(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 §1036.108. Participation in this program is voluntary. (Note: As described in subpart B of this part, you must 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 FCL or standard. This 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 FCL or standard (for example, during a selective enforcement audit), you may use emission credits to recertify the engine family with a higher 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 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 FCL during the model year by amending your application for certification under §1036.225. The new 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(k)(7) or §1036.615 or 40 CFR 1037.615.

(i) Unless the regulations explicitly allow it, you may not calculate credits more than once for any emission reduction. For example, if you generate 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 vehicle under 40 CFR part 1037. However, 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 only if the credit-generating engines were certified to the tractor engine standards in §1036.108 and credits were calculated relative to the tractor engine standards. You may otherwise use emission credits generated in one model year without adjustment for certifying vehicles in a later model year, even if emission standards are different.

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