[Federal Register Volume 61, Number 219 (Tuesday, November 12, 1996)]
[Rules and Regulations]
[Pages 58102-58107]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-28545]



[[Page 58101]]

_______________________________________________________________________

Part II





Environmental Protection Agency





_______________________________________________________________________



40 CFR Parts 86 and 89



Control of Air Pollution; Amendments to Emission Requirements 
Applicable to New Nonroad Compression-Ignition Engines at or Above 37 
Kilowatts: Provisions for Replacement Compression-Ignition Engines and 
the Use of On-Highway Compression-Ignition Engines in Nonroad Vehicles; 
Final Rule

  Federal Register / Vol. 61, No. 219 / Tuesday, November 12, 1996 / 
Rules and Regulations  

[[Page 58102]]



ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 86 and 89

[FRL-5645-4]
RIN 2060-AG78


Control of Air Pollution; Amendments to Emission Requirements 
Applicable to New Nonroad Compression-Ignition Engines at or Above 37 
Kilowatts: Provisions for Replacement Compression-Ignition Engines and 
the Use of On-Highway Compression-Ignition Engines in Nonroad Vehicles

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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

SUMMARY: This rulemaking amends the regulations applicable to 
compression-ignition nonroad engines at or above 37 kilowatts (kW) to 
address two disruptive situations that have arisen regarding the 
implementation of regulations applicable to these nonroad engines. No 
air quality impact is expected from these amendments.
    These amendments will allow nonroad vehicle manufacturers to use 
certified on-highway engines in nonroad vehicles that are constructed 
from on-highway vehicles or that must use public roads between job 
sites. These amendments also will allow engine manufacturers to provide 
uncertified replacement engines to repower pre-regulation nonroad 
equipment when that equipment experiences major engine failure.

DATES: This final rule is effective January 13, 1997 unless adverse or 
critical comments are received by December 12, 1996. If the effective 
date is delayed, timely notice will be published in the Federal 
Register.

ADDRESSES: Written comments should be addressed to: EPA Air Docket (LE-
131), Attention: Docket Number A-96-37, room M-1500, 401 M Street, SW., 
Washington, DC 20460 (telephone 202-260-7548, fax 202-260-4400). Please 
contact the individual listed below before submitting comments.
    Materials relevant to this rulemaking are contained in the docket 
listed above and may be reviewed at that location from 8:00 a.m. until 
5:30 p.m. Monday through Friday. As provided in 40 CFR Part 2, a 
reasonable fee may be charged by EPA for photocopying.

FOR FURTHER INFORMATION CONTACT: John Guy, Office of Mobile Sources, 
Engine Programs and Compliance Division (6403J), 401 M Street SW., 
Washington, DC 20460, 202-233-9276.

SUPPLEMENTARY INFORMATION:

I. Regulated Entities

    Entities potentially regulated by this action are those which 
manufacture and use compression ignition engines of 37 kW or greater. 
Regulated categories and entities include:

------------------------------------------------------------------------
             Category                  Examples of regulated entities   
------------------------------------------------------------------------
Industry..........................  Manufacturers and users of          
                                     compression ignition engines of 37 
                                     kW or greater.                     
------------------------------------------------------------------------

    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely to be regulated by this 
action. This table lists the types of entities that EPA is now aware 
could potentially be regulated by this action. Other types of entities 
not listed in the table could also be regulated. To determine whether 
your product is regulated by this action, you should carefully examine 
the applicability criteria in Sec. 89.1 of title 40 of the Code of 
Federal Regulations. If you have questions regarding the applicability 
of this action to a particular product, consult the person listed in 
the preceding FOR FURTHER INFORMATION CONTACT section.

II. Obtaining Copies of the Regulatory Language

Electronic Copies of Rulemaking Documents

    Electronic copies of the preamble and the regulatory text of this 
rulemaking are available via the Internet on the Office of Mobile 
Sources (OMS) Home Page (http://www.epa.gov/OMSWWW/). Users can find 
Nonroad Engines and Vehicles information and documents through the 
following path once they have accessed the OMS Home Page: ``Nonroad 
Engines and Vehicles,'' ``Large Engines''. Electronic copies of the 
preamble and the regulatory text of this rulemaking are also available 
on the Office of Air Quality Planning and Standards (OAQPS) Technology 
Transfer Network Bulletin Board System (TTN BBS). Users are able to 
access and download TTN BBS files on their first call. After logging 
onto TTN BBS, to navigate through the BBS to the files of interest, the 
user must enter the appropriate command at each of a series of menus. 
The steps required to access information on this rulemaking are listed 
below. The service is free, except for the cost of the phone call.
    TTN BBS: 919-541-5742 (1,200-14,400 bps, no parity, eight data 
bits, one stop bit). Voice help: 919-541-5384 Internet address: TELNET 
ttnbbs.rtpnc.epa.gov Off-line: Mondays from 8:00-12:00 Noon ET.

1. Technology Transfer Network Top Menu: GATEWAY TO TTN TECHNICAL AREAS 
(Bulletin Boards)
2. TTN TECHNICAL INFORMATION AREAS: OMS--Mobile Sources Information
3. OMS BBS===MAIN MENU FILE TRANSFERS: Rulemaking & Reporting
4. RULEMAKING PACKAGES: Nonroad
5. Nonroad Rulemaking Area: File Area #2 . . . Nonroad Engines
6. Nonroad engines

    At this stage, the system will list all available nonroad engine 
files. To download a file, select a transfer protocol which will match 
the terminal software on your computer, then set your own software to 
receive the file using that same protocol.
    If unfamiliar with handling compressed (i.e., ZIP'd) files, go to 
the TTN topmenu, 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 TTN BBS with the oodbye command.

III. Table of Contents

IV. Statutory Authority and Background
    A. Statutory Authority
    B. Background
V. Use of On-highway Engines in Nonroad Vehicles
    A. Discussion
    B. Regulatory Approach
VI. Use of Uncertified Engines for Replacement of Failed Engines in 
Older Equipment
    A. Discussion
    B. Regulatory Approach
VII. Final Action
VIII. Cost Effectiveness
IX. Administrative Requirements
    A. Administrative Designation
    B. Reporting and Recordkeeping Requirements
    C. Impact on Small Entities
    D. Submission to Congress and the General Accounting Office
    E. Unfunded Mandates Act

IV. Statutory Authority and Background

A. Statutory Authority

    Authority for the actions in this notice is granted to EPA by 
sections 202, 203, 204, 205, 206, 207, 208, 209, 213, 215, 216, and 301 
of the Clean Air Act as amended (42 U.S.C. 7521, 7522, 7523, 7524, 
7525, 7541, 7542, 7543, 7547, 7549, 7550, and 7601(a).

[[Page 58103]]

B. Background

    EPA promulgated final regulations applicable to nonroad 
compression-ignition engines at or above 37 kilowatts (kW) (large CI 
engines) on June 17, 1994 (59 FR 31306). These regulations are being 
phased in based on engine power. New engines greater than or equal to 
130 kW and less than or equal to 560 kW were subject to the 
requirements beginning on January 1, 1996. The other implementation 
dates are January 1, 1997 for new engines greater than or equal to 75 
kW and less than 130 kW; January 1, 1998 for new engines greater than 
or equal to 37 kW and less than 75 kW; and January 1, 2000 for new 
engines greater than 560 kW.
    The rule, at 40 CFR 89.1003(a)(1)(i), prohibits nonroad engine 
manufacturers from introducing into commerce any nonroad engine to 
which emission requirements are applicable unless the engine is covered 
by a certificate of conformity issued by EPA under the regulations for 
nonroad engines. The rule also prohibits vehicle or equipment 
manufacturers from introducing into commerce any nonroad vehicle or 
equipment unless the engine in the vehicle or equipment is certified to 
the applicable nonroad emission requirements.1 (40 CFR 
89.1003(a)(6) and (b)(4)).
---------------------------------------------------------------------------

    \1\ The regulations also prohibit, in the case of any person, 
the importation of engines after the applicable implementation date 
for the engine, or vehicles or equipment containing such engine, 
unless the engine is covered by a certificate of conformity. 40 CFR 
89.1003(a)(1)(ii).
---------------------------------------------------------------------------

    Since the first implementation date, two unintended side effects of 
the rule's prohibitions have become evident which pose hardships for 
vehicle and/or engine manufacturers. The first concerns some nonroad 
vehicle manufacturers that have indicated a need to use certified on-
highway engines in nonroad vehicles. This includes those vehicles that 
must use public roads between job sites and nonroad vehicles built from 
on-highway trucks that can not be obtained with certified nonroad 
engines. The second side effect involves the inability of engine 
manufacturers to provide replacement engines to repower pre-regulation 
nonroad equipment when that equipment experiences major engine failure. 
The amendments in this package will alleviate both problems.

V. Use of On-highway Engines in Nonroad Vehicles

A. Discussion

    As the phase-in date for each category of large CI engines passes, 
the existing regulations take effect to prohibit engine manufacturers 
from introducing into commerce uncertified nonroad large CI engines of 
that category. The regulations also prohibit nonroad vehicle 
manufacturers from installing engines to which regulations are 
applicable in their vehicles unless the engines have been certified by 
EPA to meet the nonroad emission standards. The rationale for the 
prohibition applicable to vehicle manufacturers is given in the 
preamble to the final rule:

    Without a requirement that certified engines be used, nonroad 
vehicle and equipment manufacturers would be free to use uncertified 
engines thus undermining the environmental and public health 
benefits of the nonroad * * * engine * * * program. 59 FR 31324.

    Several manufacturers of mobile construction equipment, such as 
mobile excavators and cranes, have written EPA individually for 
permission to use certified on-highway engines to propel vehicles that 
are, by definition, nonroad vehicles but nevertheless must travel 
significant mileage on public roads between job sites. One applicant 
indicated that some purchasers of its equipment drive as much as 30,000 
miles per year. Based on the submittals of these manufacturers, these 
vehicles benefit from certain performance and/or safety features, 
notably engine braking devices, which are available on on-highway 
engines, but are not typically available on non-road engines.
    Another firm, which converts on-highway trucks into dedicated 
nonroad agricultural chemical applicators has asked for relief from the 
requirement to install certified non-road engines so that it does not 
have to remove and dispose of the certified on-highway engines that 
come with the base trucks it purchases and then replace them with 
certified nonroad engines.
    In separate letters to each applicant, EPA's Office of Mobile 
Sources and Office of Enforcement and Compliance Assurance stated that 
EPA would exercise enforcement discretion and granted permission to use 
on-highway engines through December 31, 1997 subject to certain 
specific conditions. EPA is incorporating those conditions in this 
rulemaking. EPA's permission letters indicated EPA's intention to amend 
the rules and explained that:

* * * your company, although not using a certified nonroad engine as 
required, would still be using a certified engine, albeit a 
certified on-highway engine. We do not believe that the 
environmental and public health benefits of the nonroad engine 
program would be undermined by your use of certified on-highway 
engines which require greater technological innovation to meet 
applicable standards.

    The incoming letters and EPA's responses are available in the 
docket.
    The Agency believes that nonroad vehicles should be equipped with 
nonroad engines but believes flexibility is appropriate for vehicles 
that: (1) must frequently operate on-highway in cases where suitable 
non-road engines are not available; or (2) are derived from on-highway 
vehicles which are not available with suitable nonroad engines. 
Therefore, we are amending the rule to permit the use of on-highway 
engines in cases like those above, provided that certified nonroad 
engines with appropriate performance or safety characteristics are not 
available or are not available in the base on-highway vehicle (for 
vehicle conversions).
    In the Notice of Proposed Rulemaking for the large CI rule (58 FR 
28809, May 17, 1993), EPA proposed that engine manufacturers be allowed 
to use the transient on-highway test as an alternative test procedure 
to certify nonroad engines. This would have allowed certified on-
highway engines to also obtain nonroad certification and would 
effectively have eliminated the problems faced by the specialty vehicle 
manufacturers described above. However, comments and data received from 
industry during the comment period indicated that the ability of the 
on-highway test cycle to predict nonroad NOX emissions was 
uncertain. Therefore, the provision was not finalized.
    Today's action does not attempt to make assertions about the 
ability of the on-highway engine test procedure to yield comparable 
NOX results to the nonroad test procedure. Nor does it provide any 
sort of automatic nonroad certification for on-highway engines. What it 
does do is establish provisions to use on-highway engines in situations 
where nonroad vehicles are either derived from motor vehicles or are 
operated like motor vehicles and therefore require features associated 
with motor vehicle engines. Many of the vehicles, such as cranes and 
excavators, covered under the permission letters mentioned above are 
designed to be driven on public roads but are considered nonroad 
vehicles because their size or weight exceeds the thresholds that EPA 
uses to separate motor vehicles from nonroad vehicles. They often have 
smaller ``sibling'' vehicles that fit within EPA's motor vehicle 
criteria and are required to use motor vehicle engines. Because of the 
way these nonroad vehicles are operated, it seems appropriate that they 
be allowed to have engines that were tested on the on-highway cycle and 
meet the on-highway standards. Many

[[Page 58104]]

of these vehicles are equipped with two engines, one for propulsion 
around and between job sites and one to power the craning or excavating 
features of the vehicle. The propulsion engine is generally shut off 
once the vehicle is positioned at the job site. In such vehicles, it is 
only the propulsion engine which would be permitted to be an on-highway 
engine.
    EPA does not believe that allowing these vehicles to use certified 
on-highway engines will have a detrimental effect on emissions. 
Although EPA is not asserting that engines tested using the on-highway 
test would meet the same level of emissions if tested using the nonroad 
test, EPA believes that, given the current standards for on-highway 
heavy duty engines which require substantially greater technological 
innovation than current nonroad standards, and given the general uses 
of the engines, discussed above, emissions of such engines are unlikely 
to be higher for such equipment in-use than they would be if certified 
nonroad engines were used.

B. Regulatory Approach

    The Agency is implementing the desired changes by amending the 
existing Prohibited Acts section at 40 CFR 89.1003. The amendments 
alter the strict language which prohibits the use of engines other than 
certified nonroad engines in nonroad vehicles to permit the use of 
certified on-highway engines under the circumstances outlined above. 
Although EPA believes that nonroad equipment manufacturers are 
generally required to use engines certified to nonroad standards 
pursuant to Section 213 of the Act, EPA believes that the Act does give 
EPA the flexibility to permit nonroad equipment manufacturers to use 
certified on-highway engines in this instance.
    To facilitate the conversion of on-highway vehicles to nonroad 
vehicles having nonroad engines, we are providing that nonroad engines 
may be installed in on-highway vehicles where the original vehicle 
manufacturer obtains a written statement from a secondary manufacturer 
that such vehicles will be converted to nonroad vehicles before title 
is transferred to an ultimate purchaser. We are also providing that on-
highway engines may be used in nonroad vehicles in the event that a 
state requires their use under a waiver granted by EPA pursuant to 
section 209(e) of the Clean Air Act.

VI. Use of Uncertified Engines for Replacement of Failed Engines in 
Older Equipment

A. Discussion

    As indicated above, the Large CI rule prohibits the introduction 
into commerce of any new nonroad engines subject to these regulations 
unless the engines are certified by EPA. According to a letter received 
from the Engine Manufacturers Association, this prohibition poses a 
hardship to engine manufacturers and their customers when equipment 
produced before the applicable effective date of the Large CI rule, and 
therefore equipped with uncertified engines, experiences catastrophic 
engine failures.2 In such cases, particularly for newer pieces of 
equipment still under warranty, engine manufacturers desire to be able 
to provide an entire new engine. However, certified engines that will 
fit are often not available for reasons discussed below.
---------------------------------------------------------------------------

    \2\ Letter from EMA to Mr. Chester J. France of EPA dated 
February 13, 1996. Available in the docket.
---------------------------------------------------------------------------

    Under current regulations, an equipment owner who experiences a 
major engine failure with an uncertified engine is limited to the 
following options. It can:
    (1) Obtain a new, uncertified engine from a manufacturer's or 
distributor's inventory. Regulations at 40 CFR 89.1003(b)(4) provide 
that:

    Nonroad vehicle and engine manufacturers may continue to use 
noncertified nonroad engines built prior to the effective date until 
noncertified engine inventories are depleted; however, stockpiling 
of noncertified nonroad engines will be considered a violation of 
this section.

    EPA does not regard engines inventoried beyond the end of a model 
year for reasonable anticipated warranty needs to be ``stockpiled''. 
However, because of the manufacturers' understandable desire to avoid 
inventory costs, this option would not likely be able to supply 
significant numbers of replacement engines. Manufacturers have 
indicated to EPA that their supplies of pre-regulation engines to which 
the January 1, 1996 phase-in date is applicable, are virtually all 
gone.
    (2) Obtain a used or remanufactured engine.
    There are numerous entities engaged in remanufacturing nonroad 
engines in the U.S. The larger remanufacturers have distributors 
located around the country and have told EPA that they can sometimes 
provide next day service of certain of the more common nonroad engines. 
EPA has no restrictions on the installation of used or remanufactured 
engines in equipment that predates the relevant effective date of the 
Large CI rule.
    (3) Repair the individual engine using a ``short block.''
    In this case, a new cylinder block with pistons, connecting rods, 
crankshaft and timing gear (a ``short block'') serves as a repair part. 
EPA has a long standing policy, well known to industry, that a short 
block is not a new engine and will not result in a new engine when 
combined with the used components from the original engine.3
---------------------------------------------------------------------------

    \3\ Letters of December 11, 1989 and April 6, 1990 from Charles 
N. Freed, EPA to Mitsubishi Motors America, Inc. Copies located in 
docket.
---------------------------------------------------------------------------

    (4) Replace with a new, certified engine.
    In this case, a new certified engine is installed in place of the 
uncertified engine. This is the most desirable option from the Agency's 
point of view, however in many cases certified engines will not fit in 
equipment that may have been designed around uncertified engines. Many 
engines certified to meet the nonroad standards are equipped with 
additional or different components which impact the external dimensions 
of or connections to the engines and therefore limit their abilities to 
fit in engine compartments of older equipment.
    From the manufacturers' point of view, all of the current options 
described above have limitations. The manufacturers point to a long 
standing industry practice of being able to provide complete, new 
replacement engines expeditiously when catastrophic engine failures 
occur, particularly when those failures affect equipment in the first 
few years of use and even more particularly when it may still be under 
warranty. Many of these engines are used in highly specialized 
agricultural or construction equipment. Timely repairs can be crucial 
when the broken engine is in an agricultural combine and crops are 
waiting to be harvested. Because of the diversity of nonroad products 
using large CI engines, replacement or rental nonroad equipment is 
generally not as readily available as it is with on-highway equipment.
    As manufacturers have exhausted their supply of preregulation 
engines they have begun to furnish short blocks for engine repairs. 
They have indicated to EPA that the need to repair an engine using a 
short block leads to delays and extra costs that would not occur if the 
old, broken engine could simply be exchanged for a new uncertified 
engine. They argue that the short block option

[[Page 58105]]

requires greater skills and facilities and more time to complete than 
an engine swap and produces an engine that is not a factory-tested and 
adjusted unit. From an air quality standpoint, they argue that an 
entire new uncertified engine might be better than an old engine 
repaired with a new short block or replaced with a remanufactured 
engine.
    Manufacturers have indicated that the number of nonroad engines 
that would be subject to replacement each year is far less than one 
percent of annual production. Manufacturers are often still producing 
uncertified complete engines for export, are willing to produce small 
quantities for replacement purposes, and desire to be able to sell them 
(or provide them under warranty) for replacement purposes. We note that 
the California Air Resources Board, in its regulation of large nonroad 
diesel engines permits the introduction into commerce of uncertified 
engines for replacement purposes up through January 1, 2000.
    To address industry's concerns and minimize disruption to equipment 
operators accustomed to replacement engines, the Agency is amending the 
regulations to permit the sale of uncertified replacement engines in 
those cases where a new, certified engine is not available with 
appropriate physical or performance characteristics to repower the 
vehicle. The Agency believes that if a certified engine is available 
with sufficient torque and horsepower that will fit in the vehicle, 
then the certified engine should be used.
    The amended regulations will permit a nonroad engine in a piece of 
equipment that predates the applicable implementation date of the Large 
CI rule to be replaced with a new, uncertified engine.
    Given the small percentage of uncertified engines that will likely 
require replacement, the fact that some of those will get replaced with 
certified engines and the issue that a new replacement engine is likely 
to be at least as clean as a remanufactured engine or an engine 
repaired with a short block as currently allowed, we do not believe 
that permitting the use of uncertified replacement engines will pose an 
environmental threat or reduce the environmental benefit of the Large 
CI rule.

B. Regulatory Approach

    As with the use of on-highway engines in nonroad vehicles, the 
Agency is implementing this provision through amendments to the 
Prohibited Acts section at 40 CFR 89.1003. As suggested by the Engine 
Manufacturers Association, EPA is requiring that any uncertified large 
C.I. engine produced for replacement purposes be clearly labeled as 
such and that such label include a warning that any use of the engine 
in a motor vehicle or post-regulation nonroad vehicle constitutes a 
violation of the Act subject to civil penalty. As further suggested by 
EMA, EPA is requiring that the manufacturer retain documentation that 
it took a failed engine from the customer in exchange for each 
uncertified replacement engine that was sold.

VII. Final Action

    EPA is publishing this rule without prior proposal because EPA 
views these amendments as noncontroversial and anticipates no adverse 
comments. However, in the event that adverse or critical comments are 
filed, EPA has prepared a Notice of Proposed Rulemaking (NPRM) 
proposing the same amendments. This NPRM is contained in a separate 
document in this Federal Register publication. The direct final action 
will be effective January 13, 1997 unless adverse or critical comments 
are received by December 12, 1996. If EPA receives adverse or critical 
comments on either the revisions discussed in Section V or those 
discussed in Section VI, the revisions described in that section will 
be withdrawn. If adverse or critical comments are received on the 
revisions described in both sections, then both sections will be 
withdrawn before the effective date. In case of the withdrawal of all 
or part of this action, the withdrawal will be announced by a 
subsequent Federal Register document. All public comments will then be 
addressed in a subsequent final rule based on this action serving as a 
proposed rule. EPA will not implement a second comment period on this 
action. Any parties interested in commenting on this rule should do so 
at this time. If no adverse comments are received, the public is 
advised that the rule will be effective January 13, 1997.

VIII. Cost Effectiveness

    This rulemaking alters an existing provision by allowing nonroad 
vehicle manufacturers to have greater flexibility in their choice of 
engines under certain circumstances. It also permits nonroad engine 
manufacturers to sell engines that the original rule would not permit. 
Therefore, because this rulemaking alters an existing provision, and 
that alteration provides regulatory relief, there are no additional 
costs to original equipment manufacturers associated with this specific 
final action.
    The costs and emission reductions associated with the Large CI rule 
were developed for the June 17, 1994 final rulemaking. We do not 
believe the change being implemented today affects the costs and 
emission reductions published as part of that rulemaking.

IX. Administrative Requirements

A. Administrative Designation

    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.
    It has been determined that this rule is not a ``significant 
regulatory action'' under the terms of Executive Order 12866 and is 
therefore not subject to OMB review.

B. Reporting and Recordkeeping Requirements

    This proposed rulemaking does not change the information collection 
requirements submitted to and approved by OMB in association with the 
Large CI final rulemaking (59 FR 31306, June 17, 1994).

C. Impact on Small Entities

    EPA has determined that it is not necessary to prepare a regulatory 
flexibility analysis in connection with this final rule. This rule will 
not have a significant adverse economic impact on a substantial number 
of small businesses. This rulemaking will provide regulatory relief to 
both large and small volume engine and equipment manufacturers by 
permitting greater flexibility in engine choices in vehicles. It will 
not have a substantial impact on such entities. The provisions in this 
rulemaking will not have a significant impact on businesses that 
manufacture, rebuild, distribute, or sell

[[Page 58106]]

automotive parts, nor those involved in automotive service and repair, 
as the revisions simply permit a long-standing business practice to 
continue.

D. Submission to Congress and the General Accounting Office

    Under 5 U.S.C. 801(a)(1)(A) as added by the Small Business 
Regulatory Enforcement Fairness Act of 1996, EPA submitted a report 
containing this rule and other required information to the U.S. Senate, 
the U.S. House of Representatives and the Comptroller General of the 
General Accounting Office prior to publication of the rule in today's 
Federal Register. This rule is not a ``major rule'' as defined by 5 
U.S.C. 804(2).

E. Unfunded Mandates Act

    Under Section 202 of the Unfunded Mandates Reform Act of 1995 
(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA 
must prepare a budgetary impact statement to accompany any proposed or 
final rule that includes a Federal mandate that may result in estimated 
costs to State, local, or tribal governments in the aggregate; or to 
the private sector, or $100 million or more. Under Section 205, EPA 
must select the most cost effective and least burdensome alternative 
that achieves the objectives of the rule and is consistent with 
statutory requirements. Section 203 requires EPA to establish a plan 
for informing and advising any small governments that may be 
significantly or uniquely impacted by the rule.
    EPA has determined that the action proposed today does not include 
a Federal mandate that may result in estimated costs of $100 million or 
more to either State, local, or tribal governments in the aggregate, or 
to the private sector.

List of Subjects

40 CFR Part 86

    Environmental protection, Administrative practice and procedure, 
Confidential business information, Labeling, Motor vehicle pollution, 
Reporting and recordkeeping requirements.

40 CFR Part 89

    Environmental protection, Administrative practice and procedure, 
Confidential business information, Imports, Labeling, Motor vehicle 
pollution, Reporting and recordkeeping requirements, Research, 
Warranties.

    Dated: October 28, 1996.
Carol M. Browner,
Administrator.

    For the reasons set out in the preamble, title 40, chapter I, of 
the Code of Federal Regulations, is amended as set forth below.

PART 86--CONTROL OF AIR POLLUTION FROM NEW AND IN-USE MOTOR 
VEHICLES AND NEW AND IN-USE MOTOR VEHICLE ENGINES: CERTIFICATION 
AND TEST PROCEDURES

    1. The authority citation for part 86 continues to read as follows:

    Authority: Secs. 202, 203, 205, 206, 207, 208, 215, 216, 217, 
and 301(a), Clean Air Act, as amended (42 U.S.C. 7521, 7522, 7524, 
7525, 7541, 7542, 7549, 7550, 7552, and 7601(a)).

    2. Section 86.090-5 is amended by adding paragraph (a)(3) to read 
as follows:


Sec. 86.090-5  General standards; increase in emissions; unsafe 
conditions.

    (a) * * *
    (3) Notwithstanding paragraphs (a) (1) and (2) of this section, a 
light or heavy duty motor vehicle equipped with an engine certified to 
the nonroad provision of 40 CFR part 89 may be sold, offered for sale 
or otherwise introduced into commerce by a motor vehicle manufacturer 
to a secondary manufacturer if the motor vehicle manufacturer obtains 
written assurance from the secondary manufacturer that such vehicle 
will be converted to a nonroad vehicle or to a piece of nonroad 
equipment, as defined in 40 CFR part 89, before title is transferred to 
an ultimate purchaser. Failure of the secondary manufacturer to convert 
such vehicles to nonroad vehicles or equipment prior to transfer to an 
ultimate purchaser shall be considered a violation of section 203(a) 
(1) and (3) of the Clean Air Act.
* * * * *

PART 89--CONTROL OF EMISSIONS FROM NEW AND IN-USE NONROAD ENGINES

    1. The authority citation for part 89 continues to read as follows:

    Authority: Sections 202, 203, 204, 205, 206, 207, 208, 209, 213, 
215, 216, and 301(a) of the Clean Air Act, as amended (42 U.S.C. 
7521, 7522, 7523, 7524, 7525, 7541, 7542, 7543, 7547, 7549, 7550, 
and 7601(a).

    2. Section 89.1003 is amended by revising paragraphs (a)(6) and 
(b)(4) and adding paragraphs (b)(5), (b)(6), and (b)(7) to read as 
follows:


Sec. 89.1003  Prohibited acts.

    (a) * * *
    (6) For a manufacturer of nonroad vehicles or equipment to 
distribute in commerce, sell, offer for sale, or introduce into 
commerce a nonroad vehicle or piece of equipment, manufactured on or 
after the implementation date applicable to engines in such vehicle or 
equipment under Sec. 89.102-96(a), which contains an engine not covered 
by a certificate of conformity.
    (b) * * *
    (4) Certified nonroad engines shall be used in all vehicles and 
equipment manufactured on or after the applicable dates in Sec. 89.102-
96(a) that are self-propelled, portable, transportable, or are intended 
to be propelled while performing their function unless the manufacturer 
of the vehicle or equipment can prove that the vehicle or equipment 
will be used in a manner consistent with paragraph (2) of the 
definition of nonroad engine in Sec. 89.2. Nonroad vehicle and 
equipment manufacturers may continue to use noncertified nonroad 
engines built prior to the effective date until noncertified engine 
inventories are depleted; however, stockpiling of noncertified nonroad 
engines will be considered a violation of this section.
    (5) A manufacturer of nonroad vehicles may install an engine 
certified to the motor vehicle requirements of 40 CFR part 86 in a 
nonroad vehicle or equipment where:
    (i) The subject nonroad vehicle or equipment is designed for travel 
on public streets and highways to get from one job site to another; and
    (ii) The engine serves to propel the vehicle or equipment when it 
is operated on public roads; and
    (iii) There is no adjustment outside of the manufacturer's 
specifications or removal or rendering inoperative of devices or 
elements of design installed on or in the engine by the original engine 
manufacturer for purposes of emission control or any other action that 
may be considered tampering under section 203 of the Clean Air Act or 
paragraph (a)(3) of this section; and
    (iv) A certified nonroad engine is not available with appropriate 
physical or performance characteristics; or
    (v) A state requires the use of an on-highway engine pursuant to a 
waiver granted by EPA under section 209(e) of the Clean Air Act.
    (6) A manufacturer that produces nonroad vehicles or equipment by 
performing modifications to complete or incomplete motor vehicles may 
retain the motor vehicle engine in such vehicle or equipment provided 
that:

[[Page 58107]]

    (i) The engine is certified to the motor vehicle requirements of 40 
CFR part 86; and
    (ii) The on-highway vehicle is not available from its manufacturer 
with a certified nonroad engine having appropriate performance 
characteristics; and
    (iii) There is no adjustment outside of the manufacturer's 
specifications or removal or rendering inoperative of devices or 
elements of design installed on or in the engine or vehicle by the 
original engine or vehicle manufacturer for purposes of emission 
control, or any other action that may be considered tampering under 
section 203 of the Clean Air Act or paragraph (a)(3) of this section.
    (7) A new nonroad engine, intended solely to replace an engine in a 
piece of nonroad equipment manufactured prior to the applicable 
implementation date in Sec. 89.102-96(a), shall not be subject to the 
prohibitions of paragraph (a)(1) of this section or the requirements of 
Sec. 89.105-96 and paragraph (b)(4) of this section provided that:
    (i) The engine manufacturer has ascertained that no engine produced 
by itself or the manufacturer of the engine that is being replaced, if 
different, and certified to the requirements of this subpart, is 
available with the appropriate physical or performance characteristics 
to repower the equipment; and
    (ii) The engine manufacturer or its agent takes ownership and 
possession of the old engine in partial exchange for the replacement 
engine; and
    (iii) The replacement engine is clearly labeled with the following 
language, or similar alternate language approved by the Administrator: 
THIS ENGINE DOES NOT COMPLY WITH FEDERAL NONROAD OR ON-HIGHWAY EMISSION 
REQUIREMENTS. SALE OR INSTALLATION OF THIS ENGINE FOR ANY PURPOSE OTHER 
THAN AS A REPLACEMENT ENGINE IN A NONROAD VEHICLE OR PIECE OF NONROAD 
EQUIPMENT BUILT BEFORE JANUARY 1, [INSERT APPROPRIATE YEAR] IS A 
VIOLATION OF FEDERAL LAW SUBJECT TO CIVIL PENALTY.

[FR Doc. 96-28545 Filed 11-8-96; 8:45 am]
BILLING CODE: 6560-50-P