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e-CFR data is current as of November 24, 2020

Title 40Chapter ISubchapter UPart 1039Subpart G → §1039.625


Title 40: Protection of Environment
PART 1039—CONTROL OF EMISSIONS FROM NEW AND IN-USE NONROAD COMPRESSION-IGNITION ENGINES
Subpart G—Special Compliance Provisions


§1039.625   What requirements apply under the program for equipment-manufacturer flexibility?

The provisions of this section allow equipment manufacturers to produce equipment with engines that are subject to less stringent emission standards after the Tier 4 emission standards begin to apply. To be eligible to use these provisions, you must follow all the instructions in this section. See 40 CFR 89.102(d) and (e) for provisions that apply to equipment produced while Tier 1, Tier 2, or Tier 3 standards apply. See §1039.626 for requirements that apply specifically to companies that manufacture equipment outside the United States and to companies that import such equipment without manufacturing it. Engines and equipment you produce under this section are exempt from the prohibitions in 40 CFR 1068.101(a)(1), subject to the provisions of this section.

(a) General. If you are an equipment manufacturer, you may introduce into commerce in the United States limited numbers of nonroad equipment with engines exempted under this section. You may use the exemptions in this section only if you have primary responsibility for designing and manufacturing equipment and your manufacturing procedures include installing some engines in this equipment. Consider all U.S.-directed equipment sales in showing that you meet the requirements of this section, including those from any parent or subsidiary companies and those from any other companies you license to produce equipment for you. If you produce a type of equipment that has more than one engine, count each engine separately. These provisions are available over the following periods:

(1) These provisions are available for the years shown in the following table, except as provided in paragraph (a)(2) of this section:

Table 1 of §1039.625—General Availability of Allowances

Power category Calendar years
kW <192008-2014
19 ≤kW <562008-2014
56 ≤kW <1302012-2018
130 ≤kW ≤5602011-2017
kW >5602011-2017

(2) If you do not use any allowances in a power category before the earliest dates shown in the following table, you may delay the start of the seven-year period for using allowances under this section as follows:

Table 2 of §1039.625—Availability of Delayed Allowances

Power category Calendar years
kW <19
19 ≤kW <562012-2018
56 ≤kW <1302014-2020
130 ≤kW ≤5602014-2020
kW >5602015-2021

(b) Allowances. You may choose one of the following options for each power category to produce equipment with exempted engines under this section, except as allowed under §1039.627:

(1) Percent-of-production allowances. You may produce a certain number of units with exempted engines calculated using a percentage of your total sales within a power category relative to your total U.S.-directed production volume. The sum of these percentages within a power category during the seven-year period specified in paragraph (a) of this section may not exceed 80 percent, except as allowed under paragraph (b)(2) or (m) of this section.

(2) Small-volume allowances. You may determine an alternate allowance for a specific number of exempted engines under this section using one of the following approaches for your U.S.-directed production volumes:

(i) You may produce up to 700 units with exempted engines within a power category during the seven-year period specified in paragraph (a) of this section, with no more than 200 units in any single year within a power category, except as provided in paragraph (m) of this section. Engines within a power category that are exempted under this section must be from a single engine family within a given year.

(ii) For engines below 130 kW, you may produce up to 525 units with exempted engines within a power category during the seven-year period specified in paragraph (a) of this section, with no more than 150 units in any single year within a power category, except as provided in paragraph (m) of this section. For engines at or above 130 kW, you may produce up to 350 units with exempted engines within a power category during the seven-year period, with no more than 100 units in any single year within a power category. Exemptions under this paragraph (b)(2)(ii) may apply to engines from multiple engine families in a given year.

(iii) In each power category at or above 56 kW, you may apply the provisions of paragraph (b)(2)(i) of this section in the first two model years for which Tier 4 standards apply, regardless of the number of engine families you use in your equipment, provided you exceed the single engine family restriction of that paragraph primarily due to production of equipment intended specifically to travel on snow and to commonly operate at more than 9,000 feet above sea level. After the first two Tier 4 model years in a power category, you may continue to apply the provisions of paragraph (b)(2)(i) of this section, subject to the single engine family restriction.

(c) Percentage calculation. Calculate for each calendar year the percentage of equipment with exempted engines from your total U.S.-directed production within a power category if you need to show that you meet the percent-of-production allowances in paragraph (b)(1) of this section.

(d) Inclusion of engines not subject to Tier 4 standards. The following provisions apply to engines that are not subject to Tier 4 standards:

(1) If you use the provisions of 40 CFR 1068.105(a) to use up your inventories of engines not certified to new emission standards, do not include these units in your count of equipment with exempted engines under paragraph (b) of this section. However, you may include these units in your count of total equipment you produce for the given year for the percentage calculation in paragraph (b)(1) of this section.

(2) If you install engines that are exempted from the Tier 4 standards for any reason, other than for equipment-manufacturer allowances under this section, do not include these units in your count of exempted engines under paragraph (b) of this section. However, you may include these units in your count of total equipment you produce for the given year for the percentage calculation in paragraph (b)(1) of this section. For example, if we grant a hardship exemption for the engine manufacturer, you may count these as compliant engines under this section. This paragraph (d)(2) applies only if the engine has a permanent label describing why it is exempted from the Tier 4 standards.

(3) Do not include equipment using model year 2008 or 2009 engines certified under the provisions of §1039.101(c) in your count of equipment using exempted engines. However, you may include these units in your count of total equipment you produce for the given year for the percentage calculation in paragraph (b)(1) of this section.

(4) You may start using the allowances under this section for engines that are not yet subject to Tier 4 standards, as long as the seven-year period for using allowances under the Tier 2 or Tier 3 program has expired (see 40 CFR 89.102(d)). Table 3 of this section shows the years for which this applies. To use these early allowances, you must use engines that meet the emission standards described in paragraph (e) of this section. You must also count these units or calculate these percentages as described in paragraph (c) of this section and apply them toward the total number or percentage of equipment with exempted engines we allow for the Tier 4 standards as described in paragraph (b) of this section. The maximum number of cumulative early allowances under this paragraph (d)(4) is 10 percent under the percent-of-production allowance or 100 units under the small-volume allowance. For example, if you produce 5 percent of your equipment with engines between 130 and 560 kW that use allowances under this paragraph (d)(4) in 2009, you may use up to an additional 5 percent of your allowances in 2010. If you use allowances for 5 percent of your equipment in both 2009 and 2010, your 80 percent allowance for 2011-2017 in the 130-560 kW power category decreases to 70 percent. Manufacturers using allowances under this paragraph (d)(4) must comply with the notification and reporting requirements specified in paragraph (g) of this section.

Table 3 of §1039.625—Years for Early Allowances

Maximum engine powerCalendar years
kW <192007
19 ≤kW <372006-2011
37 ≤kW <562011
56 ≤kW <752011
75 ≤kW <1302010-2011
130 ≤kW <2252010
225 ≤kW <4502008-2010
450 ≤kW ≤5602009-2010
KW >560

(e) Standards. If you produce equipment with exempted engines under this section, the engines must meet emission standards specified in this paragraph (e), or more stringent standards. Note that we consider engines to be meeting emission standards even if they are certified with a family emission limit that is higher than the emission standard that would otherwise apply.

(1) If you are using the provisions of paragraph (d)(4) of this section, engines must meet the applicable Tier 1 or Tier 2 emission standards described in 40 CFR 89.112.

(2) If you are using the provisions of paragraph (a)(2) of this section, engines must be identical in all material respects to engines certified under this part 1039 as follows:

Engines in the following power category.  .  .Must meet all standards and requirements that applied in the following model year.  .  .
(i) 19 ≤kW <562008 (Option 1, where applicable).
(ii) 56 ≤kW <1302012 (Phase-out).
(iii) 130 ≤kW ≤5602011 (Phase-out).
(iv) kW >5602011.

(3) In all other cases, engines at or above 56 kW and at or below 560 kW must meet the appropriate Tier 3 standards described in 40 CFR 89.112. Engines below 56 kW and engines above 560 kW must meet the appropriate Tier 2 standards described in 40 CFR 89.112.

(f) Equipment labeling. You must add a permanent label, written legibly in English, to the engine or another readily visible part of each piece of equipment you produce with exempted engines under this section. This label, which supplements the engine manufacturer's emission control information label, must include at least the following items:

(1) The label heading “EMISSION CONTROL INFORMATION”.

(2) Your corporate name and trademark.

(3) The calendar year in which the equipment is manufactured.

(4) An e-mail address and phone number to contact for further information, or a Web site that includes this contact information.

(5) The following statement:

THIS EQUIPMENT [or identify the type of equipment] HAS AN ENGINE THAT MEETS U.S. EPA EMISSION STANDARDS UNDER 40 CFR 1039.625.

(g) Notification and reporting. You must notify us of your intent to use the provisions of this section and send us an annual report to verify that you are not exceeding the allowances, as follows:

(1) Before you use the provisions of this section, send the Designated Compliance Officer a written notice of your intent, including:

(i) Your company's name and address, and your parent company's name and address, if applicable.

(ii) The name, phone number and e-mail address of a person to contact for more information.

(iii) The calendar years in which you expect to use the exemption provisions of this section.

(iv) The name and address of each company you expect to produce engines for the equipment you manufacture under this section.

(v) Your best estimate of the number of units in each power category you will produce under this section and whether you intend to comply under paragraph (b)(1) or (b)(2) of this section.

(vi) The number of units in each power category you have sold in previous calendar years under 40 CFR 89.102(d).

(2) For each year that you use the provisions of this section, send the Designated Compliance Officer a written report by March 31 of the following year. Identify the following things in your report:

(i) The total count of units you sold in the preceding year for each power category, based on actual U.S.-directed production information.

(ii) The percentages of U.S.-directed production that correspond to the number of units in each power category and the cumulative numbers and percentages of units for all the units you have sold under this section for each power category. You may omit the percentage figures if you include in the report a statement that you will not be using the percent-of-production allowances in paragraph (b)(1) of this section.

(iii) The manufacturer of the engine installed in the equipment you produce under this section if this is different than you specified under paragraph (g)(1)(iv) of this section.

(h) Recordkeeping. Keep the following records of all equipment with exempted engines you produce under this section for at least five full years after the final year in which allowances are available for each power category:

(1) The model number, serial number, and the date of manufacture for each engine and piece of equipment.

(2) The maximum power of each engine.

(3) The total number or percentage of equipment with exempted engines, as described in paragraph (b) of this section and all documentation supporting your calculation.

(4) The notifications and reports we require under paragraph (g) of this section.

(i) Enforcement. Producing more exempted engines or equipment than we allow under this section or installing engines that do not meet the emission standards of paragraph (e) of this section violates the prohibitions in 40 CFR 1068.101(a)(1). You must give us the records we require under this section if we ask for them (see 40 CFR 1068.101(a)(2)).

(j) Provisions for engine manufacturers. As an engine manufacturer, you may produce exempted engines as needed 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. Send us an annual report of the engines you produce under this section, as described in §1039.250(a). Exempt engines must meet the emission standards in paragraph (e) of this section and you must meet all the requirements of 40 CFR 1068.265, except that engines produced under the provisions of paragraph (a)(2) of this section must be identical in all material respects to engines previously certified under this part 1039. If you show under 40 CFR 1068.265(c) that the engines are identical in all material respects to engines that you have previously certified to one or more FELs above the standards specified in paragraph (e) of this section, you must supply sufficient credits for these engines. Calculate these credits under subpart H of this part using the previously certified FELs and the alternate standards. You must meet the labeling requirements in 40 CFR 89.110 or §1039.135, as applicable, with the following exceptions:

(1) Add the following statement instead of the compliance statement in 40 CFR 89.110(b)(10) or §1039.135(c)(12), as applicable:

THIS ENGINE MEETS U.S. EPA EMISSION STANDARDS UNDER 40 CFR 1039.625. SELLING OR INSTALLING THIS ENGINE FOR ANY PURPOSE OTHER THAN FOR THE EQUIPMENT FLEXIBILITY PROVISIONS OF 40 CFR 1039.625 MAY BE A VIOLATION OF FEDERAL LAW SUBJECT TO CIVIL PENALTY.

(2) You may omit the family emission limits if they are below the emission standards.

(k) Other exemptions. See 40 CFR 1068.255 for exemptions based on hardship for equipment manufacturers and secondary engine manufacturers.

(l) [Reserved]

(m) Additional exemptions for technical or engineering hardship. You may request additional engine allowances under paragraph (b) of this section; however, you may use these extra allowances only for those equipment models for which you, or an affiliated company, do not also produce the engine. Additional allowances under this paragraph (m) must be used within the specified seven-year period. After considering the circumstances, we may permit you to introduce into U.S. commerce equipment with such engines that do not comply with Tier 4 emission standards, as follows:

(1) We may approve additional exemptions if extreme and unusual circumstances that are clearly outside your control and that could not have been avoided with reasonable discretion have resulted in technical or engineering problems that prevent you from meeting the requirements of this part. You must show that you exercised prudent planning and have taken all reasonable steps to minimize the scope of your request for additional allowances.

(2) To apply for exemptions under this paragraph (m), send the Designated Compliance Officer a written request as soon as possible before you are in violation. In your request, include the following information:

(i) Describe your process for designing equipment.

(ii) Describe how you normally work cooperatively or concurrently with your engine supplier to design products.

(iii) Describe the engineering or technical problems causing you to request the exemption and explain why you have not been able to solve them. Describe the extreme and unusual circumstances that led to these problems and explain how they were unavoidable.

(iv) Describe any information or products you received from your engine supplier related to equipment design—such as written specifications, performance data, or prototype engines—and when you received it.

(v) Compare the design processes of the equipment model for which you need additional exemptions and that for other models for which you do not need additional exemptions. Explain the technical differences that justify your request.

(vi) Describe your efforts to find and use other compliant engines, or otherwise explain why none is available.

(vii) Describe the steps you have taken to minimize the scope of your request.

(viii) Include other relevant information. You must give us other relevant information if we ask for it.

(ix) Estimate the increased percent of production you need for each equipment model covered by your request, as described in paragraph (m)(3) of this section. Estimate the increased number of allowances you need for each equipment model covered by your request, as described in paragraph (m)(4) of this section.

(3) We may approve your request to increase the allowances under paragraph (b)(1) of this section, subject to the following limitations:

(i) You must use up the allowances under paragraph (b)(1) of this section before using any additional allowances under this paragraph (m).

(ii) The additional allowances under this paragraph (m)(3) may not exceed 200 percent for each power category.

(iii) You may use these additional allowances only for the specific equipment models covered by your request.

(4) We may approve your request to increase the small-volume allowances under paragraph (b)(2) of this section, subject to the following limitations:

(i) You are eligible for additional allowances under this paragraph (m)(4) only if you do not use the provisions of paragraph (m)(3) of this section to obtain additional allowances within a given power category.

(ii) You must use up the allowances under paragraph (b)(2) of this section before using any additional allowances under this paragraph (m).

(iii) The additional allowances under this paragraph (m)(4) may not exceed 2,000 units.

(iv) We may approve additional allowances in the form of waiving the annual limits specified in paragraph (b)(2) of this section instead of or in addition to increasing the total number of allowances under this paragraph (m)(4).

(v) If we increase the total number of allowances, you may use these allowances only for the specific equipment models covered by your request.

[69 FR 39213, June 29, 2004, as amended at 70 FR 40464, July 13, 2005; 72 FR 53133, Sept. 18, 2007; 73 FR 59191, Oct. 8, 2008; 75 FR 68461, Nov. 8, 2010; 78 FR 49966, Aug. 16, 2013; 79 FR 7084, Feb. 6, 2014]

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