(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 equipment 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 equipment) in which emission credits may be exchanged only with other engines (or equipment) 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) The use of emission credits is limited to averaging sets, as follows:

(1) You may not average or exchange exhaust credits with evaporative credits, or vice versa.

(2) Handheld engines and nonhandheld engines are in separate averaging sets with respect to exhaust emissions except as specified in §1054.740(e). You may use emission credits generated under 40 CFR part 90 for handheld engines subject to the standards in §1054.103 only if you can demonstrate that those credits were generated by handheld engines, except as specified in §1054.740(e). You may use emission credits generated under 40 CFR part 90 for nonhandheld engines only if you can demonstrate that those credits were generated by nonhandheld engines, subject to the provisions of §1054.740.

(3) Equipment using handheld engines and equipment using nonhandheld engines are in separate averaging sets with respect to evaporative emissions. You may not average or exchange evaporative credits between either of these averaging sets.

(4) For purposes of calculating emission credits under this subpart, engines with displacement at or below 80 cc are presumed to be handheld engines. You may treat these as nonhandheld engines for calculating exhaust or evaporative emission credits only for those engines you can demonstrate will be installed in nonhandheld equipment. For example, if 50 percent of engines in a family will be used in nonhandheld equipment, you may calculate the emission credits for 50 percent of the engines to be nonhandheld credits. Use the specified calculation methods for handheld engines to quantify positive or negative exhaust emission credits for all engines at or below 80 cc.

(d) You may not generate evaporative credits based on permeation measurements from metal fuel tanks.

(e) 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.

(f) Emission credits may be used in the model year they are generated (averaging) and in future model years (banking). Emission credits may not be used for past model years.

(g) You may increase or decrease an exhaust FEL during the model year by amending your application for certification under §1054.225. See 40 CFR 1060.225 for provisions related to changing an FEL for fuel tank permeation.

(h) Engine and equipment 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.

(i) In your application for certification, base your showing of compliance on projected production volumes for engines or equipment intended for sale in the United States. As described in §1054.730, compliance with the requirements of this subpart is determined at the end of the model year based on actual production volumes for engines or equipment intended for sale in the United States. Do not include any of the following engines or equipment to calculate emission credits:

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

(2) Engines or equipment intended for export.

(3) Engines or equipment 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 equipment 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 equipment not subject to the requirements of this part, such as those excluded under §1054.5.

(5) Any other engines or equipment where we indicate elsewhere in this part 1054 that they are not to be included in the calculations of this subpart.