§ 1036.701 - General provisions.

§ 1036.701 General provisions.

(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 and 1036.108. Participation in this program is voluntary. Note that certification to NO_X standards in § 1036.104 is based on a family emission limit (Note: As described in FEL) and certification to CO₂ standards in § 1036.108 is based on a Family Certification Level (FCL). This part refers to “FEL/FCL” to simultaneously refer to FELs for NO_X and FCLs for CO₂. Note also that subpart B of this part, requires you must 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 under this paragraph (h). Those . 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 for CO₂) 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) See § 1036.740 for special credit provisions that apply for greenhouse gas credits generated under 40 CFR 86.1819-14–14(k)(7) or § 1036.615 or 40 CFR 1037.615.

(i) Unless the regulations in this part explicitly allow it, you may not calculate Phase 1 credits more than once for any emission reduction. For example, if you generate Phase 1 CO₂ emission credits for a hybrid engine under this part for a given vehicle, no one may generate CO₂ emission credits for that same hybrid engine and the associated vehicle under 40 CFR part 1037. However, Phase 1 credits could be generated for identical vehicles using engines that did not generate credits under this part.

(j) Credits you generate with compression-ignition engines in 2020 and earlier model years may be used in model year 2021 and later as follows:

(1) For credit-generating engines certified to the tractor engine standards in § 1036.108, you may use credits calculated relative to the tractor engine standards.

(2) For credit-generating engines certified to the vocational engine standards in § 1036.108, you may optionally carry over adjusted vocational credits from an averaging set, and you may use credits calculated relative to the emission levels in the following table:

Table 1 to Paragraph (j)(2) of § 1036.701 - Emission —Emission Levels for Credit Calculation

Medium heavy-duty engines	Heavy heavy-duty engines	HDE	Heavy HDE
558 g/hp·hr	525 g/hp·hr.

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

[81 FR 74011, Oct. 25, 2016, as amended at 86 FR 34403, June 29, 2021]