(a) You may average, bank, and trade (ABT) emission credits for purposes of certification as described in this subpart and in subpart B of this part to show compliance with the standards of §§ 1036.104. Participation in this program is voluntary. Note that certification to NOX standards in § 1036.104 is based on a family emission limit (FEL) the NHTSA fuel efficiency program under 49 CFR part 535 is based on a Family Certification Level (FCL). This part refers to “FEL/FCL” to simultaneously refer to FELs for NOX and FCLs for NHTSA. Note also that subpart B of this part requires you to assign an FCL to all engine families, whether or not they participate in the ABT provisions of this subpart.

(b) The definitions of subpart I of this part apply to this subpart in addition to the following definitions:

(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 in which emission credits may be exchanged. See § 1036.740.

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

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

(7) Standard means the emission standard that applies under subpart B of this part for engines not participating in the ABT program of this subpart.

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

(c) Emission credits may be exchanged only within an averaging set, except as specified in § 1036.740.

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

(e) You may use either of the following approaches to retire or forego emission credits:

(1) You may retire emission credits generated from any number of your engines. This may be considered donating emission credits to the environment. Identify any such credits in the reports described in § 1036.730. Engines must comply with the applicable FELs even if you donate or sell the corresponding emission credits. Donated credits may no longer be used by anyone to demonstrate compliance with any EPA emission standards.

(2) You may certify an engine family using an FEL/FCL below the emission standard as described in this part and choose not to generate emission credits for that family. If you do this, you do not need to calculate emission credits for those engine families, and you do not need to submit or keep the associated records described in this subpart for that family.

(f) Emission credits may be used in the model year they are generated. Surplus emission credits may be banked for future model years. Surplus emission credits may sometimes be used for past model years, as described in § 1036.745.

(g) You may increase or decrease an FEL/FCL during the model year by amending your application for certification under § 1036.225. The new FEL/FCL may apply only to engines you have not already introduced into commerce.

(h)-(j) [Reserved]

(k) Engine families you certify with a nonconformance penalty under 40 CFR part 86, subpart L, may not generate emission credits.

[88 FR 4487, Jan. 24, 2023, as amended at 91 FR 7781, Feb. 18, 2026]

(a) The provisions of this section apply for calculating NOX emission credits.

(b) 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. Calculate emission credits to the nearest megagram (Mg) for each family using the following equation:

Emission credits (Mg) = (Std−FL) · CF · Volume · UL · c Eq. 1036.705-1 Where: Std = the emission standard, in (mg NOX)/hp·hr that applies under subpart B of this part for engines not participating in the ABT program of this subpart (the “otherwise applicable standard”). FL = the engine family's FEL, in mg/hp·hr, rounded to the same number of decimal places as the emission standard. CF = a transient cycle conversion factor (hp·hr/mile), calculated by dividing the total (integrated) horsepower-hour over the applicable duty cycle by 6.3 miles for engines subject to spark-ignition standards and 6.5 miles for engines subject to compression-ignition standards. This represents the average work performed over the duty cycle. Volume = the number of engines eligible to participate in the averaging, banking, and trading program within the given engine family during the model year, as described in paragraph (c) of this section. UL = the useful life for the standard that applies for a given primary intended service class, in miles. c = 10−9.

Example for model year 2028 Heavy HDE generating NOX credits:

Std = 35 mg/hp·hr FEL = 20 mg/hp·hr CF = 9.78 hp·hr/mile Volume = 15,342 UL = 650,000 miles c = 10−9 Emission credits = (35−20) · 9.78 · 15,342 · 650,000 · 10−9 Emission credits = 1,463 Mg

(c) Compliance with the requirements of this subpart is determined at the end of the model year by calculating emission credits based on actual production volumes, excluding the following engines:

(1) Engines that you do not certify to the standards of this part because they are permanently exempted under subpart G of this part or under 40 CFR part 1068.

(2) Exported engines.

(3) Engines not subject to the requirements of this part, such as those excluded under § 1036.5.

(4) Engines certified to state emission standards that are different than the emission standards referenced in this section, and intended for sale in a state that has adopted those emission standards.

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

[91 FR 7782, Feb. 18, 2026]

(a) Averaging is the exchange of emission credits among your engine families. You may average emission credits only within the same averaging set, except as specified in § 1036.740.

(b) You may certify one or more engine families to an FEL/FCL above the applicable standard, subject to any applicable FEL caps and other the 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, or that a negative balance is allowed under § 1036.745 for NHTSA's fuel efficiency program.

(c) If you certify an engine family to an FEL/FCL that exceeds the otherwise applicable standard, you must obtain enough emission credits to offset the engine family's deficit by the due date for the final report required in § 1036.730. The emission credits used to address the deficit may come from your other engine families that generate emission credits in the same model year (or from later model years as specified in § 1036.745), from emission credits you have banked, or from emission credits you obtain through trading.

[88 FR 4487, Jan. 24, 2023, as amended at 91 FR 7782, Feb. 18, 2026]

(a) Banking is the retention of surplus emission credits by the manufacturer generating the emission credits for use in future model years for averaging or trading.

(b) You may designate any emission credits you plan to bank in the reports you submit under § 1036.730 as reserved credits. 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.

(d) Banked credits retain the designation of the averaging set in which they were generated.

(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 remain subject to the averaging-set restrictions based on the averaging set in which they were generated.

(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 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 § 1036.255(e) for cases involving fraud. We may void the certificates of all engine families participating in a trade that results in a manufacturer having a negative balance of emission credits. See § 1036.745 for NHTSA's fuel efficiency program.

[88 FR 4487, Jan. 24, 2023, as amended at 91 FR 7782, Feb. 18, 2026]

(a) You must declare in your application for certification your intent to use the provisions of this subpart for each engine family that will be certified using the ABT program. You must also declare the FEL/FCL you select for the engine 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.

(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. For NHTSA's fuel efficiency program, you may include a statement that you will have a negative balance of emission credits for one or more averaging sets, but that it is allowed under § 1036.745.

(2) Calculations of projected emission credits (positive or negative) based on projected production volumes as described in § 1036.705(c). We may require you to include similar calculations from your other engine families to project your net credit balances 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.

[88 FR 4487, Jan. 24, 2023, as amended at 89 FR 29764, Apr. 22, 2024; 91 FR 7782, Feb. 18, 2026]

(a) If you certify any of your engine families using the ABT provisions of this subpart, you must send us a final report by September 30 following the end of the model year.

(b) Your report must include the following information for each engine family participating in the ABT program:

(1) Engine-family designation and averaging set.

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

(3) The FEL/FCL for each pollutant. If you change the FEL/FCL after the start of production, identify the date that you started using the new FEL/FCL and/or give the engine identification number for the first engine covered by the new FEL/FCL. In this case, identify each applicable FEL/FCL and calculate the positive or negative emission credits as specified in § 1036.225(f).

(4) The projected and actual production volumes for calculating emission credits for the model year. If you changed an FEL/FCL during the model year, identify the actual production volume associated with each FEL/FCL.

(5) The transient cycle conversion factor for each engine configuration as described in § 1036.705.

(6) Useful life.

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

(c) Your report must include the following additional information:

(1) Show that your net balance of emission credits from all your participating engine families in each averaging set in the applicable model year is not negative, except as allowed under § 1036.745 for NHTSA's fuel efficiency program. Your credit tracking must account for the limitation on credit life under § 1036.740(d).

(2) State whether you will reserve 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 averaging set corresponding to the engine families that generated emission credits for the trade, including the number of emission credits from each averaging set.

(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 for each averaging set.

(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 report as follows:

(1) If you notify us by the deadline for submitting the final report that errors mistakenly decreased your balance of emission credits, you may correct the errors and recalculate the balance of emission credits.

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

[88 FR 4487, Jan. 24, 2023, as amended at 89 FR 29764, Apr. 22, 2024; 91 FR 7782, Feb. 18, 2026]

(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 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 §§ 1036.725 and 1036.730.

(d) Keep appropriate records to document production volumes of engines that generate or use emission credits under the ABT program. For example, keep available records of the engine identification number (usually the serial number) for each engine you produce that generates or uses emission credits. You may identify these numbers as a range. If you change the FEL/FCL after the start of production, identify the date you started using each FEL/FCL and the range of engine identification numbers associated with each FEL/FCL. You must also identify the purchaser and destination for each engine you produce to the extent this information is available.

(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.

[88 FR 4487, Jan. 24, 2023, as amended at 89 FR 29764, Apr. 22, 2024]

The following restrictions apply for using emission credits:

(a) Averaging sets. Except as specified in paragraph (c) of this section, emission credits may be exchanged only within the following averaging sets based on primary intended service class:

(1) Spark-ignition HDE.

(2) Light HDE.

(3) Medium HDE.

(4) Heavy HDE.

(b)-(c) [Reserved]

(d) Credit life. NOX credits may be used only for five model years after the year in which they are generated. For example, credits you generate in model year 2027 may be used to demonstrate compliance with emission standards only through model year 2032.

(e) Other restrictions. Other sections of this part specify additional restrictions for using emission credits under certain special provisions.

[88 FR 4487, Jan. 24, 2023, as amended at 91 FR 7782, Feb. 18, 2026]

See 49 CFR 535.7 for provisions related to credit deficits for NHTSA's fuel consumption credits.

[91 FR 7782, Feb. 18, 2026]

(a) For each engine family participating in the ABT program, the certificate of conformity is conditioned 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 an engine family if you fail to comply with any provisions of this subpart.

(b) You may certify your engine family to an FEL above an applicable standard based on a projection that you will have enough emission credits to offset the deficit for the engine family.

(c) We may void the certificate of conformity for an engine family if you fail to keep records, send reports, or give us information we request. Note that failing to keep records, send reports, or give us information we request is also a violation of 42 U.S.C. 7522(a)(2).

(d) You may ask for a hearing if we void your certificate under this section (see § 1036.820).

After receipt of each manufacturer's final report as specified in § 1036.730 and completion of any verification testing required to validate the manufacturer's submitted final data, we will issue a report to the Department of Transportation with CO2 emission information and will verify the accuracy of each manufacturer's equivalent fuel consumption data required by NHTSA under 49 CFR 535.8. We will send a report to DOT for each engine manufacturer based on each regulatory category and subcategory, including sufficient information for NHTSA to determine fuel consumption and associated credit values. See 49 CFR 535.8 to determine if NHTSA deems submission of this information to EPA to also be a submission to NHTSA.

[91 FR 7782, Feb. 18, 2026]