So, it has always been illegal to take a certified engine or a certified car, and take them out of compliance for any reason. (Well, OK, destroying it is taking it out of compliance, and that's legal, but that also doesn't involve it emitting anything.) This includes off-road-only usage.
However, the EPA has historically not enforced that, as off-road emissions tend to be away from populated areas, and are a tiny portion (that isn't growing, because racing cars is expensive) of vehicle emissions. It's so far down the EPA's priority list that literal cow burps are a higher priority for them. (And I'm not using "literally" to mean "figuratively" about the cow burps.)
What's happened, however, is a massive industry of parts being made for "off-road usage", scare quotes included - test pipes for tricking O2 sensors, EGR deletes, DPF deletes, and the like. Now, who on this forum has had at least one of those parts, and has used it on-road? Almost everyone in this thread, probably, myself included (race pipe on an ALH).
So, that's why the EPA proposed regulation to make it explicitly enforceable to ban off-road-only emissions modifications that take a vehicle out of compliance. They even said that they weren't going to focus on enforcing against actual motorsport usage, but rather the parts suppliers that were selling parts for "off-road usage", when they couldn't actually prove that the supplier was knowingly selling them for on-road usage. (They have gone after diesel truck tuning companies that were provably doing that, mind you, already. But, when a business is entirely mail-order, they're not marketing a tow/haul tune (which is something that you'd use on-road), or if they do in-person tuning, they require that the vehicle be towed there and not have license plates... it's a lot harder to prove that they're selling for on-road usage.)