Subpart G - Special Compliance Provisions

§1054.601 What compliance provisions apply?

(a) Engine and equipment manufacturers, as well as owners, operators, and rebuilders of engines subject to the requirements of this part, and all other persons, must observe the provisions of this part, the requirements and prohibitions in 40 CFR part 1068, and the provisions of the Clean Air Act.

(b) Note that the provisions of 40 CFR 1068.103(f) prohibit engine manufacturers from deviating from normal production and inventory practices to stockpile engines with a date of manufacture before new or changed emission standards take effect. If your normal practice for producing engines subject to this part 1054 includes maintaining engines in inventory for some engine families for more than 12 months, you must get our prior approval to continue this practice for model years in which emission standards change. Include in your request information showing that this is necessary and it is consistent with your normal business practice. Unless we specify otherwise, include relevant inventory and production records from the preceding eight years. Note that 40 CFR 1068.103(f) applies to any engines inventoried beyond your normal practice and authorizes us to review your records to verify your normal practices, whether or not you maintain the engines in inventory for more than 12 months.

§1054.610 What is the exemption for delegated final assembly?

The provisions of 40 CFR 1068.261 related to delegated final assembly do not apply for handheld engines certified under this part 1054. The provisions of 40 CFR 1068.261 apply for nonhandheld engines, with the following exceptions and clarifications:

(a) Through the 2014 model year, you may use the provisions of this section for engines you sell to a distributor, where you establish a contractual arrangement in which you designate the distributor to be your agent in all matters related to compliance with the requirements of this section. Identify each of the distributors you intend to designate as your agent under this paragraph (a) in your application for certification. You may continue to use the provisions of this paragraph (a) this for later model years for specific distributors if we approve it based on your clear and convincing demonstration that each distributor can be expected to comply fully with the requirements of this section and 40 CFR 1068.261. We may set additional conditions beyond the provisions specified in this section to ensure that all engines will be in a certified configuration when installed by the equipment manufacturer.

(b) If you identify distributors as your agents under paragraph (a) of this section, you must perform or arrange for audits of all participating distributors and equipment manufacturers based on the following auditing rate instead of the provisions specified in 40 CFR 1068.261(d)(3)(i) and (ii):

(1) If you sell engines to 48 or more equipment manufacturers under the provisions of this section, you must annually perform or arrange for audits of twelve equipment manufacturers to whom you sell engines under this section. To select individual equipment manufacturers, divide all the affected equipment manufacturers into quartiles based on the number of engines they buy from you; select equal numbers of equipment manufacturers from each quartile each model year as much as possible. Vary the equipment manufacturers selected for auditing from year to year, though audits may be repeated in later model years if you find or suspect that a particular equipment manufacturer is not properly installing aftertreatment devices.

(2) If you sell engines to fewer than 48 equipment manufacturers under the provisions of this section, set up a plan to perform or arrange for audits of each equipment manufacturer on average once every four model years.

§1054.612 What special provisions apply for equipment manufacturers modifying certified nonhandheld engines?

The provisions of this section are limited to small-volume emission families.

(a) General provisions. If you buy certified nonhandheld engines for installation in equipment you produce, but you install the engines such that they use intake or exhaust systems that are not part of the originally certified configuration, you become the engine manufacturer for those engines and must certify that they will meet emission standards. We will allow you to utilize the provisions for simplified certification specified in paragraph (b) of this section, as long as your design stays within the overall specifications from the original engine manufacturer (such as exhaust backpressure) and you use a catalyst as described in the original engine manufacturer's application for certification.

(b) Simplified certification. You must perform testing with an emission-data engine to show that you meet exhaust emission standards; however, you may use the deterioration factor from the original engine manufacturer. The production-line testing requirements in subpart D of this part do not apply for engines certified under this section. You must meet all the other requirements that apply to engine manufacturers for engines subject to standards under this part. The engine family must have the same useful life value specified by the original engine manufacturer for that engine. In your application for certification describe any differences between the original engine manufacturer's design and yours and explain why the deterioration data generated by the original engine manufacturer is appropriate for your configuration.

(c) Engine exemption. As an engine manufacturer, you may produce nonconforming engines for equipment manufacturers as allowed under this section. You do not have to request this exemption for your engines, but you must have written assurance from equipment manufacturers that they need a certain number of exempted engines under this section. Add a removable label to the engines as described in 40 CFR 1068.262.

[86 FR 34522, Jun. 29, 2021]

§1054.615 What is the exemption for engines certified to standards for Large SI engines?

(a) An engine is exempt from the requirements of this part if it is in an emission family that has a valid certificate of conformity showing that it meets emission standards and other requirements under 40 CFR part 1048 for the appropriate model year.

(b) The only requirements or prohibitions from this part that apply to an engine that is exempt under this section are in this section.

(c) If your engines do not have the certificate required in paragraph (a) of this section, they will be subject to the provisions of this part. Introducing these engines into U.S. commerce without a valid exemption or certificate of conformity violates the prohibitions in 40 CFR 1068.101(a).

(d) Engines exempted under this section are subject to all the requirements affecting engines under 40 CFR 1048, including evaporative emission standards. The requirements and restrictions of 40 CFR 1048 apply to anyone manufacturing these engines, anyone manufacturing equipment that uses these engines, and all other persons in the same manner as if these were nonroad spark-ignition engines above 19 kW.

(e) Engines exempted under this section may not generate or use emission credits under this part 1054.

§1054.620 What are the provisions for exempting engines used solely for competition?

The provisions of this section apply for new engines and equipment built on or after January 1, 2010.

(a) We may grant you an exemption from the standards and requirements of this part for a new engine on the grounds that it is to be used solely for competition. The requirements of this part, other than those in this section, do not apply to engines that we exempt for use solely for competition.

(b) We will exempt engines that we determine will be used solely for competition. The basis of our determination is described in paragraphs (c) and (d) of this section. Exemptions granted under this section are good for only one model year and you must request renewal for each subsequent model year. We will not approve your renewal request if we determine the engine will not be used solely for competition.

(c) Engines meeting all the following criteria are considered to be used solely for competition:

(1) Neither the engine nor any equipment containing the engine may be displayed for sale in any public dealership or otherwise offered for sale to the general public. Note that this does not preclude display of these engines as long as they are not available for sale to the general public.

(2) Sale of the equipment in which the engine is installed must be limited to professional competition teams, professional competitors, or other qualified competitors. Engine manufacturers may sell loose engines to these same qualified competitors, and to equipment manufacturers supplying competition models for qualified competitors.

(3) The engine and the equipment in which it is installed must have performance characteristics that are substantially superior to noncompetitive models.

(4) The engines are intended for use only as specified in paragraph (e) of this section.

(d) You may ask us to approve an exemption for engines not meeting the criteria listed in paragraph (c) of this section as long as you have clear and convincing evidence that the engines will be used solely for competition.

(e) Engines are considered to be used solely for competition only if their use is limited to competition events sanctioned by a state or federal government agency or another widely recognized public organization with authorizing permits for participating competitors. Operation of such engines may include only racing events, trials to qualify for racing events, and practice associated with racing events. Authorized attempts to set speed records are also considered racing events. Engines will not be considered to be used solely for competition if they are ever used for any recreational or other noncompetitive purpose. Any use of exempt engines in recreational events is a violation of 40 CFR 1068.101(b)(4).

(f) You must permanently label engines exempted under this section to clearly indicate that they are to be used only for competition. Failure to properly label an engine will void the exemption for that engine.

(g) If we request it, you must provide us any information we need to determine whether the engines are used solely for competition. This would generally include documentation regarding the number of engines and the ultimate purchaser of each engine as well as any documentation showing an equipment manufacturer's request for an exempted engine. Keep these records for five years.

[86 FR 34522, Jun. 29, 2021]

§1054.630 What provisions apply for importation of individual items for personal use?

(a) Any individual may import previously used nonconforming engines for purposes other than resale, but no more than once in any five-year period. This may include up to three nonconforming engines imported at the same time. To import engines under this section, provide to the Customs official the following information:

(1) Identify your name, address, and telephone number.

(2) If you are importing engines under this section on behalf of another person, identify the ultimate engine owner's name, address, and telephone number.

(3) Identify the total number of engines you are importing and specify the make, model, identification number, and original production year of each engine.

(4) State: “I am importing these previously used engines for personal use. I have not imported any engines under the provisions of 40 CFR 1054.630 within the previous five years. I am not importing these engines for purpose of resale. I authorize EPA enforcement officers to inspect my engines and my facilities as permitted by the Clean Air Act.”

(b) We may require you to send us additional information but you do not need written approval from us to import engines under this section. We will also not require a U.S. Customs Service bond for engines you import under this section.

(c) The provisions of this section may not be used to circumvent emission standards that apply to new engines under this part. For example, you may not purchase new engines and use them in a trivial manner outside of the United States to qualify for importation under this section.

(d) If you violate the provisions of this section, or submit false information to obtain this exemption, you will be subject to civil penalties as specified in 40 CFR 1068.101(a)(2) and (b)(5).

§1054.635 What special provisions apply for small-volume engine and equipment manufacturers?

This section describes how we apply the special provisions in this part for small-volume engine and equipment manufacturers.

(a) If you qualify under paragraph (1) or (2) of the definition of small-volume engine manufacturer or under paragraph (1) or (2) of the definition of small-volume equipment manufacturer in §1054.801, the small-volume provisions apply as specified in this part.

(b) If you are a small business (as defined by the Small Business Administration at 13 CFR 121.201) that manufactures nonroad spark-ignition engines or equipment, but you do not qualify under paragraph (1) or (2) of the definition of small-volume engine manufacturer or under paragraph (1) or (2) of the definition of small-volume equipment manufacturer in §1054.801, you may ask us to designate you to be a small-volume engine or equipment manufacturer. You may do this whether you began manufacturing engines before, during, or after 2007. We may set other reasonable conditions that are consistent with the intent of this section and the Clean Air Act.

(c) Special provisions apply for small-volume engine and equipment manufacturers, as illustrated by the following examples:

(1) Additional lead time and other provisions related to the transition to new emission standards. See §1054.145.

(2) More flexible arrangements for creating engine families. See §1054.230.

(3) Assigned deterioration factors. See §1054.240.

(4) Waived requirements for production-line testing. See §1054.301.

(5) Streamlined certification provisions for equipment manufacturers relying on engine manufacturer's design parameters. See §1054.612.

(6) [Reserved]

(7) Additional special provisions apply for small-volume engine and equipment manufacturers under 40 CFR part 1068. For example, see 40 CFR 1068.250.

(d) Small-volume engine and equipment manufacturers may ask us to waive or modify the requirements of §1054.690 if this would cause a serious economic hardship, as long as you demonstrate to us in some other way that you will meet any potential compliance-or enforcement-related obligations. In evaluating such a request, we would consider the extent to which there is a risk of noncompliance or nonconformity and the extent to which the manufacturer could be expected to fulfill future regulatory obligations and administrative judgments. We may also consider how many years the manufacturer has certified engines without a violation or a finding of noncompliance to determine whether to adjust applicable asset thresholds or to reduce the minimum bond value. We may set other reasonable conditions to ensure that the manufacturer will meet applicable requirements.

(e) If you use any of the provisions of this part that apply specifically to small-volume manufacturers and we find that you exceed the production limits or otherwise do not qualify as a small-volume manufacturer, we may consider you to be in violation of the requirements that apply for companies that are not small-volume manufacturers for those engines produced in excess of the specified production limits. If you no longer qualify as a small-volume engine manufacturer (based on increased production volumes or other factors), we will work with you to determine a reasonable schedule for complying with additional requirements that apply. For example, if you no longer qualify as a small-volume engine manufacturer shortly before you certify your engines for the next model year, we might allow you to use assigned deterioration factors for one more model year.

[86 FR 34522, Jun. 29, 2021]

§1054.645 What special provisions apply for converting an engine to use an alternate fuel?

A certificate of conformity is no longer valid for an engine if the engine is modified such that it is not in a configuration covered by the certificate. This section applies if such modifications are done to convert the engine to run on a different fuel type. Such engines may need to be recertified as specified in this section if the certificate is no longer valid for that engine.

(a) Converting a certified new engine to run on a different fuel type violates 40 CFR 1068.101(a)(1) if the modified engine is not covered by a certificate of conformity.

(b) Converting a certified engine that is not new to run on a different fuel type violates 40 CFR 1068.101(b)(1) if the modified engine is not covered by a certificate of conformity. We may specify alternate certification provisions consistent with the requirements of this part. For example, you may certify the modified engine for a partial useful life. For example, if the engine is modified halfway through its original useful life period, you may generally certify the engine based on completing the original useful life period; or if the engine is modified after the original useful life period is past, you may generally certify the engine based on testing that does not involve further durability demonstration.

(c) Engines may be certified using the certification procedures for new engines as specified in this part or using the certification procedures for aftermarket parts as specified in 40 CFR part 85, subpart V. Unless the original engine manufacturer continues to be responsible for the engine as specified in paragraph (d) of this section, you must remove the original engine manufacturer's emission control information label if you recertify the engine.

(d) The original engine manufacturer is not responsible for operation of modified engines in configurations resulting from modifications performed by others. In cases where the modification allows an engine to be operated in either its original configuration or a modified configuration, the original engine manufacturer remains responsible for operation of the modified engine in its original configuration.

(e) Entities producing conversion kits may obtain certificates of conformity for the converted engines. Such entities are engine manufacturers for purposes of this part.

§1054.650 What special provisions apply for adding or changing governors?

The special provisions in this section apply for engines that will not be governed to control engine speeds consistent with the constant-speed operation reflected by the duty cycles specified in §1054.505. We refer to these as constant-speed governors in this section. Paragraph (a) of this section also applies for any engines shipped without installed governors.

(a) The representative-testing requirements of 40 CFR 1065.10(c)(1) related to in-use duty cycles do not apply to engines you produce and ship without constant-speed governors if you comply with all the following requirements:

(1) You must have test data showing that the effectiveness of the engine's emission controls over the expected range of in-use operation will be similar to that measured over the specified duty cycle. Alternatively, if your emission controls depend on maintaining a consistent air-fuel ratio, you may demonstrate that the engine is calibrated to maintain a consistent air-fuel ratio over the expected range of in-use operation.

(2) Describe in your application for certification the data and analysis that supports your conclusion.

(b) It is a violation of the tampering provisions in 40 CFR 1068.101(b)(1) to remove a governor from a certified engine unless you recertify the engine in the modified configuration.

§1054.655 What special provisions apply for installing and removing altitude kits?

An action for the purpose of installing or modifying altitude kits and performing other changes to compensate for changing altitude is not considered a prohibited act under 40 CFR 1068.101(b) if it is done consistent with the manufacturer's instructions.

[86 FR 34522, Jun. 29, 2021]

§1054.660 What are the provisions for exempting emergency rescue equipment?

The provisions of this section apply for new equipment built on or after January 1, 2010.

(a) Equipment manufacturers may introduce into U.S. commerce equipment that is not certified to current emission standards under the following conditions if the equipment will be used solely in emergency rescue situations:

(1) You must determine annually that no engines certified to current emission standards are available to power the equipment safely and practically. We may review your records supporting this determination at any time.

(2) You may not use exempted engines for the following equipment used to provide remote power to a rescue tool: generators, alternators, compressors, or pumps.

(3) If engines that meet less stringent emission standards are capable of powering your equipment safely and practically, you must use them as a condition of this exemption. You must use available engines meeting the most stringent standards feasible.

(4) You must send the engine manufacturer a written request for each exempted equipment model.

(5) You must notify the Designated Compliance Officer of your intent to use the provisions of this section. We may require you to notify us annually or to send us annual reports describing how you meet the conditions of this section.

(b) For the purposes of this section, “emergency rescue situations” means firefighting or other situations in which a person is retrieved from imminent danger.

(c) As an engine manufacturer, you may produce exempt engines under this section without our prior approval if you have a written request for an exempted engine for use in emergency rescue equipment from the equipment manufacturer. You must permanently label engines with the following statement: “EMERGENCY RESCUE EQUIPMENT - EXEMPT FROM EMISSION STANDARDS UNDER 40 CFR 1054.660.” Failure to properly label an engine will void the exemption.

(d) We may discontinue an exemption under this section if we find that engines are not used solely for emergency rescue equipment or if we find that a certified engine is available to power the equipment safely and practically.

§1054.690 What bond requirements apply for certified engines?

This section generally applies for certifying engine manufacturers. It also applies to importers that do not certify engines as described in paragraph (j) of this section.

(a) Before introducing certified engines into U.S. commerce, you must post a bond to cover any potential compliance or enforcement actions under the Clean Air Act with respect to engines certified under this part unless you demonstrate to us in your application for certification that you are able to meet any potential compliance- or enforcement-related obligations, as described in this section. Note that you might also need to post bond under this section to meet your obligations under §1054.120(f).

(b) The bonding requirements apply if you do not have long-term assets in the United States meeting any of the following thresholds:

(1) A threshold of $3 million applies if you have been a certificate holder in each of the preceding ten years without failing a test conducted by EPA officials or having been found by EPA to be noncompliant under applicable regulations.

(2) A threshold of $6 million applies if you are a secondary engine manufacturer.

(3) A threshold of $10 million applies if you do not qualify for the smaller bond thresholds in paragraph (b)(1) or (2) of this section.

(c) For the purpose of establishing your level of long-term assets under paragraph (b) of this section, include the values from your most recent balance sheet for buildings, land, and fixed equipment, but subtract depreciation and related long-term liabilities (such as a mortgage). If you have sufficient long-term assets to avoid bond payments under this section, you must identify the location of these assets in your application for certification.

(d) Determine the value of the bond as follows:

(1) Calculate a value based on the per-engine bond values shown in Table 1 to this section and on the projected U.S.-directed production volume from each displacement grouping for the model year. For example, if you have projected U.S.-directed production volumes of 10,000 engines with 180 cc displacement and 10,000 engines with 400 cc displacement in 2013, the calculated bond amount is $750,000. If the calculated value is less than $500,000, the appropriate bond amount is $500,000. If the calculated value exceeds the applicable threshold value specified in paragraph (b) of this section, use the applicable threshold value as the appropriate value of the bond. These values may be adjusted as described in paragraphs (d)(2) through (4) of this section. You may generally change your projected U.S.-directed production volume under §1054.225 during the model year; however, you may not decrease your bond based on new projected U.S.-directed production volumes once you have imported or otherwise introduced into U.S. commerce your first engine from that model year.

(2) If your estimated or actual U.S.-directed production volume increases beyond the level appropriate for your current bond payment, you must post additional bond to reflect the increased volume within 90 days after you change your estimate or determine the actual production volume. You may not decrease your bond in a given year, but you may calculate a lower bond value in a later year based on the highest actual U.S.-directed production volumes from the preceding three years.

(3) If you sell engines without aftertreatment components under the provisions of §1054.610, you must increase the per-engine bond values for the current year by 20 percent.

(4) The minimum bond value is $25,000 instead of $500,000 if you are a small-volume engine manufacturer or a small-volume equipment manufacturer that has been a certificate holder in each of the preceding five years without failing a test conducted by EPA officials or having been found by EPA to be noncompliant under applicable regulations.

(e) The threshold identified in paragraph (b) of this section and the bond values identified in paragraph (d) of this section are in 2008 dollars. We will adjust these values for 2020 and later, and every 10 years after that, by considering the current Consumer Price Index values published by the Bureau of Labor Statistics relative to 2008. We will generally round values for thresholds and total bond obligations as follows:

(1) Round calculated values at or below $125,000 to the nearest $5,000.

(2) Round calculated values above $125,000 and at or below $2.25 million to the nearest $50,000.

(3) Round calculated values above $2.25 million to the nearest $500,000.

(f) If you are required to post a bond under this section, you must get the bond from a third-party surety that is cited in the U.S. Department of Treasury Circular 570, “Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring Companies” (https://www.fiscal.treasury.gov/surety-bonds/circular-570.html). You must maintain this bond for every year in which you sell certified engines. The surety agent remains responsible for obligations under the bond for two years after the bond is cancelled or expires without being replaced.

(g) If you forfeit some or all of your bond in an enforcement action, you must post any appropriate bond for continuing sale within 90 days after you forfeit the bond amount.

(h) You will forfeit the proceeds of the bond posted under this section if you need to satisfy any United States administrative settlement agreement, administrative final order, or judicial judgment against you arising from your violation of this chapter, or violation of 18 U.S.C. 1001, 42 U.S.C. 7413(c)(2), or other applicable provisions of the Clean Air Act.

(i) If you are required to post a bond under this section, you must note that in your application for certification as described in §1054.205. Your certification is conditioned on your compliance with this section. Your certificate is automatically suspended if you fail to comply with the requirements of this section. This suspension applies with respect to all engines in your possession as well as all engines being imported or otherwise introduced into U.S. commerce. For example, if you maintain a bond sufficient to cover 500 engines, you may introduce into U.S. commerce only 500 engines under your certificate; your certificate would be automatically suspended for any additional engines. Introducing such additional engines into U.S. commerce would violate 40 CFR 1068.101(a)(1). For importation, U.S. Customs may deny entry of engines lacking the necessary bond, whether there is no bond or the value of the bond is not sufficient for the appropriate production volumes. We may also revoke your certificate.

(j) The following provisions apply if you import engines for resale when those engines have been certified by someone else (or equipment containing such engines):

(1) You and the certificate holder are each responsible for compliance with the requirements of this part and the Clean Air Act. For example, we may require you to comply with the warranty requirements in §1054.120.

(2) You do not need to post bond if you or the certificate holder complies with the bond requirements of this section. You also do not need to post bond if the certificate holder complies with the asset requirements of this section and the repair-network provisions of §1054.120(f)(4).

[73 FR 59259, Oct. 8, 2008, as amended at 74 FR 8426, Feb. 24, 2009; 75 FR 23025, Apr. 30, 2010; 80 FR 9114, Feb. 19, 2015; 86 FR 34522, Jun. 29, 2021]