Subpart H - Averaging, Banking, and Trading for Certification

§1051.701 General provisions.

(a) You may average, bank, and trade emission credits for purposes of certification as described in this subpart to show compliance with the standards of this part. To do this you must certify your engines to Family Emission Limits (FELs) and show that your average emission levels for all your engine families together are below the emission standards in subpart B of this part, or that you have sufficient credits to offset a credit deficit for the model year (as calculated in §1051.720).

(b) The following averaging set restrictions apply:

§1051.705 How do I average emission levels?

(a) As specified in subpart B of this part, certify each vehicle to an FEL, subject to the FEL caps in subpart B of this part.

(b) Calculate a preliminary average emission level according to §1051.720 for each averaging set using projected U.S.-directed production volumes from your application for certification, excluding vehicles described in §1051.701(d)(4).

(c) After the end of your model year, calculate a final average emission level according to §1051.720 for each type of recreational vehicle or engine you manufacture or import. Use actual U.S.-directed production volumes, excluding vehicles described in §1051.701(d)(4).

(d) If your preliminary average emission level is below the allowable average standard, see §1051.710 for information about generating and banking emission credits. These credits will be considered reserved until we verify them in reviewing the end-of-year report.

(e) If your average emission level is above the allowable average standard, you must obtain enough emission credits to offset the deficit by the due date for the final report required in §1051.730. The emission credits used to address the deficit may come from emission credits you have banked or from emission credits you obtain through trading.

[67 FR 68347, Nov. 8, 2002, as amended at 70 FR 40505, July 13, 2005]

§1051.710 How do I generate and bank emission credits?

(a) Banking is the retention of emission credits by the manufacturer generating the emission credits for use in averaging or trading in future model years. You may use banked emission credits only within the averaging set in which they were generated.

(b) If your average emission level is below the average standard, you may calculate credits according to §1051.720. Credits you generate do not expire.

(c) You may generate credits if you are a certifying manufacturer.

(d) You may designate any emission credits you plan to bank in the reports you submit under §1051.730. During the model year and before the due date for the final report, you may designate your reserved emission credits for averaging or trading.

(e) 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.

[70 FR 40505, July 13, 2005, as amended at 73 FR 59256, Oct. 8, 2008]

§1051.715 How do I trade emission credits?

(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 may be used only within 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) [Reserved]

(d) 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 §1051.255(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 §1051.745.

[70 FR 40505, July 13, 2005, as amended at 73 FR 59256, Oct. 8, 2008]

§1051.720 How do I calculate my average emission level or emission credits?

(a) Calculate your average emission level for each type of recreational vehicle or engine for each model year according to the following equation and round it to the nearest tenth of a g/km or g/kW-hr. Use consistent units throughout the calculation.

(1) For exhaust emissions:

(i) Calculate the average emission level as:

Where:

FEL_i = The FEL to which the engine family is certified.

UL_i = The useful life of the engine family.

Production_i = The number of vehicles in the engine family.

(ii) Use U.S.-directed production projections for initial certification, and actual U.S.-directed production volumes to determine compliance at the end of the model year.

(2) For vehicles that have standards expressed as g/kW-hr and a useful life in kilometers, convert the useful life to kW-hr based on the maximum engine power and an assumed vehicle speed of 30 km/hr as follows: UL (kW-hr) = UL (km) × Maximum Engine Power (kW) ÷ 30 km/hr. (Note: It is not necessary to include a load factor, since credit exchange is not allowed between vehicles certified to g/kW-hr standards and vehicles certified to g/km standards.)

(3) For evaporative emission standards expressed as g/m ²/day, use the useful life value in years multiplied by 365.24 and calculate the average emission level as:

Where:

FEL _i = The FEL to which the engine family is certified, as described in paragraph (a)(4) of this section.

Production _i = The number of vehicles in the engine family times the average internal surface area of the vehicles' fuel tanks.

(4) Determine the FEL for calculating credits under paragraph (a)(3) of this section using any of the following values:

(i) The FEL to which the tank is certified, as long as the FEL is at or below 3.0 g/m ²/day.

(ii) 10.4 g/m ²/day. However, if you use this value to establish the FEL for any of your tanks, you must use this value to establish the FEL for every tank not covered by paragraph (a)(4)(i) of this section.

(iii) The measured permeation rate of the tank or the measured permeation rate of a thinner-walled tank of the same material. However, if you use this approach to establish the FEL for any of your tanks, you must establish an FEL based on emission measurements for every tank not covered by paragraph (a)(4)(i) of this section.

(b) If your average emission level is below the average standard, calculate credits available for banking according to the following equation and round them to the nearest tenth of a gram:

C

(c) If your average emission level is above the average standard, calculate your preliminary credit deficit according to the following equation, rounding to the nearest tenth of a gram:

[67 FR 68347, Nov. 8, 2002, as amended at 70 FR 40505, July 13, 2005; 73 FR 59256, Oct. 8, 2008]

§1051.725 What must I include in my applications for certification?

(a) You must declare in your applications for certification your intent to use the provisions of this subpart. You must also declare the FELs you select for each engine family. Your FELs must comply with the specifications of subpart B of this part, including the FEL caps. FELs must be expressed to the same number of decimal places as the applicable standards.

(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. This means that if you believe that your average emission level will be above the standard (i.e., that you will have a deficit for the model year), you must have banked credits (or project to have received traded credits) to offset the deficit.

(2) Detailed calculations of projected emission credits (positive or negative) based on projected production volumes. We may require you to include similar calculations from your other engine families to demonstrate that you will be able to avoid a negative credit balance for the model year. If you project negative emission credits for an engine family, state the source of positive emission credits you expect to use to offset the negative emission credits.

[70 FR 40506, July 13, 2005, as amended at 73 FR 59256, Oct. 8, 2008]

§1051.730 What ABT reports must I send to EPA?

(a) If any of your engine families are certified using the ABT provisions of this subpart, you must send an end-of-year report within 90 days after the end of the model year and a final report within 270 days after the end of the model year. We may waive the requirement to send the end-of year report, as long as you send the final report on time.

(b) Your end-of-year and final reports must include the following information for each engine family:

(1) Engine-family designation.

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

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

(4) The projected and actual production volumes for the model year with a point of retail sale in the United States, as described in §1051.701(d). For fuel tanks, state the production volume in terms of surface area and production volume for each tank configuration and state the total surface area for the emission family. If you changed an FEL during the model year, identify the actual production volume associated with each FEL.

(5) For vehicles that have standards expressed as g/kW-hr, maximum engine power for each vehicle configuration, and the average engine power weighted by U.S.-directed production volumes for the engine family.

(6) Useful life.

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

(c) Your end-of-year and final reports must include the following additional information:

(1) Show that your net balance of emission credits in each averaging set in the applicable model year is not negative.

(2) State whether you will retain 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 engine families that generated emission credits for the trade, including the number of emission credits from each family.

(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 to each engine family (if known).

(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 end-of-year report or final report as follows:

(1) You may correct any errors in your end-of-year report when you prepare the final report as long as you send us the final report by the time it is due.

(2) If you or we determine within 270 days after the end of the model year that errors mistakenly decreased your balance of emission credits, you may correct the errors and recalculate the balance of emission credits. You may not make these corrections for errors that are determined more than 270 days after the end of the model year. If you report a negative balance of emission credits, we may disallow corrections under this paragraph (f)(2).

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

[70 FR 40506, July 13, 2005, as amended at 73 FR 59256, Oct. 8, 2008]

§1051.735 What records must I keep?

(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 on 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 §1051.725 and §1051.730.

(d) Keep records of the identification number for each vehicle or engine or piece of equipment you produce that generates or uses emission credits under the ABT program. You may identify these numbers as a range.

(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.

[70 FR 40506, July 13, 2005, as amended at 73 FR 59257, Oct. 8, 2008]

§1051.740 Are there special averaging provisions for snowmobiles?

For snowmobiles, you may only use credits for the same phase or set of standards against which they were generated, except as allowed by this section.

(a) Restrictions.(1) You may not use any Phase 1 or Phase 2 credits for Phase 3 compliance.

(2) You may not use Phase 1 HC credits for Phase 2 HC compliance. However, because the Phase 1 and Phase 2 CO standards are the same, you may use Phase 1 CO credits for compliance with the Phase 2 CO standards.

(b) Special credits for next phase of standards. You may choose to generate credits early for banking for purposes of compliance with later phases of standards as follows:

(1) If your corporate average emission level at the end of the model year exceeds the applicable (current) phase of standards (without the use of traded or previously banked credits), you may choose to redesignate some of your snowmobile production to a calculation to generate credits for a future phase of standards. To generate credits the snowmobiles designated must have an FEL below the emission level of that set of standards. This can be done on a pollutant specific basis.

(2) Do not include the snowmobiles that you redesignate in the final compliance calculation of your average emission level for the otherwise applicable (current) phase of standards. Your average emission level for the remaining (non-redesignated) snowmobiles must comply with the otherwise applicable (current) phase of standards.

(3) Include the snowmobiles that you redesignate in a separate calculation of your average emission level for redesignated engines. Calculate credits using this average emission level relative to the specific pollutant in the future phase of standards. These credits may be used for compliance with the future standards.

(4) For generating early Phase 3 credits, you may generate credits for HC or CO separately as described:

(i) To determine if you qualify to generate credits in accordance with paragraphs (b)(1) through (3) of this section, you must meet the credit trigger level. For HC this value is 75 g/kW-hr. For CO this value is 200 g/kW-hr.

(ii) HC and CO credits for Phase 3 are calculated relative to 75 g/kW-hr and 200 g/kW-hr values, respectively.

(5) Credits can also be calculated for Phase 3 using both sets of standards. Without regard to the trigger level values, if your net emission reduction for the redesignated averaging set exceeds the requirements of Phase 3 in §1051.103 (using both HC NO_X and CO in the Phase 3 equation in §1051.103), then your credits are the difference between the Phase 3 reduction requirement of that section and your calculated value.

[70 FR 40507, July 13, 2005, as amended at 73 FR 35952, June 25, 2008; 73 FR 59257, Oct. 8, 2008]

§1051.745 What can happen if I do not comply with the provisions of this subpart?

(a) For each engine family participating in the ABT program, the certificate of conformity is conditional 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 avoid a negative credit balance for each averaging set for the applicable model year. However, except as allowed in §1051.145(h), we may void the certificate of conformity if you cannot show in your final report that you have enough actual emission credits to offset a deficit for any pollutant in an 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.

(d) You may ask for a hearing if we void your certificate under this section (see §1051.820).

[70 FR 40507, July 13, 2005]