(a) Manufacturers wishing to participate in certification averaging, banking and trading programs shall select a FEL for each engine family they wish to include. The level of the FEL shall be selected by the manufacturer, subject to the upper limits described in paragraph (m) of this section. An engine family certified to an FEL is subject to all provisions specified in this part, except that the applicable FEL replaces the applicable THC + NOX and PM emission standard for the family participating in the averaging, banking, and trading program.

(b) A manufacturer may certify one or more engine families at FELs above or below the applicable emission standard, provided the summation of the manufacturer's projected balance of all credit transactions in a given calendar year is greater than or equal to zero, as calculated for each family under §94.305 and reported under §94.309.

(c) Manufacturers certifying engine families with FELs exceeding the applicable emission standard shall obtain emission credits in amounts sufficient to address the shortfall. Credits may be obtained from averaging, banking, or trading, subject to the restrictions described in this subpart.

(d) Manufacturers certifying engine families with FELs below the applicable emission standard may generate emission credits to average, bank, or trade, or a combination thereof.

(e) An engine family may not generate credits for one pollutant while also using credits for another pollutant in the same model year.

(f) Credits may only be used for certification; they may not be used to remedy a violation of the FEL determined by production line or in-use testing. Credits may be used to allow subsequent production of engines for an engine family failing production line testing if the manufacturer elects to recertify to a higher FEL.

(g) [Reserved].

(h) If an FEL is changed after initial certification in any given model year, the manufacturer must conduct production line testing to verify that the emission levels are achieved, with one exception: when an FEL is changed immediately after (and because of) a production line testing failure, additional verification testing is not required.

(i) Manufacturers participating in the averaging, banking and trading program must demonstrate compliance with the applicable emission standards at the end of the model year. Manufacturers that have certified engine families to FELs above the applicable emission standards and do not have sufficient emission credits to offset the difference between the emission standard and the FEL for such engine families will be in violation of the conditions of the certificate of conformity for such engine families. The certificates of conformity may be voided ab initio for those engine families.

(j) In the event of a negative credit balance resulting from a credit trade, both the buyer(s) and the seller(s) are liable, except in cases involving fraud. Certificates of all engine families participating in a negative trade may be voided ab initio.

(1) Where a buyer of credits is not responsible for causing the negative credit balance, the buyer is only liable to supply additional credits equivalent to any amount of invalid credits that the buyer used for its engine family(ies).

(2) Credit holders responsible for the credit shortfall may be subject to the requirements of §94.309(g)(3).

(k) The following provisions limit credit exchanges between different types of engines:

(1) Credits generated by Category 1 engine families may be used for compliance by Category 1 or Category 2 engine families. Credits generated from Category 1 engine families for use by Category 2 engine families must be discounted by 25 percent.

(2) Credits generated by Category 2 engine families may be used for compliance only by Category 2 engine families.

(3) Credits may not be exchanged between recreational and commercial engines.

(l) Credit life shall be unlimited.

(m) Upper limits. The FELs for THC + NOX and PM for new engines certified for participation in this averaging, banking and trading program may not exceed the following values:

(1) For Category 1 engines, the FEL may not exceed the levels contained in Table D-1, which follows:

(2) For Category 2 engines, the FEL may not exceed the applicable standard by more than 25 percent.

[64 FR 73331, Dec. 29, 1999, as amended at 67 FR 68346, Nov. 8, 2002]