(a) You may average, bank, and trade (ABT) emission credits for purposes of certification as described in this subpart to show compliance with the standards of this part. This applies for engines with respect to exhaust emissions and for vessels with respect to evaporative emissions. Participation in this program is voluntary.

(b) The definitions of subpart I of this part apply to this subpart. The following definitions also apply:

(1) Actual emission credits means emission credits you have generated that we have verified by reviewing your final report.

(2) Averaging set means a set of engines (or vessels) in which emission credits may be exchanged only with other engines (or vessels) in the same averaging set.

(3) Broker means any entity that facilitates a trade of emission credits between a buyer and seller.

(4) Buyer means the entity that receives emission credits as a result of a trade.

(5) Family means engine family for exhaust credits or emission family for evaporative credits.

(6) Reserved emission credits means emission credits you have generated that we have not yet verified by reviewing your final report.

(7) Seller means the entity that provides emission credits during a trade.

(8) Standard means the emission standard that applies under subpart B of this part for engines or fuel-system components not participating in the ABT program of this subpart.

(9) Trade means to exchange emission credits, either as a buyer or seller.

(c) You may not average or exchange banked or traded exhaust credits with evaporative credits, or vice versa. Evaporative credits generated by any vessels under this part may be used by any vessels under this part. Exhaust credits may be exchanged only within an averaging set. Except as specified in paragraph (d) of this section, the following criteria define the applicable exhaust averaging sets:

(1) Sterndrive/inboard engines.

(2) Outboard and personal watercraft engines.

(d) Sterndrive/inboard engines certified under § 1045.660 for jet boats may use HC + NOX and CO exhaust credits generated from outboard and personal watercraft engines, as long as the credit-using engine is the same model as an engine model from an outboard or personal watercraft family. Such emission credits that you generate under this part 1045 may be used for averaging, but not for banking or trading. The FEL caps for such jet boat families are the HC + NOX and CO standard for outboard and personal watercraft engines. U.S.-directed sales from jet boat engines using the provisions of this paragraph (d) may not be greater than the U.S.-directed sales of the same engine model for outboard or personal watercraft engines.

(e) You may not generate evaporative credits based on permeation measurements from metal fuel tanks or portable marine fuel tanks.

(f) You may not use emission credits generated under this subpart to offset any emissions that exceed an FEL or standard. This applies for all testing, including certification testing, in-use testing, selective enforcement audits, and other production-line testing. However, if exhaust emissions from an engine exceed an exhaust FEL or standard (for example, during a selective enforcement audit), you may use emission credits to recertify the family with a higher FEL that applies only to future production.

(g) Emission credits may be used for averaging in the model year they are generated or banked for averaging in future model years, except that CO emission credits for outboard and personal watercraft engines may not be banked or traded.

(h) You may increase or decrease an exhaust FEL during the model year by amending your application for certification under § 1045.225.

(i) Engine and vessel manufacturers certifying with respect to evaporative emissions may use emission credits to demonstrate compliance under this subpart. Component manufacturers may establish FELs for their certified products, but they may not generate or use emission credits under this subpart.

(j) In your application for certification, base your showing of compliance on projected production volumes for engines or vessels intended for sale in the United States. As described in § 1045.730, compliance with the requirements of this subpart is determined at the end of the model year based on actual production volumes for engines or vessels intended for sale in the United States. Do not include any of the following engines or vessels to calculate emission credits:

(1) Engines or vessels exempted under subpart G of this part or under 40 CFR part 1068.

(2) Engines or vessels intended for export.

(3) Engines or vessels that are subject to state emission standards for that model year. However, this restriction does not apply if we determine that the state standards and requirements are equivalent to those of this part and that products sold in such a state will not generate credits under the state program. For example, you may not include engines or vessels certified for California if California has more stringent emission standards for these products or if your products generate or use emission credits under the California program.

(4) Engines or vessels not subject to the requirements of this part, such as those excluded under § 1045.5.

(5) Any other engines or vessels where we indicate elsewhere in this part 1045 that they are not to be included in the calculations of this subpart.

[73 FR 59194, Oct. 8, 2008, as amended at 75 FR 23020, Apr. 30, 2010]

The provisions of this section apply for calculating exhaust emission credits for HC + NOX or CO. You may generate exhaust emission credits only if you are a certifying engine manufacturer.

(a) For each participating family, calculate positive or negative emission credits relative to the otherwise applicable emission standard. Calculate positive emission credits for a family that has an FEL below the standard. Calculate negative emission credits for a family that has an FEL above the standard. Sum your positive and negative credits for the model year before rounding. Round the sum of emission credits to the nearest kilogram (kg) using consistent units throughout the following equation:

Emission credits (kg) = (STD−FEL) × (Volume) × (Power) × (UL) × (LF) × (10−3) Where: STD = the emission standard, in g/kW-hr. FEL = the family emission limit for the family, in g/kW-hr. Volume = the number of engines eligible to participate in the averaging, banking, and trading program within the given family during the model year, as described in § 1045.701(j). Power = maximum engine power for the family, in kilowatts (see § 1045.140). UL = The useful life for the given family. LF = load factor. Use 0.207. We may specify a different load factor if we approve the use of special test procedures for an engine family under 40 CFR 1065.10(c)(2), consistent with good engineering judgment.

(b) [Reserved]

[73 FR 59194, Oct. 8, 2008, as amended at 75 FR 23020, Apr. 30, 2010]

The provisions of this section apply for calculating evaporative emission credits. This applies only for fuel tank permeation. You may generate credits only if you are a certifying vessel manufacturer. This may include outboard engine manufacturers if they install under-cowl fuel tanks.

(a) For each participating vessel, calculate positive or negative emission credits relative to the otherwise applicable emission standard. Calculate positive emission credits for a family that has an FEL below the standard. Calculate negative emission credits for a family that has an FEL above the standard. Sum your positive and negative credits for the model year before rounding. Round the sum of emission credits to the nearest kilogram (kg) using consistent units throughout the following equation:

Emission credits (kg) = (STD−FEL) × (Total Area) × (UL) × (AF) × (365) × (10−3) Where: STD = the emission standard, in g/m 2/day. FEL = the family emission limit for the family, in g/m 2/day, as described in paragraph (b) of this section. Total Area = The combined internal surface area of all fuel tanks in the family, in m 2. UL = 5 years, which represents the useful life for the given family. AF = adjustment factor. Use 1.0 for fuel tank testing performed at 28 °C and 0.60 for testing performed at 40 °C.

(b) For calculating credits under paragraph (a) of this section, the emission standard and FEL must both be based on test measurements at the same temperature (28 ° or 40 °C). Determine the FEL for calculating emission credits (relative to testing at 28 °C) as follows:

(1) To use an FEL below 5.0 g/m 2/day, it must be based on emission measurements.

(2) The provisions of this paragraph (b)(2) apply for all emission families with FELs at or above 5.0 g/m 2/day. To calculate emission credits for such emission families, you must choose from one of the following options and apply it to all your emission families with FELs at or above 5.0 g/m 2/day:

(i) Option 1: Establish all your FELs based on emission measurements. This may include measurements from a certifying fuel tank manufacturer.

(ii) Option 2: Use an assigned FEL of 10.4 g/m 2/day. This would apply without regard to whether any of these emission families have measured emission levels below 10.4 g/m 2/day. If any of your fuel tanks were otherwise certified (by you or the fuel tank manufacturer) with an FEL between 5.0 and 10.4 g/m 2/day, the assigned FEL of 10.4 g/m 2/day applies only for emission credit calculations.

(a) Averaging is the exchange of emission credits among your families. You may average emission credits only within the same averaging set.

(b) You may certify one or more families to an FEL above the emission standard, subject to the FEL caps and other provisions in subpart B of this part, if you show in your application for certification that your projected balance of all emission-credit transactions in that model year is greater than or equal to zero.

(c) If you certify a family to an FEL that exceeds the otherwise applicable standard, you must obtain enough emission credits to offset the family's deficit by the due date for the final report required in § 1045.730. The emission credits used to address the deficit may come from your other families that generate emission credits in the same model year, from emission credits you have banked, or from emission credits you obtain through trading.

(a) Banking is the retention of emission credits by the manufacturer generating the emission credits for use in future model years for averaging or trading. You may use banked emission credits only within the averaging set in which they were generated, except as described in this subpart.

(b) You may designate any emission credits you plan to bank in the reports you submit under § 1045.730. During the model year and before the due date for the final report, you may designate your reserved emission credits for averaging or trading.

(c) Reserved credits become actual emission credits when you submit your final report. However, we may revoke these emission credits if we are unable to verify them after reviewing your reports or auditing your records.

(a) Trading is the exchange of emission credits between manufacturers. You may use traded emission credits for averaging, banking, or further trading transactions. Traded emission credits may be used only within the averaging set in which they were generated, except as described in this subpart.

(b) You may trade actual emission credits as described in this subpart. You may also trade reserved emission credits, but we may revoke these emission credits based on our review of your records or reports or those of the company with which you traded emission credits. You may trade banked credits within an averaging set to any certifying engine or vessel manufacturer.

(c) If a negative emission credit balance results from a transaction, both the buyer and seller are liable, except in cases we deem to involve fraud. See § 1045.255(e) for cases involving fraud. We may void the certificates of all families participating in a trade that results in a manufacturer having a negative balance of emission credits. See § 1045.745.

(a) You must declare in your application for certification your intent to use the provisions of this subpart for each family that will be certified using the ABT program. You must also declare the FELs you select for the family for each pollutant for which you are using the ABT program. Your FELs must comply with the specifications of subpart B of this part, including the FEL caps. FELs must be expressed to the same number of decimal places as the emission standard.

(b) Include the following in your application for certification:

(1) A statement that, to the best of your belief, you will not have a negative balance of emission credits for any averaging set when all emission credits are calculated at the end of the year.

(2) Detailed calculations of projected emission credits (positive or negative) based on projected production volumes. We may require you to include similar calculations from your other engine families to demonstrate that you will be able to avoid a negative credit balance for the model year. If you project negative emission credits for a family, state the source of positive emission credits you expect to use to offset the negative emission credits.

(a) If any of your families are certified using the ABT provisions of this subpart, you must send an end-of-year report within 90 days after the end of the model year and a final report within 270 days after the end of the model year. We may waive the requirement to send the end-of year report as long as you send the final report on time.

(b) Your end-of-year and final reports must include the following information for each family participating in the ABT program:

(1) Family designation.

(2) The emission standards that would otherwise apply to the family.

(3) The FEL for each pollutant. If you change the FEL after the start of production, identify the date that you started using the new FEL and/or give the engine identification number for the first engine covered by the new FEL. In this case, identify each applicable FEL and calculate the positive or negative emission credits under each FEL.

(4) The projected and actual production volumes for the model year with a point of retail sale in the United States, as described in § 1045.701(j). For fuel tanks, state the production volume in terms of total surface area and production volume for each tank configuration and state the total surface area for the emission family. If you changed an FEL during the model year, identify the actual production volume associated with each FEL.

(5) Maximum engine power for each engine configuration, and your declared value of maximum engine power for the engine family (see § 1045.140).

(6) Useful life.

(7) Calculated positive or negative emission credits for the whole family. Identify any emission credits that you traded, as described in paragraph (d)(1) of this section.

(c) Your end-of-year and final reports must include the following additional information:

(1) Show that your net balance of emission credits from all your participating families in each averaging set in the applicable model year is not negative.

(2) State whether you will retain any emission credits for banking.

(3) State that the report's contents are accurate.

(d) If you trade emission credits, you must send us a report within 90 days after the transaction, as follows:

(1) As the seller, you must include the following information in your report:

(i) The corporate names of the buyer and any brokers.

(ii) A copy of any contracts related to the trade.

(iii) The families that generated emission credits for the trade, including the number of emission credits from each family.

(2) As the buyer, you must include the following information in your report:

(i) The corporate names of the seller and any brokers.

(ii) A copy of any contracts related to the trade.

(iii) How you intend to use the emission credits, including the number of emission credits you intend to apply to each family (if known).

(e) Send your reports electronically to the Designated Compliance Officer using an approved information format. If you want to use a different format, send us a written request with justification for a waiver.

(f) Correct errors in your end-of-year report or final report as follows:

(1) You may correct any errors in your end-of-year report when you prepare the final report as long as you send us the final report by the time it is due.

(2) If you or we determine within 270 days after the end of the model year that errors mistakenly decreased your balance of emission credits, you may correct the errors and recalculate the balance of emission credits. You may not make these corrections for errors that are determined more than 270 days after the end of the model year. If you report a negative balance of emission credits, we may disallow corrections under this paragraph (f)(2).

(3) If you or we determine anytime that errors mistakenly increased your balance of emission credits, you must correct the errors and recalculate the balance of emission credits.

(a) You must organize and maintain your records as described in this section. We may review your records at any time.

(b) Keep the records required by this section for at least eight years after the due date for the end-of-year report. You may not use emission credits for any engines or vessel if you do not keep all the records required under this section. You must therefore keep these records to continue to bank valid credits. Store these records in any format and on any media as long as you can promptly send us organized, written records in English if we ask for them. You must keep these records readily available. We may review them at any time.

(c) Keep a copy of the reports we require in §§ 1045.725 and 1045.730.

(d) Keep records of the engine identification number for each engine or vessel you produce that generates or uses emission credits under the ABT program. You may identify these numbers as a range.

(e) We may require you to keep additional records or to send us relevant information not required by this section in accordance with the Clean Air Act.

(a) For each family participating in the ABT program, the certificate of conformity is conditional upon full compliance with the provisions of this subpart during and after the model year. You are responsible to establish to our satisfaction that you fully comply with applicable requirements. We may void the certificate of conformity for a family if you fail to comply with any provisions of this subpart.

(b) You may certify your family to an FEL above an emission standard based on a projection that you will have enough emission credits to offset the deficit for the family. However, we may void the certificate of conformity if you cannot show in your final report that you have enough actual emission credits to offset a deficit for any pollutant in a family.

(c) We may void the certificate of conformity for a family if you fail to keep records, send reports, or give us information we request.

(d) You may ask for a hearing if we void your certificate under this section (see § 1045.820).