Hello,
Having the engine on a generator might confuse the regular custom officer but it still doesn't make the engine legal as per the new EPA laws.
Any engine or engine equipped machine sold in USA must now comply with the new EPA regulations for it's category. Being an engine only or a generator (or lawnmower, truck, ATV), it would still need to be certified. The regulation might be a little different depending on category (Stationary, off-road engines, on-road engines...) but every machine still needs to be certified except for military engines, model engines, and a few others not really applicable for a Lister.
The only way you could get away if you need to import an engine in the US from Canada are:
(For educational purpose ONLY)
1. Import a pre April 06 engine
New EPA law didn't not apply then and engine made before that date are exempted to comply to the new law.
2. Import the engines in pieces as spare parts (be careful here not to get the hole engine shipped at once)
Some US dealers are already importing parts from India selling them as kit. Selling a complete engine would be illegal unless you are an EPA certified manufacturer. Bringing over an Indian made engine from Canada looks easier than building the engine from a kit. You would be sure that all parts will be there and that the engines was factory tested.
3. Pick up the engine yourself in Canada, import it personally under informal entry (2000USD or less).
I have reports that some custom officers don't even know what EPA means!
There is no way that the guy at the border can know all regulations on all products.
Personal imports by US citizens are not the top priority of custom officers, they have enough job with other more important things.
They might check inside the box but they are not looking for the manufactured date, there are looking for you know what... (Undocumented workers, Terrorists, drugs, nuclear weapons, and anything else to justify their jobs...)
BTW, I'm sold out. I have no more pre-april06 Listers (Except for few Petteroids and my personal Listeroid). When I get my next batch, I don't see why I would not sell an engine to an American Tourist. We all know that these new EPA regulations on stationary engines should not include hobby engines 50HP or less.
Email me if you have any questions!
Good luck!
PAT