and cost effectiveness numbers will also be the same for 
compression-ignition marine engines. EPA requests comments on the 
proposed standards, leadtime and costs for compression-ignition marine 
engines.
3. Test Procedure
    The test procedure used for diesel compression-ignition marine 
engines is different from that used for most other compression-ignition 
engines (this is discussed in more detail in a later section: 
``Representativeness of the Test Procedures.'') This difference results 
from the different duty cycles involved in marine as opposed to other 
applications. The test cycle for marine compression-ignition engines 
and the test cycle for land-based compression-ignition engines weight 
the test points differently, but both weight the high power levels 
significantly. While the ISO E5 5-Mode test cycle for compression-
ignition marine engines used as propulsion engines has a lower load 
factor than the ISO C1 8-Mode test cycle adopted for other large 
nonroad compression-ignition engines, both cycles characterize a number 
of steady-state modes between idle and wide open throttle operation. 
The emission control technologies predicted to meet the large nonroad 
compression-ignition engine rule (59 FR 31306, June 17, 1994) are 
capable of proportional emission control over the entire range of 
operation covered by both ISO E5 and ISO C1. Therefore, proposing the 
same level of emission standards tested over the ISO E5 test cycle as 
were promulgated for use with the ISO C1 test cycle will result in use 
of the same technologies (some calibration differences may be needed). 
However, EPA is interested in comments on whether the leadtime should 
be extended to allow more testing to ensure engines meet the new 
standards.

K. Representativeness of the Test Procedures

 1. ISO E4 Cycle for Gasoline Spark-ignition Marine Engines
    The emission standards in this proposal for gasoline spark-ignition 
marine engines are based on the 5-mode steady state test procedure 
developed by the International Council of Marine Industry Associations 
(ICOMIA) and referred to by ISO as the E4 cycle. EPA's primary concerns 
in the choice of a test procedure are that the test procedure must 
accurately predict actual in-use emissions of the engine being tested 
and that the emission control technologies applied to the test engine 
to meet the proposed standard result in comparable emission reduction 
when applied to production engines in actual use.
    EPA believes that a standard based on the ICOMIA test procedure is 
appropriate to ensure that marine engines will meet the emission 
reduction goals of this regulation while operating in-use. Although 
preliminary data show that emissions from marine engines are highly 
sensitive to transience, EPA has not yet gathered enough data to 
determine whether or not a transient test cycle better represents 
actual in-use engine operation than a steady state cycle. For these 
reasons, the duty cycle from the ICOMIA test procedure is being 
proposed for this rulemaking.
    The International Bodensee Shipping Commission has also developed 
an 8-mode steady state cycle (BSO cycle) from the same data that was 
used to develop the ICOMIA cycle. This cycle contains the five modes 
from the ICOMIA plus an additional three modes. Consequently, different 
weighting factors are used to calculate composite emissions. Neither 
EPA nor industry testing has shown that significant additional control 
would be gained by using the three additional operating points in the 
BSO cycle. Therefore, the additional test length of the BSO cycle would 
not be justified. In addition, emissions from engines tested on the BSO 
steady state cycle could easily be converted to represent ICOMIA cycle 
results. Therefore, EPA proposes the option of using the BSO cycle and 
calculating the results based on the modes and weightings of the ICOMIA 
cycle.
2. ISO E5 Cycle for Marine Propulsion Compression-ignition Engines
    The ISO E5 test procedure was developed from operational data 
collected by Volvo on recreational boats and data collected by the 
Norwegian government on several classes of commercial fishing vessels. 
For the purpose of developing the cycle, data from vessels with engines 
rated over 375 kW (500 hp) were not used.
    EPA is proposing a marine cycle for compression-ignition marine 
engines different from that proposed for gasoline spark-ignition marine 
engines due to the significantly higher power factor typical of 
compression-ignition marine engine operation. This higher power factor 
is attributed to the typical use of large displacement hull vessels 
with compression-ignition marine engines, while gasoline spark-ignition 
marine engines are typically used in smaller planing hull craft.
    EPA requests comment on the possible use of the ISO E2 constant 
speed cycle for compression-ignition marine engines, as well as the ISO 
E3 propeller law cycle for compression-ignition marine engines. The 
principle difference between the ISO E3 and E5 cycle is the exclusion 
of an idle mode from the ISO E3 cycle which is included in the ISO E5 
cycle. EPA requests comments on the distinction between the E3 and E5 
cycles and the merits of including or not including an idle mode for 
compression-ignition marine propulsion engines.
3. ISO C1 Cycle for Marine Non-Propulsion Compression-Ignition Engines
    EPA proposes to adopt the ISO C1 8-mode test cycle for all non-
propulsion marine engines covered under this rulemaking to maintain 
consistency with similar requirements for other nonroad compression-
ignition engines. The C1 cycle is identical to the 8-mode cycle used in 
40 CFR 89 for nonroad compression-ignition engines greater than 37 kW. 
EPA solicits comment on the appropriateness of the ISO C1 cycle for 
non-propulsion compression-ignition marine engines.
    However, the ISO D2 cycle may be more appropriate for generator 
sets because ISO D2 is intended to represent the generator set duty 
cycle. EPA solicits comment on the ISO D2 cycle as an alternative cycle 
for compression-ignition generator sets used on marine vessels. In 
addition, EPA solicits comment on the appropriateness of the 6-mode ISO 
G2 cycle for compression-ignition non-propulsion marine engines less 
than or equal to 20 kW. EPA is aware that this cycle is being utilized 
by the California Air Resources Board in their small utility, lawn and 
garden regulation for compression-ignition engines. EPA solicits 
comment on the rationale for using the 6-mode ISO G2 cycle and the 20 
kW break-point as opposed to the 8-mode ISO C1 cycle for all 
compression-ignition non-propulsion marine engines.

L. Safety/Noise/Energy Issues

    Pursuant to section 213(a)(3) of the 1990 Clean Air Act, if EPA 
decides to promulgate standards for new nonroad engines, EPA must 
consider the noise, energy, and safety factors associated with such 
regulations. Each of these factors is considered below.
1. Noise
    EPA does not believe that the regulations proposed in this rule 
will significantly affect the noise levels associated with marine 
engines or marine vessels. The type of engine changes which EPA 
believes will be used to meet the proposed exhaust emission standards 
will not increase engine noise. Noise levels from new technology 
engines as a result of this rule are expected to remain the same or be 
reduced compared to current technology engines. EPA requests comments 
on this issue.
2. Energy
    The regulations proposed in this rulemaking should result in 
significant fuel savings. Current technology two-stroke engines, which 
are widely used in marine vessels, do not use fuel efficiently. An 
unburned fuel/oil/air mixture is used to push the exhaust gas out of 
the cylinder (this is called ``scavenging''). As a result, a 
substantial portion of the unburned fuel and oil is pushed out of the 
cylinder with the exhaust gases. This combustion technology can result 
in wasting more than 25-35 percent of the fuel consumed. These losses 
will be greatly alleviated by the proposed regulations because 
emissions of such magnitude would fail to meet the standards. The 
regulations are likely to encourage the widespread use of 4-stroke 
technology, 2-stroke direct injection technology, or other ``clean'' 
technologies to alleviate the problem. These technologies use a more 
complete combustion process and do not use air/fuel scavenging of 
exhaust. As a result, more fuel will be burned in the engine instead of 
being exhausted unburned, and work done per unit of fuel will be 
increased.
    For example, based on manufacturer data from 1991, EPA estimates 
that changing outboard engines from current technology 2-stroke to 4-
stroke technology will result in an average decrease in fuel 
consumption of approximately 31.5 percent. EPA expects similar results 
from engines that use direct injection technology.
3. Safety
    The federal agency that regulates safety issues for marine vessels 
is the U.S. Coast Guard. The regulations promulgated by the Coast Guard 
fall into three general categories: (1) Ensuring the safety of 
passengers (regulations for personal flotation devices, and so forth); 
(2) reducing the risk of fire hazards (regulations for electrical 
systems, fuels systems, and ventilation systems); and, (3) for larger 
vessels, ensuring vessel integrity (strength and adequacy of design, 
construction, choice of materials for machinery, boilers, pressure 
vessels, and safety valves and piping).\15\
---------------------------------------------------------------------------

    \15\See Memorandum to the Docket regarding marine safety issues 
on recreational boats.
---------------------------------------------------------------------------

    EPA has sent the proposed regulations to the Coast Guard for 
review, and their comments are in the docket. It is EPA's view that the 
proposed regulations do not violate or conflict with Coast Guard safety 
mandates. The regulations proposed in this rulemaking could be affected 
by two sets of Coast Guard regulations: (1) Compartment ventilation 
requirements and (2) fuel tank ventilation requirements.
    Coast Guard regulations require that boats with compartments not 
open to the air and containing a permanently installed gasoline engine 
with a cranking motor be equipped with power-assisted ventilation. This 
ventilation system is necessary because gasoline fumes may accumulate 
in these compartments through evaporation, posing a fire hazard when 
the engine is started. The Coast Guard also mandates that compartments 
that contain: (1) An enclosed engine, (2) openings between it and a 
compartment that requires ventilation, (3) permanently installed fuel 
tanks, (4) a fuel tank with a vent that opens into the compartment, or 
(5) a nonmetallic fuel tank be equipped with natural ventilation to the 
exterior of the boat. The regulations proposed in this rulemaking do 
not require any systems that would violate any of these requirements. 
If EPA determines that evaporative emissions regulations are necessary, 
EPA will work with the Coast Guard to ensure that safety is not 
compromised.
    Second, Coast Guard regulations mandate fuel tank vents on all fuel 
tanks. Since fuel gauges are not well-calibrated on boats, in part 
because fuel tanks come in so many sizes and shapes, and since boat 
operators want to be sure they have a full tank when they leave the 
dock, refueling often continues until some fuel spills out of the tank. 
The vent is to ensure that the spillage does not fall in the boat, 
creating a fire hazard. However, fuel vents also permit the release of 
evaporative emissions. Coast Guard representatives expressed concern 
about closed fuel systems that could be mandated to reduce these 
evaporative emissions. Closed fuel systems are not currently permitted 
under Coast Guard regulations and could cause a potential safety 
hazard. Again, the regulations proposed in this rulemaking do not 
require any systems that would violate any of these requirements, since 
EPA has decided not to regulate evaporative emissions at this time. 
However, EPA intends to continue working with the Coast Guard and boat 
manufacturer groups to encourage closure of this vent at most times and 
especially when fueling is completed.
    At the same time, the proposed regulations give rise to a safety 
issue that has not yet been considered by the Coast Guard. In 
discussions with EPA, representatives of the Coast Guard expressed 
concern about the use of fuel injection systems on marine engines.\16\ 
In these systems, the fuel must be under pressure in the fuel line. 
This is a potential safety hazard that could be dangerous, especially 
when the craft is far from shore. Although the regulations proposed in 
this preamble do not specifically call for fuel injection systems, it 
is the case that marine engine manufacturers already include these 
systems on some engines and may use them more in response to these 
regulations. For this reason, it is important for EPA and the Coast 
Guard to consider the safety issues relevant to fuel injection systems. 
EPA requests comment from both the general public and the Coast Guard 
on the issue of the safety of fuel injection systems on marine engines. 
Comments from the Coast Guard are included in the docket for this 
rulemaking and are described above.
---------------------------------------------------------------------------

    \16\See Memorandum to the Docket, cited above.
---------------------------------------------------------------------------

M. Banking of Emission Credits for Gasoline Spark-Ignition Marine 
Engines

1. Banking Unused Credits During the Phase-in Period for Future Use
    EPA is proposing to allow manufacturers to carry positive credit 
balances over to future model years to help achieve compliance with 
standards applicable in those future years. This is known as an 
emission credit banking program. The rationale for allowing banking is 
that the value to society of achieving greater emission reductions 
early is greater than the detriment caused by smaller reductions in the 
future, just as we value money more today than tomorrow (and hence pay 
interest on loans). However, since there is also an interest in 
maintaining reductions into the future, EPA in general has not allowed 
unrestricted banking and does not propose to do so today. As the 
program proposed today phases in the required reductions and allows for 
lead time, special issues need to be considered.
2. Early Banking (Banking Prior to Phase-in Period)
    EPA is not proposing to allow early banking of emission credits, 
that is, banking of credits prior to the implementation date of model 
year 1998. The main reason for this is that allowing early banking 
would require early certification of every engine family of a given 
manufacturer since net emissions credits are determined based on the 
entire product line. EPA believes that allowing early banking for new 
product offerings with lower emissions will not encourage manufacturers 
to bring such engines into the market sooner or ease the transition to 
control technology since all families would have to be certified early. 
The standards structure already provides incentives to bring new 
product offerings into the market sooner because there is greater 
credit generation potential in the early phase-in years. EPA requests 
comment on allowing early banking.
3. Credit Life
    Other mobile source credit banking programs allow banked credits to 
be used in the three years following generation. This is referred to as 
a three year potential credit life. EPA is proposing a three year 
potential credit life for this rule in order to be consistent with the 
other mobile source programs on this aspect. However, EPA is requesting 
comment on shortening this credit life to a two year or one year credit 
life. Given that the standards structure is based on a declining 
average emission level, it may be reasonable to limit the potential 
credit life to two years because credits generated in previous years 
would have been calculated from a higher average standard level. EPA is 
not proposing in this rulemaking to limit the potential credit life to 
two years or one year because of the possibility that shorter credit 
life may discourage early emission reduction. Moreover, even if the 
past year's credits were generated from a higher average standard 
level, they would still represent emission reductions beyond the 
average standard level requirement. This reduction is good for the 
environment. EPA requests comments on the potential benefits associated 
with a credit life of three years, of less than three years, or of 
greater than three years.
    As described, society values earlier emission reductions more than 
later ones. Therefore, the year after emission reductions are earned, 
society values them less than it did in the year they were earned, and 
the longer the period between credits earned and used, the greater the 
benefits to society. Similarly, from the manufacturers' point of view, 
there is an incentive to use credits sooner rather than later. EPA is 
proposing expiration of credits since if it is not profitable for the 
manufacturers to use credits within the proposed 3 year life, then the 
necessity of the banked credits intended to ease the transition to 
tighter regulations is questionable. Further, by limiting credit life, 
EPA can better ensure that no manufacturer will stockpile credits early 
in the program when they may be easier to obtain and then turn them 
loose in a later year when they could significantly impact 
implementation of declining standards. Therefore, EPA is not proposing 
to extend the potential credit life beyond 3 years.
4. Determination of Amount of Credit: Year of Use v. Year of Generation
    Under the regulations proposed today, the amount of banked credits 
would be determined as of the year they are generated. EPA has 
considered and is requesting comment on whether the amount of banked 
credits should instead be determined in the year of use. Under this 
option, if a manufacturer generated banked credits in the first year of 
the phase-in, but waited to use those credits until the third year of 
the phase-in, the manufacturer could only claim the credits that the 
engine would have generated in the third year of the phase-in.
    For example, if the average emission standard for a 100 kW engine 
was 100 g/kw-hr in 1998 and the engine achieved a controlled emission 
level of 20 g/kw-hr, then the engine brake specific emission credit 
amount would be 80. However, the same engine would generate less credit 
in the year 2001 because the average emission standard would be less, 
at approximately 67 g/kw-hr. In the year 2001, the engine would only 
generate a brake specific credit amount of 47. Therefore, under this 
alternative, if the manufacturer had banked credits calculated using 80 
brake specific credits after model year 1998 and had wanted to use them 
in the model year 2001, then only 47 of the 80 brake specific credits 
would be available for use. This is called determination of the amount 
of credits by year of credit use. EPA is not proposing this. EPA is 
proposing to determine the amount of credits by year of credit 
generation.
    The amount of banked credits is reduced under this option where the 
amount of credits is determined by year of credit use. EPA is not 
proposing this option because the Agency believes that it reduces the 
incentive to achieve emission reductions beyond the required level in 
the early years of the program.
    This program may be appropriate for today's proposal but is 
unlikely to be appropriate for other regulations. In today's proposal 
the standard is phased in gradually, yet it is very unlikely that 
engine manufacturers would choose to lower the emissions of any 
particular engine gradually. The technologies which will be used to 
meet the standards proposed today achieve very significant reductions; 
the reductions will be achieved in large ``chunks.'' However, 
manufacturers phase in new technologies by using the technology on a 
portion of their fleet, not by adding more and more control to the 
fleet as a whole. Thus, in the third year, manufacturers are still 
earning credits and selling the engine that earned credits in the first 
year. Under today's proposal the same engine earns more credits in the 
first year than in the third. Since we would like engines cleaned up as 
early as possible, EPA is proposing this as the standard structure.
5. Banking Restriction for Outboard/Personal Watercraft NOX 
Emissions
    EPA proposes no banking of NOX emission credits for the model 
years 1998 through 2005 for the outboard/personal watercraft averaging 
set. The reason for this concerns the level of the NOX standard in 
relation to the HC emission standards in the phase-in years for this 
averaging set. So as not to limit the HC credit generation capabilities 
of the engine families during phase-in, EPA thinks it necessary to set 
the NOX standard during phase-in at the level most appropriate for 
the fully phased-in HC reductions for model year 2006. This means that 
the NOX standard is a fairly loose, flexible standard for the 
phase-in years. Because it is fairly loose and flexible, an additional 
banking provision would be excessively flexible and is unjustified.
    EPA will not consider allowing NOX credit banking during the 
model years 1998 through 2006 at the 6.0 g/kW-hr standard. EPA would 
only consider NOX credit banking if the NOX standard was 
incrementally increased in conjunction with the phased-in HC emission 
standards for model years 1998 through 2006. EPA requests comment on 
this option or other options which would make NOX credit banking 
acceptable during phase-in.

N. Tracking Engine Sales to Point of First Retail Sale

    For purposes of calculating emission credits, accurate sales levels 
must be used. EPA intends manufacturers to include all engines which 
are introduced into commerce in the U.S. for sale in the U.S. in the 
sales estimate. EPA does not include exports in this regulation. 
Therefore, it is important that manufacturers report sales levels to 
EPA which account for those engines actually introduced into commerce 
in the U.S., excluding any engines which are exported either by the 
engine or vessel manufacturer.
    EPA is proposing to define ``eligible sales'' for the purposes of 
averaging, trading, and banking provisions as ``marine engines sold for 
purposes of being used in the United States and include any engine 
introduced into commerce in the U.S. to be sold for use in the U.S.'' 
Therefore, EPA is requiring manufacturers to track the sales of engines 
to the point of first retail sale to determine which engines will 
remain in the U.S. and which engines will be exported. EPA is proposing 
to define ``point of first retail sale'' to mean ``the point at which 
the engine is first sold directly to an end user.'' Generally, this 
point is with the boat or engine dealer. If the engine is sold first to 
a boat or vessel manufacturer, the boat or vessel manufacturer may 
serve as point of first retail sale if that manufacturer can determine 
with certainty whether the boat is to be exported or sold to a U.S. 
purchaser.
    The main issue regarding tracking engine sales is the issue of 
determining which engines are exported and which engines are sold for 
use in the U.S. EPA's intent is to require manufacturers to track sales 
of engines only up to the point in the distribution chain where this 
determination can be made. EPA is willing to assume that if the engine 
is sold to a retail boat dealer in the U.S. that the engine is not 
exported. Further, EPA is willing to assume that if the engine is 
exported to a foreign dealer, then the engine does not re-enter the 
U.S.
    EPA requests comment on these definitions and alternative methods 
of tracking engines to satisfactorily determine whether an engine is 
exported so that accurate U.S. sales are known. Comments are also 
requested on the nature of the distribution chain for the various types 
of marine engines.

O. Nonconformance Penalties for Marine Engines

    Section 213(d) of the Act requires marine engine emissions 
standards to be subject to sections 206, 207, 208, and 209 of the Act, 
with such modifications as EPA deems appropriate. Pursuant to section 
206(g)(1) of the CAA, the on-highway heavy-duty engine emission 
compliance program provides that, in certain cases, engine 
manufacturers whose engines cannot meet emission standards may continue 
to receive a certificate of conformity and continue to sell their 
engines provided they pay a nonconformance penalty (NCP). EPA believes 
that it has the authority, pursuant to section 213 of the CAA, to 
permit such a program for marine engines. However, EPA believes that 
the use of NCPs may not be warranted given the form of the standards 
proposed in today's action and EPA is not proposing NCPs for the 
engines included in this proposal. NCPs are designed to provide relief 
for engine manufacturers who cannot develop the emission control 
technology needed to meet technology forcing standards. The Agency 
believes the proposed averaging, banking, and trading program should 
provide manufacturers sufficient flexibility to meet the proposed 
standards and should alleviate any concerns that manufacturers may have 
regarding their inability to bring some engines into compliance with 
the proposed standards. EPA requests comment on whether or not NCPs 
would be appropriate in the context of this proposed rulemaking.

P. New Vessels Must Incorporate New Engines

    EPA is aware that some new vessels are currently manufactured 
without new engines incorporated (e.g., air boats). EPA is concerned 
that such practices may compromise the intent and integrity of the 
proposed regulations. EPA is proposing to prohibit the sale of new 
vessels with old engines. This prohibition is contained in Sec. 91.8 in 
the proposed regulations.
    EPA does not intend this proposed restriction on new vessels to 
apply to vessels normally sold without any engine, such as rowboats and 
canoes. EPA requests comment on the adequacy of the proposed Sec. 91.8 
to meet this intent. Also, EPA requests comment on the necessity of 
this restriction.

Q. Emerging Market Segments

    EPA is aware of several emerging market segments of marine vessels. 
Both jet boats and air boats are new types of vessels gaining in 
popularity. EPA is proposing to include jet boats in the outboard/
personal watercraft category and airboats in the sterndrive/inboard 
category. However, EPA requests comments on jet boats, air boats, or 
any type of vessel not mentioned in this NPRM. Commenters should 
address how any such vessel should be handled in the regulations.

VI. Cost Analysis

    Refer to Chapters 1 and 2 of the Regulatory Impact Analysis for 
further discussion of all individual cost components and calculation 
methodology.

A. Gasoline Spark-Ignition Engine Cost Analysis

1. Aggregate Annual Cost
    EPA estimates the cost of this rule to be approximately $14 million 
in 1998 increasing to approximately $300 million in the year of 2006. 
The cost analysis estimates the annual cost and the price increase to 
consumers assuming that all manufacturers participate in averaging and 
trading of emission credits.
    EPA calculated manufacturers' costs on an aggregate annual basis. 
These costs consider the aggregate cost to all engine manufacturers to 
design, certify, and produce all current engines to meet the standards 
proposed in this rule. This average annual cost estimate includes costs 
for hardware, research and development, test facilities, certification 
and enforcement of engine families.
2. Consumer Cost Summary
    In assessing the cost to the consumer, three areas are analyzed: 
change to the cost of the engine, cost of fuel, and cost of 
maintenance.
    As a conservative assumption, EPA assumes that increased costs to 
the manufacturers will be fully passed on to the consumer through an 
increase in the retail price of the engine. The increase in the retail 
price of the engine to the consumer is estimated using a percentage 
increase over the average amortized and discounted per engine 
manufacturers' cost. The estimated price increase to consumer per 
engine on average due to the proposed rule in 2006 is approximately 
$700 per engine. Because of the phase-in structure of the proposal, 
costs are less during phase-in. For instance, EPA estimates the price 
increase in year one to be approximately $32 per engine on average. 
Over time, EPA estimates the cost increase will stabilize at 
approximately $565 once research and development and other capital 
costs have been recovered.

B. Compression-Ignition Engine Cost Analysis

    Because EPA is proposing the same emission standards and comparable 
certification and enforcement measures for compression-ignition marine 
engines as the Agency promulgated for large nonroad compression-
ignition engines, the cost estimates for the final rule for nonroad 
compression-ignition engines greater than 37 kw have been used to 
estimate the cost of the proposed compression-ignition marine engine 
emission standard.
    The per-engine cost estimate is $220 per engine for the nonroad 
compression-ignition engine regulation for engines greater than 37 kw. 
EPA estimates sales of marine compression ignition engines to be 
approximately 10,000 units in 1999, the proposed first year of 
implementation of the compression-ignition marine engine emission 
standards. This indicates a total aggregate cost in 1999 of about $2 
million.
    EPA requests comment from the compression-ignition marine engine 
manufacturers regarding their cost estimates specific to marine 
applications of compression-ignition engines. Comments are requested on 
the fixed costs of production such as development and production line 
costs, testing and test facility costs, and administrative costs. 
Variable costs should also be submitted, including cost for additional 
hardware, fuel consumption impacts, maintenance impacts, and warranty 
related costs.

VII. Environmental Benefit Assessment

    National Ambient Air Quality Standards (NAAQS) have been set for 
criteria pollutants which adversely affect human health, vegetation, 
materials, and visibility. The primary criteria pollutants affected by 
this rule include, ozone and hydrocarbons (HC) for gasoline spark-
ignition engines and oxides of nitrogen (NOX) for compression-
ignition engines. In addition, this rule will have some impact on the 
other criteria pollutants, particles smaller than 10 microns 
(PM10), and carbon monoxide (CO). EPA has determined the standards 
set in this rule will reduce HC emissions from spark-ignition engines 
and reduce NOX from compression-ignition engines and help areas 
come into compliance with the ozone NAAQS. The following provides a 
summary of the reduction expected and the health effects of HC and 
NOX emissions. The underlying analysis is described in greater 
detail in Chapter 3 of the draft Regulatory Impact Analysis.

A. Gasoline Spark-Ignition Engine HC Reduction

    The proposed gasoline spark-ignition marine engine HC emission 
standards should decrease HC emissions from marine engines by 
approximately 75% from projected baseline emission levels by the year 
2025. HC emission levels are estimated to be stabilized at this 
percentage reduction through complete fleet turnover by the year 2051. 
Results are summarized in Table 4. 

  Table 4.--HC Emission Summary: Gasoline Spark-Ignition Marine Engines 
------------------------------------------------------------------------
                                                     Appx.        % HC  
                                                   projected   reduction
                                                   aggregate      from  
                      Year                         controlled  projected
                                                    HC level    baseline
                                                     (tons)     estimate
------------------------------------------------------------------------
1998............................................      520,000         1 
2006............................................      410,000        32 
2010............................................      310,000        52 
2025............................................      210,000        74 
2051............................................      220,000        74 
------------------------------------------------------------------------

B. Diesel Compression-Ignition Engine NOX Reduction

    Emission reductions due to this regulation for diesel compression-
ignition marine engines are expected to be equivalent on a per-engine 
basis to the reductions achieved from land-based compression-ignition 
engines. Land-based compression-ignition engines were estimated to 
achieve a reduction in NOX of approximately 37% per year on a per-
engine basis (see 59 FR 31306).
    Reductions in the inventory will occur through the introduction of 
new, controlled engines into the in-use fleet. The annual percentage 
reduction in the NOX inventory of marine diesel engines is 
dependent upon the useful lives of these engines, the rate of attrition 
of old engines from the in-use fleet, and the rate of new sales added 
to the in-use fleet each year. EPA does not have sufficient information 
at this time to estimate future inventory levels and requests comment 
on the hours engines are used per year, the loads placed on engines, 
the average and full useful lives of these engines including rebuilds, 
the survival probability function, engine populations, aggregate sales 
estimates according to engine size (i.e., kiloWatt), estimates of 
future sales growth, and any related information.

C. Health and Welfare Effects of Tropospheric Ozone

    EPA's primary reason for controlling HC and NOX emissions from 
marine engines is the role of these pollutants in forming ozone 
(O3). Of the major air pollutants for which national ambient air 
quality standards (NAAQS) have been designated under the Clean Air Act, 
the most widespread problem continues to be ozone, which is the most 
prevalent photochemical oxidant and an important component of smog. 
Ozone is a product of the atmospheric chemical reactions involving 
hydrocarbons, nitrogen oxides and other compounds. These reactions 
occur as atmospheric oxygen and sunlight interact with hydrocarbons and 
nitrogen oxides from both mobile and stationary sources.
    A critical part of this problem is the formation of ozone both in 
and downwind of large urban areas. Under certain weather conditions, 
the combination of HC and NOX can result in urban and rural areas 
exceeding the national ambient ozone standard by a factor of three. The 
ozone NAAQS represents the maximum level considered protective of 
public health by the EPA.
    Ozone is a powerful oxidant causing lung damage and reduced 
respiratory function after relatively short periods of exposure 
(approximately one hour). The oxidizing effect of ozone can irritate 
the nose, mouth, and throat causing coughing, choking, and eye 
irritation. In addition, ozone can also impair lung function and 
subsequently reduce the respiratory system's resistance to disease, 
including bronchial infections such as pneumonia.
    Elevated ozone levels can also cause aggravation of pre-existing 
respiratory conditions such as asthma. Ozone can cause a reduction in 
performance during exercise even in healthy persons. In addition, ozone 
can also cause alterations in pulmonary and extrapulmonary (nervous 
system, blood, liver, endocrine) function.
    The current NAAQS for ozone of 0.12 ppm is based primarily on the 
level at which human health effects begin to occur. However, ozone has 
also been shown to damage forests and crops, watershed areas, and 
marine life.\17\ The NAAQS for ozone is frequently violated across 
large areas in the U.S., and even after 20 years of efforts aimed at 
reducing ozone-forming pollutants, the ozone standard has proven to be 
exceptionally difficult to achieve. High levels of ozone have been 
recorded even in relatively remote areas, since ozone and its 
precursors can travel hundreds of miles and persist for several days in 
the lower atmosphere.
---------------------------------------------------------------------------

    \17\U.S. Environmental Protection Agency, Review of the National 
Ambient Air Quality Standards for Ozone--Assessment of Scientific 
and Technical Information: OAQPS Staff Paper, EPA-450/2-92-001, June 
1989.
---------------------------------------------------------------------------

    Ozone damage to plants, including both natural forest ecosystems 
and crops, occurs at ozone levels between 0.06 and 0.12 ppm.\18\ 
Repeated exposure to ozone levels as low as 0.04 ppm can cause 
reductions in the yields of some crops above 10%.\19\ While some 
strains of corn and wheat are relatively resistant to ozone, many crops 
experience a loss in yield of 30% at ozone concentrations below the 
NAAQS.\20\ The value of crops lost to ozone damage, while difficult to 
estimate precisely, is on the order of $2 billion per year in the 
U.S.\21\ The effect of ozone on complex ecosystems such as forests is 
even more difficult to quantify. However, growth in many species of 
pine appears to be particularly sensitive to ozone. Specifically, in 
the San Bernadino Mountains of southern California, the high ozone 
concentrations are believed to be the predominant cause of the decline 
of the endangered ponderosa pine.\22\
---------------------------------------------------------------------------

    \18\U.S. EPA, Review of NAAQS for Ozone.
    \19\U.S. EPA, Review of NAAQS for Ozone, p. X-10.
    \20\U.S. EPA, Review of NAAQS for Ozone, p. X-10.
    \21\U.S. EPA, Review of NAAQS for Ozone, p. X-22.
    \22\U.S. EPA, Review of NAAQS for Ozone, p. X-25.
---------------------------------------------------------------------------

    Finally, by trapping energy radiated from the earth, tropospheric 
ozone may contribute to heating of the earth's surface, thereby 
contributing to global warming (that is, the greenhouse effect).\23\
---------------------------------------------------------------------------

    \23\Rethinking the Ozone Problem, p. 22.
---------------------------------------------------------------------------

D. Roles of VOC and NOX in Ozone Formation

    Both volatile organic compounds (VOC) (used interchangeably with 
hydrocarbons for the purposes of this rule) and NOX contribute to 
the formation of tropospheric ozone through a complex series of 
reactions. EPA's understanding of the importance of these pollutants in 
this process has been evolving along with improved emission inventories 
and modeling techniques. The role of NOX has been controversial 
because, depending on local conditions, NOX reductions can either 
promote or retard ozone formation near the emission source(s), while 
downwind ozone concentrations will eventually decline in response to 
NOX reductions.
    In general, the ratio between the ambient concentrations of VOC and 
NOX in a localized area is an indicator of the likely 
effectiveness of VOC and/or NOX reductions as ozone control 
measures. If the level of VOC is high relative to the level of NOX 
(that is, a ratio of 20 to 1), ozone formation is limited by the amount 
of NOX present, making reduction of NOX emissions an 
effective strategy for reducing ozone levels. Alternatively, if the 
level of VOC is low relative to the level of NOX (that is, in a 
ratio of 8 to 1), efforts to control VOC would be expected to be a more 
effective means of reducing ozone concentration.
    For many years, it was believed that ozone formation was VOC-
limited in most nonattainment areas. Consequently, although both 
NOX and VOC emissions are regulated for certain source types, the 
primary focus of past ozone abatement strategies has been VOC. However, 
many areas have yet to attain the ozone standard. In recent years, 
state-of-the-art air quality models and improved knowledge of 
atmospheric chemistry have indicated that control of NOX in 
addition to VOC is necessary for effective reduction of ozone in many 
parts of the United States.
    Based upon recent scientific research, National Academy of Science 
has determined that in many parts of the country NOX control is 
generally a very beneficial strategy for ozone reduction. However, 
under some circumstances, NOX reductions without accompanying VOC 
control may actually increase ozone in a few urban cores such as 
downtown Los Angeles and New York City.\24\ In the recent report, 
researchers emphasize that both VOC and NOX controls are needed in 
most areas of the U.S.\25\
---------------------------------------------------------------------------

    \24\NRC, Rethinking the Ozone Problem, pp. 359-377.
    \25\NRC, Rethinking the Ozone Problem.
---------------------------------------------------------------------------

E. Smoke

    Smoke from compression-ignition engines has long been considered a 
significant nuisance that can cause considerable economic, visibility, 
and aesthetic damage. The large carbon particles remain suspended for 
long periods and refract light, thus causing the negative environmental 
effect of reduced visibility. Furthermore, these particles are often 
wet and cause costly damage through soiling of urban buildings, homes, 
cars and other property. Such particles also soil human skin and 
clothes and are associated with increased odor. While there is no 
concrete connection between visible smoke and direct health effects, 
there are indications that visible smoke may have an adverse effect on 
health. In any case, there are substantial costs to society in terms of 
living with a dirtier environment or alternatively, paying to clean it 
up. Further, the public is particularly aware of this highly visible 
pollutant that comes into contact with them and their property. Public 
support for effective environmental programs is hampered by the 
negative impression brought about by the substantial nuisance of a 
visible pollutant that is left uncontrolled, even given that the health 
effects of such pollutant are uncertain. It undermines EPA emission 
control programs to allow a highly visible pollutant that can have 
substantial cost to society remain uncontrolled while tightly 
controlling sources that emit no visible pollutants. The compression-
ignition smoke standards proposed today should reduce smoke 
significantly.

VIII. Cost-Effectiveness

    In evaluating various pollution control options, EPA considers the 
cost-effectiveness of the control. Also, Sec. 213 of the Act requires 
that EPA consider cost when developing emission standards. The cost-
effectiveness of a pollution control measure is typically expressed as 
the cost per ton of pollutant emissions reduced. Other things being 
equal, the Agency prefers to target emission reductions that cost less 
per ton of emissions reduced.

A. Gasoline Spark-ignition Engines

    The proposed HC standard for spark-ignition marine engines is 
estimated to have a cost-effectiveness of $718 per ton of HC removed 
from the exhaust of the affected engines. This is based on the ratio of 
the present value of the stream of projected costs to the present value 
of the stream of projected benefits.

B. Diesel Compression-ignition Engines

    The proposed NOX standard for compression-ignition marine 
engines is estimated to have the same cost- effectiveness as the final 
nonroad compression-ignition engine regulation for engines above 37 kw, 
which is $188 per ton of NOX removed from the exhaust of the 
affected engines. This is based on the ratio of the present value of 
the stream of projected costs to the present value of the stream of 
projected benefits.

IX. Public Participation

A. Comments and the Public Docket

    EPA welcomes comments on all aspects of this proposed rulemaking. 
While EPA is not publishing the proposed regulatory language, EPA 
welcomes comments on it. EPA has sent copies of the language to those 
business, environmental, and governmental entities expressing interest 
in this proposal and invites others to request a copy immediately. See 
the ``Obtaining Copies of the Regulatory Language'' at the beginning of 
SUPPLEMENTARY INFORMATION. Commenters are especially encouraged to give 
suggestions for changing any aspects of the proposal that they find 
objectionable. All comments, with the exception of proprietary 
information, should be directed to the EPA Air Docket Section, Docket 
No. A-92-28 (see ADDRESSES).
    Commenters who wish to submit proprietary information for 
consideration should clearly separate such information from other 
comments by (1) labeling proprietary information ``Confidential 
Business Information'' and (2) sending proprietary information directly 
to the contact person listed (see FOR FURTHER INFORMATION CONTACT) and 
not to the public docket. This will help insure that proprietary 
information is not inadvertently placed in the docket. If a commenter 
wants EPA to use a submission labeled as confidential information as 
part of the basis for the final rule, then a nonconfidential version of 
the document, which summarizes the key data or information, should be 
sent to the docket.
    Information covered by a claim of confidentiality will be disclosed 
by EPA only to the extent allowed and by the procedures set forth in 40 
CFR Part 2. If no claim of confidentiality accompanies the submission 
when it is received by EPA, it will be made available to the public 
without further notice to the commenter.

B. Public Hearing

    Any person desiring to present testimony regarding this proposal at 
the public hearing (see DATES) must notify the contact person listed 
above of such intent at least ten days prior to the opening day of the 
hearing. The contact person should also be given an estimate of the 
time required for the presentation of the testimony and notification of 
any need for audio/visual equipment. Testimony will be scheduled on a 
first come, first serve basis. A sign-up sheet also will be available 
at the registration table the morning of the hearing for scheduling 
testimony.
    EPA suggests that approximately 50 copies of the statement or 
material to be presented be brought to the hearing for distribution to 
the audience. In addition, EPA would find it helpful to receive an 
advance copy of any statement or material to be presented at the 
hearing at least one week before the scheduled hearing date. This is to 
give EPA staff adequate time to review such material before the 
hearing. Advance copies should be submitted to the contact person 
listed.
    The official records of the hearing will be kept open for 30 days 
following the hearing to allow submission of rebuttal and supplementary 
testimony. All such submittals should be directed to the Air Docket, 
Docket No. A-92-28 (see ADDRESSES).
    Ms. Mary Smith, Acting Director of the Office of Mobile Sources, is 
hereby designated Presiding Officer of the hearing. The hearing will be 
conducted informally, and technical rules of evidence will not apply. A 
written transcript of the hearing will be placed in the above docket 
for review. Anyone desiring to purchase a copy of the transcript should 
make individual arrangements with the court reporter recording the 
proceeding.

X. Administrative Requirements

A. Executive Order 12886

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), the 
Agency must determine whether the regulatory action is ``significant'' 
and therefore subject to OMB review and the requirements of the 
Executive Order. The Order defines ``significant regulatory action'' as 
one that is likely to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or state, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    Pursuant to the terms of Executive Order 12866, it has been 
determined that this rule is a ``significant regulatory action'' 
because it may adversely affect in a material way that sector of the 
economy involved with the production of marine engines. As such, this 
action was submitted to OMB for review. Changes made in response to OMB 
suggestions or recommendations will be documented in the public record.

B. Reporting and Recordkeeping Requirements

    The information collection requirements in this proposed rule have 
been submitted for approval to the Office of Management and Budget 
(OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. EPA has 
prepared eight Information Collection Request (ICR) documents for this 
proposal. Copies of the ICR documents may be obtained from Sandy 
Farmer, Information Policy Branch; EPA; 401 M St., SW. (mail code 
2136); Washington, DC 20460 or by calling (202) 260-2740.
    The eight ICR documents that have been prepared are:

------------------------------------------------------------------------
       EPA ICR document No.                  Type of information        
------------------------------------------------------------------------
1722.01............................  Certification/ABT.                 
282.07.............................  Emission Defect Information.       
1723.01............................  Importation of Nonconforming       
                                      Engines.                          
1724.01............................  Selective Enforcement Auditing.    
12.08..............................  Engine Exclusion Determination.    
95.07..............................  Precertification and Testing       
                                      Exemption.                        
1725.01............................  Manufacturers' Assembly Line       
                                      Testing.                          
1726.01............................  Manufacturers' In-use Testing.     
------------------------------------------------------------------------

    Each ICR document estimates the public reporting, recordkeeping, 
and testing burden for collecting the specified information, including 
time for reviewing instructions, searching existing data sources, 
gathering and maintaining the data needed, and completing the 
collection of information. EPA has estimated that the public burden for 
the collection of information for all ICRs under this proposed rule 
would average approximately 6,050 hours annually for a typical engine 
manufacturer. The hours spent by a manufacturer on information 
collection activities in any given year would be highly dependent upon 
manufacturer specific variables, such as the number of engine families, 
production changes, emissions defects, etc.
    Send comments regarding the burden estimate or any other aspect of 
this collection of information, including suggestions for reducing this 
burden to Chief, Information Policy Branch; EPA; 401 M St., SW. (mail 
code 2136); Washington, DC 20460; and to the Office of Information and 
Regulatory Affairs, Office of Management and Budget, Washington, DC 
20503, marked ``Attention: Desk Officer for EPA.'' The final rule will 
respond to any OMB or public comments on the information collection 
requirements contained in this proposal.

C. Impact on Small Entities

    The Regulatory Flexibility Act of 1980 requires federal agencies to 
identify potentially adverse impacts of federal regulations upon small 
entities. In instances where significant impacts are possible on a 
substantial number of these entities, agencies are required to perform 
a Regulatory Flexibility Analysis (RFA). The RFA explores options for 
minimizing those impacts.
    EPA has recently adopted a new approach to regulatory 
flexibility:\26\ for purposes of EPA's implementation of the Act, any 
impact is a significant impact, and any number of small entities is a 
substantial number. Thus, EPA will consider regulatory options for 
every regulation subject to the Act that can reasonably be expected to 
have an impact on small entities. Therefore, in light of this new 
approach, EPA has determined that, in the absence of provisions to take 
economic effects into account, this rule would likely have a 
significant effect on a substantial number of small entities. As a 
result, in addition to the flexibility inherent in averaging, trading, 
and banking of emissions, EPA has tailored this rule to minimize the 
cost burdens imposed on smaller engine manufacturers.
---------------------------------------------------------------------------

    \26\Habicht, F. Henry II, Deputy Administrator, Internal EPA 
Memorandum, ``Revised Guidelines for Implementing the Regulatory 
Flexibility Act,'' April 9, 1992.
---------------------------------------------------------------------------

    The proposed regulations contain certification requirements for new 
engines, in-use testing requirements for controlled engines, 
manufacturer assembly line and Selective Enforcement Auditing 
provisions for the testing of production engines.
    The certification program has been structured in this proposal such 
that all manufacturers may take advantage of a more simplified 
certification process than that currently mandated in the on-highway 
program. Testing requirements for test engines are reduced. The 
application and certification process is more straightforward.
    The in-use testing program is structured such that manufacturers 
with lower annual production volumes have a lower minimum number of 
engines which must be tested. This places the burden of the in-use 
testing mostly on manufacturers with high production volumes. 
Provisions are also allowed for manufacturers with a limited number of 
product lines. Also, manufacturers with very low production volumes are 
allowed maximum flexibility in procuring engines to be tested.
    The SEA program is structured such that the annual limit on the 
number of SEA's that EPA may perform is lower for manufacturers with 
lower projected annual production. Additionally, manufacturers with 
high projected annual production but fewer engine families will have a 
lower annual limit. Furthermore, manufacturers with low projected 
annual production may perform fewer audit tests per day to minimize the 
SEA burden on its test facilities.
    EPA is proposing that vessel manufacturers must correctly use 
engines that are certified upon implementation of these regulations. 
However, EPA has decided to make the use of non-certified engines for 
United States-marketed vessels a prohibited act rather than requiring 
vessel manufacturers to report to EPA that they are using certified 
engines in their vessels being consumed in the United States. EPA 
decided to make these provisions prohibited acts in order to reduce any 
potential reporting or recordkeeping burden for engine and vessel 
manufacturers. Manufacturers who attempt to sell vessels to the United 
States market which uses noncertified engines will be voluntarily 
reported to EPA by their competitors. EPA has proposed stiff fines on 
prohibited acts. Competition should effectively police these prohibited 
acts as competitors have a competitive incentive to make sure that no 
vessel manufacturer is dumping equipment with lower cost, unlawful, 
noncertified, or incorrectly used engines into the U.S. market.
    EPA considered, but rejected, the notion of exempting small 
manufacturers from enforcement programs or from the regulation 
entirely. A more proportionate sharing of cost burden was deemed 
appropriate. The pollution emitted by each of these engines not only 
contributes to ambient air quality problems but also has health impacts 
on the user of the engine who is in close proximity to the exhaust 
emissions. See ``VI. Environmental Benefit Assessment'' for a 
discussion of the health impacts of the related exhaust pollutants.

List of Subjects in 40 CFR Parts 89 and 91

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Confidential business information, Imports, 
Labeling, Nonroad source pollution, Reporting and recordkeeping 
requirements.

    Dated: October 28, 1994.
Carol M. Browner,
Administrator.
[FR Doc. 94-27401 Filed 11-8-94; 8:45 am]
BILLING CODE 6560-50-P