[Federal Register Volume 68, Number 70 (Friday, April 11, 2003)]
[Rules and Regulations]
[Pages 17741-17748]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-8955]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 89

[AMS-FRL-7482-1]


Control of Emissions From New Nonroad Diesel Engines: Amendments 
to the Nonroad Engine Definition

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: EPA is issuing a direct final rule revising the definition of 
nonroad engines to include all diesel-powered engines used in 
agricultural operations in the State of California that are certified 
by the engine maker to meet the applicable nonroad emission standards. 
Our rule will consider such engines as nonroad engines without regard 
to whether these engines are portable or transportable or how long 
these engines remain in one fixed location at a farm.

DATES: This direct final rule is effective on May 14, 2003, without 
further notice, unless we receive adverse comments by May 12, 2003, or 
receive a request for a public hearing by April 28, 2003. Should we 
receive any adverse comments on this direct final rule, we will publish 
a timely withdrawal in the Federal Register informing the public that 
this rule will not take effect.

ADDRESSES: Comments: All comments and materials relevant to today's 
action should be submitted to Public Docket No. OAR-2003-0046 at the 
following address: Environmental Protection Agency, EPA Docket Center 
(EPA/DC), Air and Radiation Docket, Mail Code 6102T, 1200 Pennsylvania 
Avenue, NW., Washington, DC 20460.
    Docket: Materials relevant to this rulemaking are contained in 
Public Docket Number OAR-2003-0046 at the following address: EPA Docket 
Center (EPA/DC), Public Reading Room, Room B102, EPA West Building, 
1301 Constitution Avenue, NW., Washington DC. The EPA Docket Center 
Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through 
Friday, except on government holidays. You can reach the Reading Room 
by telephone at (202) 566-1742, and by facsimile at (202) 566-1741. The 
telephone number for the Air Docket is (202) 566-1742. You may be 
charged a reasonable fee for photocopying docket materials, as provided 
in 40 CFR part 2.

FOR FURTHER INFORMATION CONTACT: Robert Larson, U.S. EPA, National 
Vehicle and Fuel Emissions Laboratory, Transportation and Regional 
Programs Division, 2000 Traverwood Drive, Ann Arbor, MI 48105; 
telephone (734) 214-4277, fax (734) 214-4956, e-mail 
[email protected].

SUPPLEMENTARY INFORMATION:

I. General Information

A. Regulated Entities

    Entities potentially impacted by this change in regulation are 
farming interests in the State of California and those interests that 
manufacture or put into commerce new, compression-ignition nonroad 
engines, including:

------------------------------------------------------------------------
                                                        Examples of
           Category                NAICS codes     potentially regulated
                                                         entities
------------------------------------------------------------------------
Manufacturing.................  333618            Manufacturers of new
                                                   nonroad diesel
                                                   engines.
Agriculture, Forestry,          111XXX            Farms with crop
 Fishing, Hunting.                                 production.
Agriculture, Forestry,          112XXX            Farms with animal
 Fishing, Hunting.                                 production.
Manufacturing.................  333111            Farm machinery and
                                                   equipment.
------------------------------------------------------------------------

B. How Can I Get Copies of This Document?

    1. Docket. EPA has established an official public docket for this 
action under Air Docket ID No. OAR-2003-0046. The official public 
docket consists of the documents specifically referenced in this 
action, any public comments received, and other information related to 
this action. Although a part of the official docket, the public docket 
does not include Confidential Business Information (CBI) or other 
information whose disclosure is restricted by statute. The official 
public docket is the collection of materials that is available for 
public viewing The official public docket is the collection of 
materials that is available for public viewing at the Air Docket in the 
EPA Docket Center, (EPA/DC) EPA West, Room B102, 1301 Constitution 
Ave., NW., Washington, DC. The EPA Docket Center Public Reading Room is 
open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding 
legal holidays. The telephone number for the Public Reading Room is 
(202) 566-1744, and the telephone number for the Air Docket is (202) 
566-1742.
    2. Electronic Access. You may access this Federal Register document 
electronically through the EPA Internet under the Federal Register 
listings at http://www.epa.gov/edocket/ to submit or view public 
comments, access the index of the contents of the official public 
docket, and access those documents in the public docket that are 
available electronically. Once in the system, select ``search'' and key 
in the appropriate docket identification number.
    EPA is publishing this rule without a prior proposal. However, if 
we receive adverse comment on this rulemaking, we will publish a timely 
withdrawal in the Federal Register indicating that this rule is being 
withdrawn due to adverse comment. In the ``Proposed Rules'' section of 
today's Federal Register publication, we are publishing a separate 
document that will serve as the proposal to adopt the provisions in 
this Direct Final Rule if adverse comments are filed. This rule will be 
effective on

[[Page 17742]]

May 14, 2003, without further notice unless we receive adverse comment 
by May 12, 2003, or receive a request for a public hearing by April 28, 
2003. We may address all adverse comments in a subsequent final rule 
based on the proposed rule. We will not institute a second comment 
period.

II. Summary of Rule

    The change to the definition of nonroad engine is intended to 
encourage agricultural operations in the State of California to reduce 
emission from their existing stationary diesel-powered \1\ engines by 
replacing them with engines certified to the emission standards for 
nonroad engines, thereby greatly reducing NOX emissions from 
these engines. The rule does not require the replacement of existing 
engines with certified engines. However, as explained below, EPA 
believes that owners of engines will choose to replace them 
voluntarily.
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    \1\ In this preamble, references to diesel-powered engines or 
diesel engines denotes engines operating over what is commonly 
referred to as the diesel engine cycle, also known as the 
compression ignition cycle. It is not limited to engines running on 
diesel fuel. For example, engines fueled with diesel fuel, 
compressed natural gas (CNG), or other fuel, may be diesel-powered 
engines.
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    The Clean Air Act divides internal combustion engines into three 
categories: Stationary internal combustion engines, engines used in 
highway motor vehicles, and nonroad engines. The last category includes 
virtually all mobile engines that are not used in motor vehicles. 
Nonroad engines are considered mobile sources under the Act and are 
regulated by EPA under section 213 of the Act. However, the boundaries 
between these three categories of engines is not well delineated in the 
Act, so EPA promulgated a rule defining ``nonroad engine,'' exercising 
its authority to clarify these boundaries (59 FR 31306, June 17, 1994). 
See 40 CFR 89.2. The current definition of nonroad engine requires that 
the engine meet one of several criteria primarily based on how it is 
used. For example, the engine is defined as a nonroad engine if it is 
used to propel a piece of mobile equipment such as a bulldozer or farm 
tractor or if it is used in equipment that is propelled while 
performing its function such as a lawn mower. In addition, the engine 
is considered a nonroad engine if it is used in a piece of equipment 
that is portable or transportable. Such equipment could include a pump 
mounted on a trailer or on a set of skids for the purpose of moving the 
equipment from one location to another for operation in multiple 
locations. However, such an engine would not be considered a nonroad 
engine if the engine or the equipment in which it is located is 
actually used in one fixed location for more than 12 consecutive 
months. If an engine is located in one place and operated more than 12 
consecutive months or otherwise does not meet the definition of nonroad 
engine (for example, if it is permanently attached to one location), 
the engine is not considered a nonroad engine and is not subject to 
EPA's emission standards for nonroad engines. Instead, it is generally 
considered stationary and is subject to regulation under Titles I and V 
of the Clean Air Act.
    In the case of agricultural pump engines used in the State of 
California, EPA estimates that approximately half of these fall under 
the definition of nonroad engines due to their portability while the 
rest are considered stationary. Other than portability, both sets of 
engines perform basically the same set of functions and operate 
similarly. Thus, a farming operation could have engines of the same 
horsepower and even the same manufacturer performing the same basic 
function of powering a pump, but one would be considered a mobile 
source nonroad engine subject to the requirements established under 
Title II of the Clean Air Act while its counterpart is treated as 
stationary and subject to the provisions of Titles I and V of the Clean 
Air Act.
    In California, stationary agricultural pump engines have 
historically not been required to reduce their emission levels.\2\ In 
contrast, nonroad engines have emission standards in place which have 
substantially improved their emission performance. Thus, using the 
example case from the previous paragraph, an agricultural operation 
could have two pump engines identical in function except the one 
considered a nonroad engine could have significantly better emission 
performance than its counterpart stationary pump engine. Clearly, from 
an emission performance standpoint, it would be preferable to have both 
engines meeting the lower emission levels of the nonroad engine.
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    \2\ California state law presently exempts these engines from 
all New Source Review and Title V permitting requirements as well as 
any local operating permit requirements. As a result of this 
exemption, EPA recently proposed to find that the California State 
Implementation Plan is substantially inadequate. 68 FR 7327 
(February 13, 2003)
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    Due to the substantial number of agricultural pump engines in use 
in California, particularly concentrated in the major agricultural 
areas such as the San Joaquin Valley, and due to the fact that the 
portion of these engines installed in stationary pumps have not been 
previously controlled (except perhaps by voluntary action of the owner 
\3\), we believe it would be environmentally beneficial to encourage 
agricultural operations to replace relatively high emitting stationary 
pump engines with engines meeting the nonroad emission standards. The 
State of California has in fact acted since 1999 to reduce the 
emissions from these stationary engines by replacing these stationary 
engines through its Carl Moyer program which has provided funding for 
the purchase of new engines certified to meet the emission standards 
applicable to new nonroad engines.
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    \3\ Some pieces of stationary agricultural equipment use engines 
that are certified to nonroad engine standards, or that are 
identical to certified engines. Internal combustion engines can be 
manufactured for many uses, and some engines manufactured to meet 
the nonroad engine standards may end up in stationary equipment. 
Farmers may choose to purchase such equipment.
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    EPA is changing the definition of nonroad engine to include diesel 
engines used in agricultural operations in the State of California that 
are certified by the engine manufacturer to meet the nonroad emission 
standards for that engine, where the engine is part of an engine family 
that contains engines that otherwise meet the definition of nonroad 
engine. Such engines will no longer be stationary internal combustion 
engines. Thus, farmers would not include the emissions from such 
nonroad engines when they determine whether their agricultural 
operation is a major source for purposes of Title V permitting or other 
requirements. We believe that this change will encourage the use of 
engines certified to nonroad standards, which will result in a 
reduction in emissions from uncontrolled levels. We believe that 
farmers will prefer to obtain new engines regulated as nonroad engines, 
rather than to continue using engines that will be regulated under 
stationary source permitting requirements including Title V and New 
Source Review (NSR). Regulations promulgated under Title II focus 
primarily on compliance by manufacturers rather than users, whereas 
Title V and NSR focuses compliance requirements on users.
    Of course, replacing current engines with new nonroad engines comes 
at some cost. However, the State of California through its Carl Moyer 
program has been providing funds to help farmers replace existing 
engines with newer cleaner engines. Additionally, the U.S. Department 
of Agriculture, through programs administered by its Natural Resources

[[Page 17743]]

Conservation Services (NCRS) anticipates making some funding available 
under the Environmental Quality Incentives Program (EQIP) to the extent 
practicable for replacement of existing agricultural engines with 
engines meeting the requirements of our nonroad regulations.
What Is EPA Doing?
    We are revising the definition of nonroad engines to include 
certain diesel engines that are used in agricultural operations in 
California that would otherwise not meet the current definition of 
nonroad engine. As a result, a diesel engine used in agricultural 
operations in California that does not meet the current definition, 
e.g. because it is used in a stationary application, would still be 
considered a nonroad engine if it is part of an engine family certified 
by the engine maker to the applicable nonroad engines standards, and at 
least some of the engines in that engine family meet the current 
definition of nonroad engine.
    Internal combustion engines are often manufactured for use in many 
different applications. Engines that are part of an engine family that 
has been certified by EPA to meet applicable nonroad engine standards 
may get used in either portable or stationary applications. Under the 
current definition, only the engines used in mobile applications meet 
the definition of nonroad engine and those used in stationary 
applications do not. Under this revision, an engine in that certified 
engine family that is used in agricultural operations in California 
would continue to meet the definition of nonroad irrespective of its 
use as long as some engines in the engine family are used in portable 
applications.
    This rule change does not require farmers in California to replace 
existing engines with new engines certified to the nonroad standards. 
However, for farmers who have already made this replacement or who do 
so in the future, their engines will be treated by EPA as nonroad 
engines, subject to the mobile source requirements established under 
Title II of the Clean Air Act, rather than as stationary engines 
subject to the stationary source requirements of Title I and V of the 
Clean Air Act. Those engines that are not replaced will continue to be 
regarded as stationary sources subject to those requirements.
Why Is EPA Making This Change?
    As discussed below, EPA believes that allowing diesel agricultural 
engines in California to be classified as nonroad engines if they are 
certified to those standards will result in more emission reductions 
than would otherwise occur if such engines remained subject to the 
stationary source requirements and that these reductions will occur 
more quickly than if these engines continue to be regulated as 
stationary sources.
    Engines used in stationary applications on farms in California have 
previously not been regulated under the stationary source requirements 
of the Clean Air Act, including Title V requirements. Effective 
November 14, 2002, such engines became subject to the Title V permit 
program pursuant to EPA's regulations at 40 CFR part 71.\4\ Title V, 
however, does not require subject sources to reduce emissions from the 
source's operation. The main goal of Title V is to improve a source's 
compliance with all Clean Air Act requirements to which it is subject. 
New Source Review requirements of the Clean Air Act requires emission 
controls be evaluated and possibly installed for new major sources or 
existing major sources which perform a significant modification. While 
New Source Review and other requirements under Title I or Title V 
(e.g., Reasonably Available Control Technology requirements for major 
sources of NOX required under Title I) may lead to emission 
reduction for some engines in the future, it is unclear to what extent 
agricultural engines in California would be required to reduce 
emissions as a result of such requirements. Finally, even assuming 
potential future emission controls for some of these engines that could 
result from stationary source requirements, it is not expected that 
such controls would result in greater total emission reductions 
compared to what would result from using engines meeting the applicable 
nonroad emission standards.
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    \4\ Federal Register 63551 (October 15, 2002)
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    In contrast, regulations for diesel nonroad engines establish 
federal emission standards for these engines and a pre-production 
certification procedure to ensure compliance with the standards, and 
include various other compliance and enforcement measures. These 
standards require substantial control of emissions and are generally 
designed to ``achieve the greatest degree of emission reduction 
achievable through the application of [available] technology * * *, 
giving appropriate consideration to * * * cost * * * noise, energy and 
safety factors.'' See Clean Air Act section 213(a)(3). These 
regulations have been in effect beginning with the 1996 model year. The 
so called ``Tier 2'' version of these regulations is currently being 
phased in and will result in a further improvement in emission 
performance. More stringent ``Tier 3'' standards will be phased in 
beginning with the 2006 model year. Additionally, EPA is developing 
another set of more stringent nonroad emission standards which we 
anticipate will very substantially improve the emission performance of 
new nonroad engines in the future. This sequence of increasingly more 
stringent emission regulations for these new nonroad diesel engines 
will assure that the nonroad requirements result in the maximum 
feasible emission controls we can anticipate for at least the next 
decade or so. If engines meeting these nonroad standards are 
extensively used in agricultural applications, maximum feasible 
emission reductions should result. This regulatory amendment is 
intended to encourage the widespread use of such nonroad engines for 
all agricultural pump applications in the State of California.
What Is Current Emission Performance of These Stationary Engines?
    We estimate that approximately 3,700 stationary diesel engines are 
used in agricultural applications in California, primarily for powering 
irrigation pumps such as those used for crop irrigation and for tending 
livestock. Some of these are quite old, dating as far back as 1960. 
However, between 1999 and 2001 approximately 1,500 engines were 
replaced through a state financed program known as the Carl Moyer 
program. Under the Carl Moyer program, existing stationary diesel 
engines were replaced with new engines of similar power and performance 
that were also certified to meet the nonroad emission standards. It is 
estimated that this program reduced oxides of nitrogen (NOX) 
emissions statewide in California by over 1,750 tons per year. The 
remaining approximately 2,200 stationary engines are estimated to have 
average emission levels approximately 8.76 g/bhp-hr, which is about 
twice as much as the emissions of a nonroad engine manufactured to 
current (i.e., Tier 2) nonroad standards (4.8 to 4.9 g/hphr 
NOX + HMHC for engines between 100-750 hr). Current nonroad 
standards also require emissions of particulate matter (PM) to be 
approximately 40 percent lower than Tier 1 levels.
What Is the Impact of These Stationary Source Emissions on Air Quality?
    Currently, agricultural stationary source diesel engines represent 
one of the most significant sources of NOX emissions from 
agricultural activities in California. Particularly in major farming 
areas such as the San Joaquin Valley, NOX emissions from 
stationary diesel engines represent approximately 5% of

[[Page 17744]]

the total NOX emissions inventory, thus contributing to the 
ozone and PM-10 non-attainment status of the area. These engines also 
emit particulate matter directly.
    Thus, replacing these relatively dirty stationary diesel engines 
with much cleaner currently available diesel engines will help air 
quality immediately. The anticipated future standards which are 
expected to further reduce emissions from nonroad engines will also 
mean that new agricultural engines in California should have even 
better emission performance in the future, providing more emission 
benefits as farmers replace their engines in later years.
What Would Happen if This Change Were not Made?
    Under Title V, farms need to assess their inventories of emissions. 
If the total of these emissions exceeds a certain level (called the 
major source threshold), they would be subject to the permitting 
requirements of Titles I and V of the CAA. One of these permitting 
requirements is the NSR program. NSR requires major stationary sources 
that desire to construct for the first time or to modify their facility 
to get a NSR permit (also called a preconstruction permit) and meet 
emission control requirements. The other permitting requirement is 
EPA's operating permits program. This requires major stationary sources 
to get an operating permit, but does not require emission control. 
Thus, farm engines classified as stationary sources and operated on a 
farm which has collective emissions great enough to trigger the major 
source threshold would be subject to both these permitting programs. 
Under today's action, stationary farm engines that meet the nonroad 
certification requirement would not be subject to these two permitting 
programs. They also would not be subject to other potential state or 
local requirements directed specifically at stationary sources (e.g., 
NOX RACT programs under Title I), but could be subject to 
other state or local requirements directed at nonroad engines (e.g., 
state nonroad engine emission standards or use restrictions).
What Do We Expect Will Happen as a Result of This Change?
    As noted above, stationary engines in agricultural applications 
have in the past not been required to control their emissions under 
either federal regulations or under any State of California regulation 
or program aimed at improving air quality. In most cases, diesel 
engines represent the predominant source of NOX emissions on 
the farm. Even after taking into account the engines that were already 
replaced under the Carl Moyer program, we estimate that around 2,200 
uncontrolled stationary diesel agricultural engines remain in use in 
California. We estimate that replacing these over the next two years 
with engines meeting the existing Tier 2 and Tier 3 nonroad emission 
standards would result in a reduction of up to 4,400 tons of 
NOX annually from agricultural operations. Particularly in 
areas with intensive levels of farming, such reductions would be 
significant. We estimate replacing the current stationary diesel 
engines with new nonroad engines would reduce NOX emission 
for all current agricultural diesel engines, both stationary and 
nonroad, by about 20 percent. It would also represent a significant 
reduction in direct PM emissions from such engines.
    This regulatory change will specify that stationary diesel engines 
used in agricultural applications in California be treated as nonroad 
sources if they otherwise meet the applicable nonroad emission 
requirements and are part of an engine family that includes engines 
that otherwise meet the nonroad engine definition. As a voluntary 
program, not all farming operations may choose to switch their 
stationary diesel engines to compliant nonroad engines. However, under 
Title V, agricultural operations have to inventory their sources of 
stationary emissions and estimate the combined level of annual 
emissions from these sources. For ozone nonattainment areas, operations 
which exceed an annual air emissions threshold for a pollutant (50 tons 
per year for areas designated as having ``serious'' air pollution, 25 
tons per year for areas designated as having ``severe'' air pollution 
and 10 tons per year for areas designated as having ``extreme'' air 
pollution) are designated as ``major'' sources of air pollution and 
have to annually report these emissions. For PM-10 nonattainment areas, 
the thresholds are 100 tons for operations in moderate nonattainment 
areas and 70 tons for areas in serious nonattainment. Additionally, 
operations designated as ``major'' stationary sources must meet the NSR 
and NOX RACT requirements discussed below. For a significant 
number of agricultural operations, switching from their existing 
stationary source diesel engines to new nonroad certified engines will 
remove these engines from the stationary source category, reducing 
farms' stationary source emissions enough so that they will no longer 
be considered major sources of NOX emissions, thus avoiding 
the obligations noted above. For those remaining agricultural 
operations which would still exceed the ``major'' source threshold even 
after switching to nonroad certified engines, these operations may 
choose to make this switch anyway as this will reduce some of the 
reporting and other procedural obligations under any potential future 
stationary source control programs. Finally, we anticipate that some of 
the cost of the new engines may be subsidized by the USDA, consistent 
with eligibility requirements under the EQIP or perhaps via continued 
funding under the State of California's Carl Moyer program. For these 
reasons, we believe that it is likely that all agricultural pump 
engines currently used in operations which would otherwise exceed the 
threshold for major source designation and subject to regulation under 
Title V will be converted to new nonroad certified engines. In 
addition, as this regulation will encourage the manufacture of 
agricultural equipment containing engines meeting the nonroad engine 
standards, it is also likely that this approach will result in greater 
use of lower-emitting agricultural engines even in locations that do 
not exceed major source thresholds.
    As noted above, this is a voluntary program so the agricultural 
operation has the opportunity to choose to take advantage of this 
regulation change or not. No adverse impact on agricultural operations 
is anticipated under this rule.
    While this rule would exclude a set of sources in California from 
certain provisions of Title I and V, we would expect a lesser degree of 
emission control from these engines if this regulation change were not 
being adopted. The State or localities may choose not to require 
controls for many engines, particularly those that are not located in 
major sources. Those engines not on farms designated ``major'' sources 
may not be controlled, and it is not clear that even engines that are 
controlled would be controlled to the same level of emissions as 
nonroad certified engines. Since the nonroad rules are generally aimed 
at achieving the greatest emission control available, it would be 
unlikely stationary source controls would result in any greater 
control.
    NSR requirements, which apply only to new or modified sources, 
would require Lowest Achievable Emissions Rate (LAER) \5\ in 
nonattainment areas or

[[Page 17745]]

Best Achievable Control Technology (BACT) \6\ in attainment areas. For 
internal combustion engines similar to the diesel agricultural engines 
affected by this rule, no single industry-wide technology has been 
generally determined to be LAER or BACT, but some recent local 
decisions regarding LAER and BACT in California indicate that diesel 
engines have not generally had to meet NOX emission 
standards more stringent than current Title II standards.
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    \5\ LAER is defined as the most stringent emission limitation 
derived from either of the following: (1) The most stringent 
emission limitation contained in the implementation plan of any 
State for such class or category of source; or (2) the most 
stringent emission limitation achieved in practice by such class or 
category of source. CAA Section 171(3)
    \6\ The BACT requirement is defined as: ``An emissions 
limitation (including a visible emission standard) based on the 
maximum degree of reduction for each pollutant subject to regulation 
under the Clean Air Act which would be emitted from any proposed 
major stationary source or major modification which the 
Administrator, on a case-by-case basis, taking into account energy, 
environmental, and economic impacts and other costs, determines is 
achievable for such source or modification through application of 
production processes or available methods, systems, and techniques, 
including fuel cleaning or treatment or innovative fuel combustion 
techniques for control of such pollutant. In no event shall 
application of best available control technology result in emissions 
of any pollutant which would exceed the emissions allowed by any 
applicable standard under 40 CFR parts 60 and 61. If the 
Administrator determines that technological or economic limitations 
on the application of measurement methodology to a particular 
emissions unit would make the imposition of an emissions standard 
infeasible, a design, equipment, work practice, operational 
standard, or combination thereof, may be prescribed instead to 
satisfy the requirement for the application of best available 
control technology. Such standard shall, to the degree possible, set 
forth the emissions reduction achievable by implementation of such 
design, equipment, work practice or operation, and shall provide for 
compliance by means which achieve equivalent results.'' 40 CFR 
52.21(b)(12)
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    In addition, the Clean Air Act requires Reasonably Available 
Control Technology (RACT) for major NOX stationary sources 
in most ozone nonattainment areas.\7\ We have defined RACT as the 
lowest emission limitation that a particular source is capable of 
meeting by the application of control technology that is reasonably 
available considering technological and economic feasibility. 44 FR 
53762 (September 17, 1979). RACT may require technology that has been 
applied to similar, but not necessarily identical, source categories. 
57 FR 55620 (November 25, 1992). There has been no source category-wide 
RACT determination for these engines, but we believe it is unlikely 
that RACT requirements for these engines would be more stringent, and 
in some cases they may be less stringent, than the applicable nonroad 
engine standards.
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    \7\ There are similar RACM requirements in PM-10 nonattainment 
areas.
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    Finally, any emission reductions under the stationary source 
provisions would likely occur later than anticipated via this rule 
change. While NSR and other Title I requirements may at some point in 
the near future begin to be applied to agricultural sources, 
implementation of such requirements would have to allow for the lead 
time needed to take regulatory and/or legislative action to promulgate 
such regulations and the lead time needed to implement such 
regulations.
    There are some restrictions on state and local ability to regulate 
nonroad engines. See Clean Air Act section 209(e). States and local 
jurisdictions may not promulgate their own emission standards for 
nonroad engines. However, the State of California may promulgate and 
enforce standards for all nonroad agricultural engines, except new 
engines under 175 horsepower, if the state receives authorization from 
EPA to do so. Though California must make certain showings to receive 
this authorization, the Clean Air Act provides considerable deference 
to California to promulgate its own standards. Even for engines below 
175 horsepower, California can receive authorization to promulgate 
standards for such engines if they are not standards affecting new 
(i.e., ``showroom new'') engines.
    In addition, states and localities may promulgate use restrictions 
for such engines, such as time-of-use restrictions and fuel 
restrictions. These requirements, as well as the state standards 
discussed in the paragraph above, may be enacted by state and local 
entities to help areas meet the attainment requirements under the Act 
by achieving even greater NOX and PM reductions.
Why Are Only Agricultural Engines in the State of California Covered by 
This Rule Change?
    This rule represents a small deviation from the general manner in 
which EPA has delineated the boundary between nonroad engines and 
stationary internal combustion engines. EPA has in the past based the 
definition on whether the engine will be used in a mobile or stationary 
manner, not on other characteristics such as engine size or the type of 
work, or industrial category of work, in which the engine was engaged. 
EPA believes that the particular circumstances of these California 
agricultural engines make it appropriate for EPA to use a somewhat 
different approach in this targeted rule.\8\ First, the engines being 
reclassified in this rule are doing work that is indistinguishable from 
work done by engines already classified as nonroad engines--in fact, as 
noted above agricultural operations often have a combination of nonroad 
and stationary engines performing the same function, such as pumping 
water for crop irrigation or livestock watering. Moreover, the 
certified engines that would be defined as nonroad engines by this 
regulatory change are engines that are part of engine families that 
have been certified for use and are used in other mobile applications. 
Therefore, many of the certified engines affected by this rule are in 
fact indistinguishable from other certified nonroad engines.
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    \8\ The use of targeted rules of limited scope, especially in 
the context of a voluntary program, is similar to other projects in 
which EPA has engaged.
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    More importantly, the unique circumstances in California make this 
revision appropriate for these engines. As noted above, unlike other 
stationary sources that are already subject to stationary source 
emission controls, farm engines have not historically been subject to 
stationary source emission control regulations. The approach we use in 
this rule basically allows a farm to voluntarily reduce emissions from 
its engines in a manner that will result in definite emission 
reductions that are likely greater and more rapid than would be 
achieved under the previous approach. This rule will thus not disturb 
existing regulatory programs in a way that a broader rule would.
    This revision is particularly appropriate for California. 
California is uniquely positioned as the only state that may promulgate 
its own standards for nonroad engines under section 209(b). Other 
states may only promulgate standards identical to any California 
chooses to adopt. Since California is in a unique position to continue 
promulgating standards regulating these engines as nonroad engines, it 
can implement effective emission control programs for these engines. 
Also, given the particular air quality concerns and the need for 
reductions of NOX in California as well as the opportunity 
to significantly reduce emissions from agricultural pump engines (the 
opportunity benefitted by the potential funding through the Carl Moyer 
program and the U.S. Department of Agriculture), farms in California 
are uniquely situated to take advantage of this regulatory provision.
    This rule is in many ways an extension of the policy behind 
California's existing Carl Moyer program to provide new certified 
engines to these farmers. That program provided funding for farmers 
that purchased engines meeting nonroad standards, whereas this revision 
provides regulatory changes that encourage the use of

[[Page 17746]]

certified engines. EPA believes that this action is similar in many 
ways to programs EPA has implemented and continues to consider, under 
which EPA offers flexibility in its regulations, etc., in site-specific 
situations to encourage companies, communities, and other project 
sponsors to develop ``cleaner, cheaper and smarter'' alternatives to 
the current system. See 62 FR 19872 (April 23, 1997), for example.
    It is not clear that this approach would be appropriate in other 
circumstances, given the different historical and environmental 
contexts and different types of engines used. Moreover, there is the 
potential that a broader use of this approach could possibly lead to 
exploitation of mobile source certification as a way to avoid 
stationary source controls, or might otherwise disrupt the proper 
functioning of the federal, state and local programs to control 
stationary source emissions. Given the potentially significant 
reductions that this program will facilitate, the general lack of 
reductions previously required under the existing regulatory approach, 
the voluntary nature of this approach, available funding and the 
limited scope of this approach, EPA believes that this rule is 
appropriate and justified.

What Are the Statutory Provisions Underlying This Rule Change?

    The Clean Air Act's statutory provisions are relatively ambiguous 
regarding the specific boundaries between nonroad engines and 
stationary internal combustion engines. Section 216(10) states that a 
nonroad engine is ``an internal combustion engine * * * that is not 
used in a motor vehicle or a vehicle used solely for competition, or 
that is not subject to standards promulgated under section 111 or 
section 202.'' Section 111(a)(3) states that ``stationary source means 
any building, structure, facility or installation which emits or may 
emit any air pollutant. Nothing in Title II of this Act relating to 
nonroad engines shall be construed to apply to stationary internal 
combustion engines.''
    EPA's prior rulemaking that clarified the delineation between 
nonroad and stationary engine focused on the use and application of the 
engine, and did so on an engine by engine basis. This targeted revision 
also focuses on the application and use of engines, but in a broader 
manner. Under this approach, EPA looks at the engine family as a group, 
not engine by engine. Where the engine family contains engines that 
are, under the previous definition, nonroad engines, EPA will allow 
other specific engines that are essentially identical to be considered 
nonroad engines. We believe this approach is reasonable in these 
circumstances for the reasons delineated above.

III. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), the 
Agency is required to determine whether this regulatory action would be 
``significant'' and therefore subject to review by the Office of 
Management and Budget (OMB) and the requirements of the Executive 
Order. The order defines a ``significant regulatory action'' as any 
regulatory action that is likely to result in a rule that may:

--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;
--Create a serious inconsistency or otherwise interfere with an action 
taken or planned by another agency;
--Materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or,
--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, we have determined 
that this final rule is not a ``significant regulatory action.''

B. Paperwork Reduction Act

    The Paperwork Reduction Act of 1980, 44 U.S.C. 3501 et seq., and 
implementing regulations, 5 CFR part 1320, do not apply to this action 
as it does not involve the collection of information as defined 
therein.

C. Regulatory Flexibility Act

    EPA has determined that it is not necessary to prepare a regulatory 
flexibility analysis in connection with this final rule. EPA has also 
determined that this rule will not have a significant economic impact 
on a substantial number of small entities, in particular because this 
rule change does not mandate that farms replace any existing engine.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for federal agencies to assess the 
effects of their regulatory actions on state, local, and tribal 
governments, and the private sector. Under section 202 of the UMRA, we 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``federal mandates'' that 
may result in expenditures to state, local, and tribal governments, in 
the aggregate, or to the private sector, of $100 million or more for 
any single year. Before promulgating a rule for which a written 
statement is needed, section 205 of the UMRA generally requires us to 
identify and consider a reasonable number of regulatory alternatives 
and adopt the least costly, most cost-effective, or least burdensome 
alternative that achieves the objectives of the rule. The provisions of 
section 205 do not apply when they are inconsistent with applicable 
law. Moreover, section 205 allows us to adopt an alternative that is 
not the least costly, most cost-effective, or least burdensome 
alternative if we provide an explanation in the final rule of why such 
an alternative was adopted.
    Before we establish any regulatory requirement that may 
significantly or uniquely affect small governments, including tribal 
governments, we must develop a small government plan pursuant to 
section 203 of the UMRA. Such a plan must provide for notifying 
potentially affected small governments, and enabling officials of 
affected small governments to have meaningful and timely input in the 
development of our regulatory proposals with significant federal 
intergovernmental mandates. The plan must also provide for informing, 
educating, and advising small governments on compliance with the 
regulatory requirements.
    This rule contains no federal mandates for state, local, or tribal 
governments as defined by the provisions of Title II of the UMRA. The 
rule imposes no enforceable duties on any of these governmental 
entities. Nothing in the rule will significantly or uniquely affect 
small governments.
    We have determined that this rule does not contain a federal 
mandate that may result in estimated expenditures of more than $100 
million to the private sector in any single year. This action has the 
net effect of revising certain provisions of the Tier 2 rule. 
Therefore, the requirements of the UMRA do not apply to this action.

E. Executive Order 13132: Federalism

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires us to develop an accountable process to ensure 
``meaningful and timely input by state

[[Page 17747]]

and local officials in the development of regulatory policies that have 
federalism implications.'' ``Policies that have federalism 
implications'' is defined in the Executive Order to include regulations 
that have ``substantial direct effects on the states, on the 
relationship between the national government and the states, or on the 
distribution of power and responsibilities among the various levels of 
government.
    Under section 6 of Executive Order 13132, we may not issue a 
regulation that has federalism implications, that imposes substantial 
direct compliance costs, and that is not required by statute, unless 
the federal government provides the funds necessary to pay the direct 
compliance costs incurred by state and local governments, or we 
consults with state and local officials early in the process of 
developing the proposed regulation. We also may not issue a regulation 
that has federalism implications and that preempts state law, unless 
the Agency consults with state and local officials early in the process 
of developing the proposed regulation.
    Section 4 of the Executive Order contains additional requirements 
for rules that preempt state or local law, even if those rules do not 
have federalism implications (i.e., the rules will not have substantial 
direct effects on the states, on the relationship between the national 
government and the states, or on the distribution of power and 
responsibilities among the various levels of government). Those 
requirements include providing all affected state and local officials 
notice and an opportunity for appropriate participation in the 
development of the regulation. If the preemption is not based on 
express or implied statutory authority, we also must consult, to the 
extent practicable, with appropriate state and local officials 
regarding the conflict between state law and federally protected 
interests within the Agency's area of regulatory responsibility.
    This rule does not have federalism implications. It will not have 
substantial direct effects on the states, on the relationship between 
the national government and the states, or on the distribution of power 
and responsibilities among the various levels of government, as 
specified in Executive Order 13132. This rule revises certain 
provisions of earlier rules that adopted national standards to control 
emissions from nonroad diesel engines. The requirements of the rule 
will be enforced by the federal government at the national level. Thus, 
the requirements of section 6 of the Executive Order do not apply to 
this rule.

F. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (59 FR 22951, November 6, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by tribal officials in the development of regulatory 
policies that have tribal implications.'' This final rule does not have 
tribal implications, as specified in Executive Order 13175. Today's 
rule does not uniquely affect the communities of American Indian tribal 
governments. Furthermore, today's rule does not impose any direct 
compliance costs on these communities and no circumstances specific to 
such communities exist that will cause an impact on these communities 
beyond those discussed in the other sections of today's document. Thus, 
Executive Order 13175 does not apply to this rule.

G. Executive Order 13045: Protection of Children From Environmental 
Health and Safety Risks

    Executive Order 13045, ``Protection of Children from Environmental 
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997) applies 
to any rule that (1) is determined to be ``economically significant'' 
as defined under Executive Order 12866, and (2) concerns an 
environmental health or safety risk that we have reason to believe may 
have a disproportionate effect on children. If the regulatory action 
meets both criteria, section 5-501 of the Executive Order directs us to 
evaluate the environmental health or safety effects of the planned rule 
on children, and explain why the planned regulation is preferable to 
other potentially effective and reasonably feasible alternatives 
considered by us.
    This rule is not subject to the Executive Order because it is not 
an economically significant regulatory action as defined by Executive 
Order 12866. Furthermore, this rule does not concern an environmental 
health or safety risk that we have reason to believe may have a 
disproportionate effect on children.

H. Executive Order 13211: Actions That Significantly Affect Energy 
Supply, Distribution, or Use

    This rule is not subject to Executive Order 13211, ``Actions 
Concerning Regulations That Significantly Affect Energy Supply, 
Distribution, or Use'' (66 FR 28355, May 22, 2001) because it is not a 
significant regulatory action under Executive Order 12866.

I. National Technology Transfer Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), section 12(d) of Public Law 104-113, directs us to 
use voluntary consensus standards in our regulatory activities unless 
it would be inconsistent with applicable law or otherwise impractical. 
Voluntary consensus standards are technical standards (e.g., materials 
specifications, test methods, sampling procedures, and business 
practices) developed or adopted by voluntary consensus standards 
bodies. The NTTAA directs us to provide Congress, through OMB, 
explanations when we decide not to use available and applicable 
voluntary consensus standards.
    No new technical standards are established in today's rule.

J. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as amended by 
the Small Business Regulatory Enforcement Fairness Act of 1996, 
generally provides that before a rule may take effect, the agency 
promulgating the rule must submit a rule report, which includes a copy 
of the rule, to Congress and the comptroller General of the United 
States. We will submit 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 United States prior to publication of 
the rule in the Federal Register. A major rule cannot take effect until 
60 days after it is published in the Federal Register. This action is 
not a ``major rule'' as defined by 5 U.S.C. 804(2). This rule will be 
effective May 27, 2003.

IV. Statutory Provisions and Legal Authority

    Statutory authority for today's final rule is found in the Clean 
Air Act, 42 U.S.C. 7401 et seq., in particular, section 213 of the Act, 
42 U.S.C. 7547. This rule is being promulgated under the administrative 
and procedural provisions of Clean Air Act section 307(d), 42 U.S.C. 
7607(d). This rule will affect not only persons in California but also 
the manufacturers outside the State who manufacture engines and 
equipment for sale in California. For this reason, I hereby determine 
and find that this is a final action of national applicability. Under 
section 307(b)(1) of the Act, judicial review of this final action may 
be sought only in the United

[[Page 17748]]

States Court of Appeals for the District of Columbia Circuit.

List of Subjects in 40 CFR Part 89

    Environmental protection, Administrative practice and procedure, 
Motor vehicle pollution.

    Dated: April 7, 2003.
Christine Todd Whitman,
Administrator.

0
For the reasons set forth in the preamble, chapter I, title 40 of the 
Code of Federal Regulations is amended as follows:

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

0
1. The authority for part 89 continues to read as follows:

    Authority: 42 U.S.C. 7521, 7522, 7523, 7524, 7527, 7541, 7542, 
7543, 7545, 7547, 7549, 7550 and 7601(a).

Subpart A--[Amended]

0
2. Section 89.2 is amended by adding paragraph (1)(iv) to the 
definition for ``nonroad engine'' to read as follows:


Sec.  89.2  Definitions.

* * * * *
    Nonroad engine means:
    (1) * * *
    (iv) That is a compression-ignition engine included in an engine 
family certified to meet applicable nonroad emission requirements of 
this part if: the engine is used in agricultural operations in the 
growing of crops or raising of fowl or animals in the State of 
California; and any other engines in the certified engine family 
otherwise meet the definition of nonroad engine.
* * * * *
[FR Doc. 03-8955 Filed 4-10-03; 8:45 am]
BILLING CODE 6560-50-P