consumption credits it expects to use to offset the negative credits
demonstrating how it plans to resolve any credit deficits that might
occur for a model year within a period of up to three model years after
that deficit has occurred.
    (B) Actual emissions and fuel consumption credit balances, credit
transactions, and credit trades.
    (ii) Manufacturers are required to provide updated credit plans
after receiving their final verified reports from EPA and NHTSA after
the end of each model year.
    (iii) The agencies may determine that a manufacturer's plan is
unreasonable or unrealistic based on a consideration of past and
projected use of specific technologies, the historical sales mix of its
vehicle models, subsequent failure to follow any submitted plans, and
limited expected access to traded credits.
    (iv) The agencies may also consider the plan unreasonable if the
manufacturer's credit deficit increases from one model year to the
next. The agencies may require that the manufacturers must send interim
reports describing its progress toward resolving its credit deficit
over the course of a model year.
    (v) If NHTSA determines that a manufacturers plan is unreasonable
or unrealistic, the manufacturer is deemed as not comply with fuel
consumption standards as specified in Sec.  535.10(c) and the
manufacturer may be liable for civil penalties.
    (7) Revoked credits. NHTSA may revoke fuel consumption credits if
unable to verify any information after auditing reports or records or
conducting confirmatory testing. In the cases where EPA revokes
emissions CO2 credits, NHTSA will revoke the equivalent
amount of fuel consumption credits.
    (8) Transition to Phase 2 standards. The following provisions allow
for enhanced use of fuel consumption credits from Phase 1 tractors and
vocational vehicles for meeting the Phase 2 standards:
    (i) Fuel consumption credits a manufacturer generates for light and
medium heavy-duty vocational vehicles in model years 2018 through 2021
may be used through model year 2027, instead of being limited to a
five-year credit life as specified in this part.
    (ii) The manufacturer may use the off-cycle provisions of paragraph
(f) of this section to apply technologies to Phase 1 vehicles as
follows:
    (A) A manufacturer may apply an improvement factor of 0.988 for
tractors and vocational vehicles with automatic tire inflation systems
on all axles.
    (B) For vocational vehicles with automatic engine shutdown systems
that conform with 40 CFR 1037.660, a manufacturer may apply an
improvement factor of 0.95.
    (C) For vocational vehicles with stop-start systems that conform
with 40 CFR 1037.660, a manufacturer may apply an improvement factor of
0.92.
    (D) For vocational vehicles with neutral-idle systems conforming
with 40 CFR 1037.660, manufacturers may apply an improvement factor of
0.98. Manufacturers may adjust this improvement factor if we approve a
partial reduction under 40 CFR 1037.660(a)(2); for example, if the
manufacturer's design reduces fuel consumption by half as much as
shifting to neutral, it may apply an improvement factor of 0.99.
    (9) Credits for small business manufacturers. Small manufacturers
may generate fuel consumption credits for natural gas-fueled vocational
vehicles as follows:
    (i) Small manufacturers may certify their vehicles instead of
relying on the exemption of Sec.  535.3.
    (ii) Use Phase 1 GEM to determine a fuel consumption level for
vehicle, then multiply this value by the engine's FCL for fuel
consumption and divide by the engine's applicable fuel consumption
standard.
    (iii) Use the value determined in paragraph (ii) in the credit
equation specified in part (c) of this section in place of the term
(Std - FEL).
    (iv) The following provisions apply uniquely to small businesses
under the custom-chassis standards of Sec.  535.5(b)(6):
    (A) Manufacturers may use fuel consumption credits generated under
paragraph (c) of this section, including banked or traded credits from
any averaging set. Such credits remain subject to other limitations
that apply under this part.
    (B) Manufacturers may produce up to 200 drayage tractors in a given
model year to the standards described in Sec.  535.5(b)(6) for ``other
buses''. Treat these drayage tractors as being in their own averaging
set.
    (10) Certifying non-gasoline engines. A manufacturer producing non-
gasoline engines complying with model year 2021 or later medium heavy-
duty spark-ignition standards may not generate fuel consumption
credits. Only manufacturers producing gasoline engines certifying to
spark-ignition standards can generate fuel consumption credits under
paragraph (d) of this part.
    (b) ABT provisions for heavy-duty pickup trucks and vans. (1)
Calculate fuel consumption credits in a model year for one fleet of
conventional heavy-duty pickup trucks and vans and if designated by the
manufacturer another consisting of advance technology vehicles for the
averaging set as defined in Sec.  535.4. Calculate credits for each
fleet separately using the following equation:

Total MY Fleet FCC (gallons) = (Std - Act) x (Volume) x (UL) x (10\2\)

Where:

Std = Fleet average fuel consumption standard (gal/100 mile).

Act = Fleet average actual fuel consumption value (gal/100 mile).
Volume = the total U.S.-directed production of vehicles in the
regulatory subcategory.
UL = the useful life for the regulatory subcategory. The useful life
value for heavy-pickup trucks and vans manufactured for model years
2013 through 2020 is equal to the 120,000 miles. The useful life for
model years 2021 and later is equal to 150,000 miles.

    (2) Adjust the fuel consumption performance of subconfigurations
with advanced technology for determining the fleet average actual fuel
consumption value as specified in paragraph (f)(1) of this section and
40 CFR 86.1819-14(d)(7). Advanced technology vehicles can be separated
in a different fleet for the purpose of applying credit incentives as
described in paragraph (f)(1) of this section.
    (3) Adjust the fuel consumption performance for subconfigurations
with innovative technology. A manufacturer is eligible to increase the
fuel consumption performance of heavy-duty pickup trucks and vans in
accordance with procedures established by EPA set forth in 40 CFR part
600. The eligibility of a manufacturer to increase its fuel consumption
performance through use of an off-cycle technology requires an
application request made to EPA and NHTSA in accordance with 40 CFR
86.1869-12 and an approval granted by the agencies. For off-cycle
technologies that are covered under 40 CFR 86.1869-12, NHTSA will
collaborate with EPA regarding NHTSA's evaluation of the specific off-
cycle technology to ensure its impact on fuel consumption and the
suitability of using the off-cycle technology to adjust fuel
consumption performance. NHTSA will provide its views on the
suitability of the technology for that purpose to EPA. NHTSA will apply
the criteria in section (f) of this section in granting or denying off-
cycle requests.
    (4) Fuel consumption credits may be generated for vehicles
certified in model year 2013 to the model year 2014 standards in Sec.
535.5(a). If a manufacturer chooses to generate CO2 emission
credits under EPA's provisions in 40 CFR part 86, it may also
voluntarily generate early credits under the NHTSA fuel consumption
program. To do so, a manufacturer must certify its entire U.S.-directed
production volume of vehicles in its fleet. The same production volume
restrictions specified in 40 CFR 1037.150(a)(2) relating to when test
groups are certified apply to the NHTSA early credit provisions.
Credits are calculated as specified in paragraph (b)(3) of this section
relative to the fleet standard that would apply for model year 2014
using the model year 2013 production volumes. Surplus credits generated
under this paragraph (b)(4) are available for banking or trading.
Credit deficits for an averaging set prior to model year 2014 do not
carry over to model year 2014. These credits may be used to show
compliance with the standards of this part for 2014 and later model
years. Once a manufacturer opts into the NHTSA program they must stay
in the program for all of the optional model years and remain
standardized with the same implementation approach being followed to
meet the EPA CO2 emission program.
    (5) Calculate the averaging set credit value by summing together
the fleet credits for conventional and advanced technology vehicles
including any adjustments for innovative technologies. Manufacturers
may sum conventional and innovative technology credits before adding
any advanced technology credits in each averaging set.
    (6) For credits that manufacturers calculate based on a useful life
of 120,000 miles, multiply any banked credits carried forward for use
in model year 2021 and later by 1.25. For credit deficits that a
manufacturer calculates based on a useful life of 120,000 miles and
that it offsets with credits originally earned in model year 2021 and
later, it multiplies the credit deficit by 1.25.
    (c) ABT provisions for vocational vehicles and tractors. (1)
Calculate the fuel consumption credits in a model year for each
participating family or subfamily consisting of conventional vehicles
in each averaging set (as defined in Sec.  535.4) using the equation in
this section. Each designated vehicle family or subfamily has a
``family emissions limit'' (FEL) that is compared to the associated
regulatory subcategory standard. An FEL that falls below the regulatory
subcategory standard creates ``positive credits,'' while fuel
consumption level of a family group above the standard creates a
``negative credits.'' The value of credits generated for each family or
subfamily in a model year is calculated as follows and must be rounded
to nearest whole number:

    Vehicle Family FCC (gallons) = (Std - FEL) x (Payload) x (Volume) x
(UL) x (10\3\)

Where:

Std = the standard for the respective vehicle family regulatory
subcategory (gal/1000 ton-mile).
FEL = family emissions limit for the vehicle family (gal/1000 ton-
mile).
Payload = the prescribed payload in tons for each regulatory
subcategory as shown in the following table:

------------------------------------------------------------------------
                 Regulatory subcategory                   Payload (tons)
------------------------------------------------------------------------
Vocational LHD Vehicles.................................            2.85
Vocational MHD Vehicles.................................            5.60
Vocational HHD Vehicles.................................             7.5
MDH Tractors............................................           12.50
HHD Tractors, other than heavy-haul Tractors............           19.00
Heavy-haul Tractors.....................................           43.00
------------------------------------------------------------------------

Volume = the number of U.S.-directed production volume of vehicles
in the corresponding vehicle family.
UL = the useful life for the regulatory subcategory (miles) as shown
in the following table:

------------------------------------------------------------------------
         Regulatory subcategory                     UL  (miles)
------------------------------------------------------------------------
LHD Vehicles............................  110,000 (Phase 1).
                                          150,000 (Phase 2).
Vocational MHD Vehicles and tractors at   185,000.
 or below 33,000 pounds GVWR.
Vocation HHD Vehicles and tractors at or  435,000.
 above 33,000 pounds GVWR.
------------------------------------------------------------------------

    (i) Calculate the value of credits generated in a model year for
each family or subfamily consisting of vehicles with advanced
technology vehicles in each averaging set using the equation above and
the guidelines provided in paragraph (f)(1) of this section.
Manufacturers may generate credits for advanced technology vehicles
using incentives specified in paragraph (f)(1) of this section.
    (ii) Calculate the value of credits generated in a model year for
each family or subfamily consisting of vehicles with off-cycle
technology vehicles in each averaging set using the equation above and
the guidelines provided in paragraph (f)(2) of this section.
    (2) Manufacturers must sum all negative and positive credits for
each vehicle family within each applicable averaging set to obtain the
total credit balance for the model year before rounding. The sum of
fuel consumptions credits must be rounded to the nearest gallon.
Calculate the total credits generated in a model year for each
averaging set using the following equation:

Total averaging set MY credits = [Sigma] Vehicle family credits within
each averaging set

    (3) Manufacturers can sum conventional and innovative technology
credits before adding any advanced technology credits in each averaging
set.
    (4) If a manufacturer chooses to generate CO2 emission
credits under

EPA provisions of 40 CFR 1037.150(a), it may also voluntarily generate
early credits under the NHTSA fuel consumption program as follows:
    (i) Fuel consumption credits may be generated for vehicles
certified in model year 2013 to the model year 2014 standards in Sec.
535.5(b) and (c). To do so, a manufacturer must certify its entire
U.S.-directed production volume of vehicles. The same production volume
restrictions specified in 40 CFR 1037.150(a)(1) relating to when test
groups are certified apply to the NHTSA early credit provisions.
Credits are calculated as specified in paragraph (c)(11) of this
section relative to the standards that would apply for model year 2014.
Surplus credits generated under this paragraph (c)(4) may be increased
by a factor of 1.5 for determining total available credits for banking
or trading. For example, if a manufacturer has 10 gallons of surplus
credits for model year 2013, it may bank 15 gallons of credits. Credit
deficits for an averaging set prior to model year 2014 do not carry
over to model year 2014. These credits may be used to show compliance
with the standards of this part for 2014 and later model years. Once a
manufacturer opts into the NHTSA program they must stay in the program
for all of the optional model years and remain standardized with the
same implementation approach being followed to meet the EPA
CO2 emission program.
    (ii) A tractor manufacturer may generate fuel consumption credits
for the number of additional SmartWay designated tractors (relative to
its MY 2012 production), provided that credits are not generated for
those vehicles under paragraph (c)(4)(i) of this section. Calculate
credits for each regulatory sub-category relative to the standard that
would apply in model year 2014 using the equations in paragraph (c)(2)
of this section. Use a production volume equal to the number of
verified model year 2013 SmartWay tractors minus the number of verified
model year 2012 SmartWay tractors. A manufacturer may bank credits
equal to the surplus credits generated under this paragraph multiplied
by 1.50. A manufacturer's 2012 and 2013 model years must be equivalent
in length. Once a manufacturer opts into the NHTSA program they must
stay in the program for all of the optional model years and remain
standardized with the same implementation approach being followed to
meet the EPA CO2 emission program.
    (5) If a manufacturer generates credits from vehicles certified for
advanced technology in accordance with paragraph (e)(1) of this
section, a multiplier of 1.5 can be used, but this multiplier cannot be
used on the same credits for which the early credit multiplier is used.
    (6) For model years 2012 and later, manufacturers may generate or
use fuel consumption credits for averaging to demonstrate compliance
with the alternative standards as described in Sec.  535.5(b)(6) of
this part. Manufacturers can specify a Family Emission Limit (FEL) for
fuel consumption for each vehicle subfamily. The FEL may not be less
than the result of emissions and fuel consumption modeling as described
in 40 CFR 1037.520 and Sec.  535.6. These FELs serve as the fuel
consumption standards for the vehicle subfamily instead of the
standards specified in this Sec.  535.5(b)(6). Manufacturers may not
use averaging for motor homes, coach buses, emergency vehicles or
concrete mixers meeting standards under Sec.  535.5(b)(5).
    (7) Manufacturers may not use averaging for vehicles meeting
standards Sec.  535.5(b)(6)(iv) through (vi), and manufacturers may not
use fuel consumption credits for banking or trading for any vehicles
certified under Sec.  535.5(b)(6).
    (8) Manufacturers certifying any vehicles under Sec.  535.5(b)(6)
must consider each separate vehicle type (or group of vehicle types) as
a separate averaging set.
    (d) ABT provisions for heavy-duty engines. (1) Calculate the fuel
consumption credits in a model year for each participating family or
subfamily consisting of engines in each averaging set (as defined in
Sec.  535.4) using the equation in this section. Each designated engine
family has a ``family certification level'' (FCL) which is compared to
the associated regulatory subcategory standard. A FCL that falls below
the regulatory subcategory standard creates ``positive credits,'' while
fuel consumption level of a family group above the standard creates a
``credit shortfall.'' The value of credits generated in a model year
for each engine family or subfamily is calculated as follows and must
be rounded to nearest whole number:

Engine Family FCC (gallons) = (Std - FCL) x (CF) x (Volume) x (UL) x
(10\2\)

Where:

Std = the standard for the respective engine regulatory subcategory
(gal/100 hp-hr).
FCL = family certification level for the engine family (gal/100 hp-
hr).
CF = a transient cycle conversion factor in hp-hr/mile which is the
integrated total cycle horsepower-hour divided by the equivalent
mileage of the applicable test cycle. For engines subject to spark-
ignition heavy-duty standards, the equivalent mileage is 6.3 miles.
For engines subject to compression-ignition heavy-duty standards,
the equivalent mileage is 6.5 miles.
Volume = the number of engines in the corresponding engine family.
UL = the useful life of the given engine family (miles) as shown in
the following table:

------------------------------------------------------------------------
         Regulatory subcategory                     UL  (miles)
------------------------------------------------------------------------
SI and CI LHD Engines...................  120,000 (Phase 1).
                                          150,000 (Phase 2).
CI MHD Engines..........................  185,000.
CI HHD Engines..........................  435,000.
------------------------------------------------------------------------

    (i) Calculate the value of credits generated in a model year for
each family or subfamily consisting of engines with advanced technology
vehicles in each averaging set using the equation above and the
guidelines provided in paragraph (f)(1) of this section. Manufacturers
may generate credits for advanced technology vehicles using incentives
specified in paragraph (f)(1) of this section.
    (ii) Calculate the value of credits generated in a model year for
each family or subfamily consisting of engines with off-cycle
technology vehicles in each averaging set using the equation above and
the guidelines provided in paragraph (f)(2) of this section.
    (2) Manufacturers shall sum all negative and positive credits for
each engine family within the applicable averaging set to obtain the
total credit balance for the model year before rounding. The sum of
fuel consumptions credits should be rounded to the nearest gallon.
    Calculate the total credits generated in a model year for each
averaging set using the following equation:

Total averaging set MY credits = [Sigma] Engine family credits within
each averaging set

    (3) The provisions of this section apply to manufacturers utilizing
the compression-ignition engine voluntary alternate standard provisions
specified in Sec.  535.5(d)(4) as follows:
    (i) Manufacturers may not certify engines to the alternate
standards if they are part of an averaging set in which they carry a
balance of banked credits. For purposes of this section, manufacturers
are deemed to carry credits in an averaging set if they carry credits
from advance technology that are allowed to be used in that averaging
set.
    (ii) Manufacturers may not bank fuel consumption credits for any
engine

family in the same averaging set and model year in which it certifies
engines to the alternate standards. This means a manufacturer may not
bank advanced technology credits in a model year it certifies any
engines to the alternate standards.
    (iii) Note that the provisions of paragraph (d)(10) of this section
apply with respect to credit deficits generated while utilizing
alternate standards.
    (4) Where a manufacturer has chosen to comply with the EPA
alternative compression-ignition engine phase-in standard provisions in
40 CFR 1036.150(e), and has optionally decided to follow the same path
under the NHTSA fuel consumption program, it must certify all of its
model year 2013 compression-ignition engines within a given averaging
set to the applicable alternative standards in Sec.  535.5(d)(5).
Engines certified to these standards are not eligible for early credits
under paragraph (d)(14) of this section. Credits are calculated using
the same equation provided in paragraph (d)(11) of this section.
    (5) If a manufacturer chooses to generate early CO2
emission credits under EPA provisions of 40 CFR 1036.150, it may also
voluntarily generate early credits under the NHTSA fuel consumption
program. Fuel consumption credits may be generated for engines
certified in model year 2013 (2015 for spark-ignition engines) to the
standards in Sec.  535.5(d). To do so, a manufacturer must certify its
entire U.S.-directed production volume of engines except as specified
in 40 CFR 1036.150(a)(2). Credits are calculated as specified in
paragraph (d)(11) of this section relative to the standards that would
apply for model year 2014 (2016 for spark-ignition engines). Surplus
credits generated under this paragraph (d)(3) may be increased by a
factor of 1.5 for determining total available credits for banking or
trading. For example, if a manufacturer has 10 gallons of surplus
credits for model year 2013, it may bank 15 gallons of credits. Credit
deficits for an averaging set prior to model year 2014 (2016 for spark-
ignition engines) do not carry over to model year 2014 (2016 for spark-
ignition engines). These credits may be used to show compliance with
the standards of this part for 2014 and later model years. Once a
manufacturer opts into the NHTSA program they must stay in the program
for all of the optional model years and remain standardized with the
same implementation approach being followed to meet the EPA
CO2 emission program.
    (6) Manufacturers may generate fuel consumption credits from an
engine family subject to spark-ignition standards for exchanging with
other engine families only if the engines in the family are gasoline-
fueled.
    (7) Engine credits generated for compression-ignition engines in
the 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 standards in Sec.  535.5(d) and 40 CFR 1036.108. Manufacturers
may otherwise use fuel consumption credits generated in one model year
without adjustment for certifying vehicles in a later model year, even
if fuel consumption standards are different.
    (8) Engine families manufacturers certify with a nonconformance
penalty under 40 CFR part 86, subpart L, and may not generate fuel
consumption credits.
    (9) Alternate transition option for Phase 2 engine standards. The
following provisions allow for enhanced generation and use of fuel
consumption credits for manufacturers complying with engines standards
in accordance with Sec.  535.7(d)(11):
    (i) If a manufacturer is eligible to certify all of its model year
2020 engines within the averaging set to the tractor and vocational
vehicle engine standards in Sec.  535.5(d)(11) and the requirements
applicable to model year 2021 engines, the banked and traded fuel
consumption credits generated for model year 2018 through 2024 engines
may be used through model year 2030 as specified in paragraph
(d)(9)(ii) of this section or through a five-year credit life,
whichever is later.
    (ii) Banked and traded fuel consumption credits generated under
this paragraph (d)(9) for model year 2018 through 2024 engines may be
used through model year 2030 with the extended credit life values shown
in the table:

------------------------------------------------------------------------
                                                        Credit life for
                                                       transition option
                      Model year                          for phase 2
                                                        engine standards
                                                            (years)
------------------------------------------------------------------------
2018.................................................                 12
2019.................................................                 11
2020.................................................                 10
2021.................................................                  9
2022.................................................                  8
2023.................................................                  7
2024.................................................                  6
2025 and later.......................................                  5
------------------------------------------------------------------------

    (e) ABT provisions for trailers. (1) Manufacturers cannot use
averaging for non-box trailers, partial-aero trailers, or non-aero
trailers or cannot use fuel consumption credits for banking or trading.
Starting in model year 2027, full aero box van manufactures may
average, credits.
    (2) Calculate the fuel consumption credits in a model year for each
participating family or subfamily consisting of full aero box trailers
(vehicles) in each averaging set (as defined in Sec.  535.4) using the
equation in this section. Each designated vehicle family or subfamily
has a ``family emissions limit'' (FEL) which is compared to the
associated regulatory subcategory standard. An FEL that falls below the
regulatory subcategory standard creates ``positive credits,'' while
fuel consumption level of a family group above the standard creates a
``negative credits.'' The value of credits generated for each family or
subfamily in a model year is calculated as follows and must be rounded
to nearest whole number:

Vehicle Family FCC (gallons) = (Std - FEL) x (Payload) x (Volume) x
(UL) x (10\3\)

Where:

Std = the standard for the respective vehicle family regulatory
subcategory (gal/1000 ton-mile).
FEL = family emissions limit for the vehicle family (gal/1000 ton-
mile).
Payload = 10 tons for short box vans and 19 tons for other trailers.
Volume = the number of U.S.-directed production volume of vehicles
in the corresponding vehicle family.
UL = the useful life for the regulatory subcategory. The useful life
value for heavy-duty trailers is equal to the 250,000 miles.

    (3) Trailer manufacturers may not generate advanced technology
credits.
    (4) Manufacturers shall sum all negative and positive credits for
each vehicle family within the applicable averaging set to obtain the
total credit balance for the model year before rounding. Calculate the
total credits generated in a model year for each averaging set using
the following equation:

Total averaging set MY credits = [Sigma] Vehicle family credits within
each averaging set

    (5) Trailer manufacturers may not bank credits within an averaging
set but surplus fuel consumption credits from a given model year may be
used to offset deficits from earlier model years.
    (f) Additional credit provisions--(1) Advanced technology credits.
(i) For the Phase 1 program, manufacturers of heavy-duty pickup trucks
and vans, vocational vehicles, tractors and the associated engines
showing improvements in CO2 emissions and fuel consumption
using hybrid vehicles

with regenerative braking, vehicles equipped with Rankine-cycle
engines, electric vehicles and fuel cell vehicles are eligible for
advanced technology credits. Manufacturers shall use sound engineering
judgment to determine the performance of the vehicle or engine with
advanced technology. Advanced technology credits for vehicles or
engines complying with Phase 1 standards may be increased by a 1.5
multiplier. Manufacturers may not apply this multiplier in addition to
any early-credit multipliers. The maximum amount of credits a
manufacturer may bring into the service class group that contains the
heavy-duty pickup and van averaging set is 5.89 [middot] 10\6\ gallons
(for advanced technology credits based upon compression-ignition
engines) or 6.76 [middot] 10\6\ gallons (for advanced technology
credits based upon spark-ignition engines) per model year as specified
in 40 CFR part 86 for heavy-duty pickup trucks and vans, 40 CFR
1036.740 for engines and 40 CFR 1037.740 for tractors and vocational
vehicles. The specified limit does not cap the amount of advanced
technology credits that can be used across averaging sets within the
same service class group. Advanced technology credits can be used to
offset negative credits in the same averaging set or other averaging
sets. A manufacturer must first apply advanced technology credits to
any deficits in the same averaging set before applying them to other
averaging.
    (A) Heavy-duty pickup trucks and vans. For advanced technology
systems (hybrid vehicles with regenerative braking, vehicles equipped
with Rankine-cycle engines and fuel cell vehicles), calculate fleet-
average performance rates consistent with good engineering judgment and
the provisions of 40 CFR 86.1819-14 and 86.1865.
    (B) Tractors and vocational vehicles. For advanced technology
system (hybrid vehicles with regenerative braking, vehicles equipped
with Rankine-cycle engines and fuel cell vehicles), calculate the
advanced technology credits as follows:
    (1) Measure the effectiveness of the advanced system by conducting
A to B testing a vehicle equipped with the advanced system and an
equivalent conventional system in accordance with 40 CFR 1037.615.
    (2) For purposes of this paragraph (f), a conventional vehicle is
considered to be equivalent if it has the same footprint, intended
vehicle service class, aerodynamic drag, and other relevant factors not
directly related to the advanced system powertrain. If there is no
equivalent vehicle, the manufacturer may create and test a prototype
equivalent vehicle. The conventional vehicle is considered Vehicle A,
and the advanced technology vehicle is considered Vehicle B.
    (3) The benefit associated with the advanced system for fuel
consumption is determined from the weighted fuel consumption results
from the chassis tests of each vehicle using the following equation:

Benefit (gallon/1000 ton mile) = Improvement Factor x GEM Fuel
Consumption Result_B

Where:

Improvement Factor = (Fuel Consumption_A-Fuel Consumption_B)/(Fuel
Consumption_A).
Fuel Consumption Rates A and B are the gallons per 1000 ton-mile of
the conventional and advanced vehicles, respectively as measured
under the test procedures specified by EPA. GEM Fuel Consumption
Result B is the estimated gallons per 1000 ton-mile rate resulting
from emission modeling of the advanced vehicle as specified in 40
CFR 1037.520 and Sec.  535.6(b).

    (4) Calculate the benefit in credits using the equation in
paragraph (c) of this section and replacing the term (Std-FEL) with the
benefit.
    (5) For electric vehicles calculate the fuel consumption credits
using an FEL of 0 g/1000 ton-mile.
    (C) Heavy-duty engines. This section specifies how to generate
advanced technology-specific fuel consumption credits for hybrid
powertrains that include energy storage systems and regenerative
braking (including regenerative engine braking) and for engines that
include Rankine-cycle (or other bottoming cycle) exhaust energy
recovery systems.
    (1) Pre-transmission hybrid powertrains are those engine systems
that include features that recover and store energy during engine
motoring operation but not from the vehicle wheels. These powertrains
are tested using the hybrid engine test procedures of 40 CFR part 1065
or using the post-transmission test procedures.
    (2) Post-transmission hybrid powertrains are those powertrains that
include features that recover and store energy from braking at the
vehicle wheels. These powertrains are tested by simulating the chassis
test procedure applicable for hybrid vehicles under 40 CFR 1037.550.
    (3) Test engines that include Rankine-cycle exhaust energy recovery
systems according to the test procedures specified in 40 CFR part 1036,
subpart F, unless EPA approves the manufacturer's alternate procedures.
    (D) Credit calculation. Calculate credits as specified in paragraph
(c) of this section. Credits generated from engines and powertrains
certified under this section may be used in other averaging sets as
described in 40 CFR 1036.740(d).
    (ii) There are no separate credit allowances for advanced
technology vehicles in the Phase 2 program. Instead, vehicle families
containing plug-in battery electric hybrids, all-electric, and fuel
cell vehicles certifying to Phase 2 vocational and tractor standards
may multiply credits by a multiplier of:
    (A) 3.5 times for plug-in hybrid electric vehicles;
    (B) 4.5 times for all-electric vehicles; and
    (C) 5.5 times for fuel cell vehicles.
    (D) Incentivized credits for vehicles equipped with advanced
technologies maintain the same credit flexibilities and restrictions as
conventional credits specified in paragraph (a) of this section during
the Phase 2 program.
    (E) For vocational vehicles and tractors subject to Phase 2
standards, create separate vehicle families if there is a credit
multiplier for advanced technology; group those vehicles together in a
vehicle family if they use the same multiplier.
    (F) For Phase 2 plug-in hybrid electric vehicles and for fuel cells
powered by any fuel other than hydrogen, calculate fuel consumption
credits using an FEL based on equivalent emission measurements from
powertrain testing. Phase 2 advanced-technology credits do not apply
for hybrid vehicles that have no plug-in capability.
    (2) Innovative and off-cycle technology credits. This provision
allows fuel saving innovative and off-cycle engine and vehicle
technologies to generate fuel consumption credits comparable to
CO2 emission credits consistent with the provisions of 40
CFR 86.1819-14(d)(13) (for heavy-duty pickup trucks and vans), 40 CFR
1036.610 (for engines), and 40 CFR 1037.610 (for vocational vehicles
and tractors).
    (i) For model years 2013 through 2020, manufacturers may generate
innovative technology credits for introducing technologies that were
not in-common use for heavy-duty tractor, vocational vehicles or
engines before model year 2010 and that are not reflected in the EPA
specified test procedures. Upon identification and joint approval with
EPA, NHTSA will allow equivalent fuel consumption credits into its
program to those allowed by EPA for manufacturers seeking to obtain
innovative technology credits in

a given model year. Such credits must remain within the same regulatory
subcategory in which the credits were generated. NHTSA will adopt fuel
consumption credits depending upon whether--
    (A) The technology has a direct impact upon reducing fuel
consumption performance; and
    (B) The manufacturer has provided sufficient information to make
sound engineering judgments on the impact of the technology in reducing
fuel consumption performance.
    (ii) For model years 2021 and later, manufacturers may generate
off-cycle technology credits for introducing technologies that are not
reflected in the EPA specified test procedures. Upon identification and
joint approval with EPA, NHTSA will allow equivalent fuel consumption
credits into its program to those allowed by EPA for manufacturers
seeking to obtain innovative technology credits in a given model year.
Such credits must remain within the same regulatory subcategory in
which the credits were generated. NHTSA will adopt fuel consumption
credits depending upon whether--
    (A) The technology meets paragraph (f)(2)(i)(A) and (B) of this
section.
    (B) For heavy-duty pickup trucks and vans, manufacturers using the
5-cycle test to quantify the benefit of a technology are not required
to obtain approval from the agencies to generate results.
    (iii) The following provisions apply to all innovative and off-
cycle technologies:
    (A) Technologies found to be defective, or identified as a part of
NHTSA's safety defects program, and technologies that are not
performing as intended will have the values of approved off-cycle
credits removed from the manufacturer's credit balance.
    (B) Approval granted for innovative and off-cycle technology
credits under NHTSA's fuel efficiency program does not affect or
relieve the obligation to comply with the Vehicle Safety Act (49 U.S.C.
Chapter 301), including the ``make inoperative'' prohibition (49 U.S.C.
30122), and all applicable Federal motor vehicle safety standards
issued thereunder (FMVSSs) (49 CFR part 571). In order to generate off-
cycle or innovative technology credits manufacturers must state--
    (1) That each vehicle equipped with the technology for which they
are seeking credits will comply with all applicable FMVSS(s); and
    (2) Whether or not the technology has a fail-safe provision. If no
fail-safe provision exists, the manufacturer must explain why not and
whether a failure of the innovative technology would affect the safety
of the vehicle.
    (C) Manufacturers requesting approval for innovative technology
credits are required to provide documentation in accordance with 40 CFR
86.1869-12, 1036.610, and 1037.610.
    (D) Credits will be accepted on a one-for-one basis expressed in
terms of gallons in comparison to those approved by EPA.
    (E) For the heavy-duty pickup trucks and vans, the average fuel
consumption will be calculated as a separate credit amount (rounded to
the nearest whole number) using the following equation:

Off-cycle FC credits = (CO2 Credit/CF) x 100 x Production x
VLM

Where:

CO2 Credits = the credit value in grams per mile
determined in 40 CFR 86.1869-12(c)(3), (d)(1), (d)(2) or (d)(3).
CF = conversion factor, which for spark-ignition engines is 8,887
and for compression-ignition engines is 10,180.
Production = the total production volume for the applicable category
of vehicles.
VLM = vehicle lifetime miles, which for 2b-3 vehicles shall be
150,000 for the Phase 2 program.
The term (CO2 Credit/CF) should be rounded to the nearest
0.0001.

    (F) NHTSA will not approve innovative technology credits for
technology that is related to crash-avoidance technologies, safety
critical systems or systems affecting safety-critical functions, or
technologies designed for the purpose of reducing the frequency of
vehicle crashes.
    (iv) Manufacturers normally may not calculate off-cycle credits or
improvement factors under this section for technologies represented by
GEM, but the agencies may allow a manufacturer to do so by averaging
multiple GEM runs for special technologies for which a single GEM run
cannot accurately reflect in-use performance. For example, if a
manufacturer use an idle-reduction technology that is effective 80
percent of the time, the agencies may allow a manufacturer to run GEM
with the technology active and with it inactive, and then apply an 80%
weighting factor to calculate the off-cycle credit or improvement
factor. A may need to perform testing to establish proper weighting
factors or otherwise quantify the benefits of the special technologies.
    (v) A manufacturer may apply the off-cycle provisions of this
paragraph (2) and 40 CFR 1037.610 to trailers as early as model year
2018 as follows:
    (A) A manufacturer may account for weight reduction based on
measured values instead of using the weight reductions specified in 40
CFR 1037.515. Quantify the weight reduction by measuring the weight of
a trailer in a certified configuration and comparing it to the weight
of an equivalent trailer without weight-reduction technologies. This
qualifies as A to B testing this part. Use good engineering judgment to
select an equivalent trailer representing a baseline configuration. Use
the calculated weight reduction in the equation specified in 40 CFR
1037.515 to calculate the trailer's CO2 emission rate and
calculate an equivalent fuel consumption rate.
    (B) If a manufacturer's off-cycle technology reduces emissions and
fuel consumption in a way that is proportional to measured rates as
described in 40 CFR 1037.610(b)(1), multiply the trailer's
CO2 fuel consumption rate by the appropriate improvement
factor.
    (C) If a manufacturer's off-cycle technology does not yield
emission and fuel consumption reductions that are proportional to
measured rates, as described in 40 CFR 1037.610(b)(2), calculate an
adjusted CO2 fuel consumption rate for trailers by
subtracting the appropriate off-cycle credit.
    (vi) Carry-over Approval. Manufacturers may carry-over these
credits into future model years as described below:
    (A) For model years before 2021, manufacturers may continue to use
an approved improvement factor or credit for any appropriate engine or
vehicle family in future model years through 2020.
    (B) For model years 2021 and later, manufacturers may not rely on
an approval for model years before 2021. Manufacturers must separately
request the agencies approval before applying an improvement factor or
credit under this section for 2021 and later engines and vehicle, even
if the agencies approve the improvement factor or credit for similar
engine and vehicle models before model year 2021.
    (C) The following restrictions also apply to manufacturers seeking
to continue to carryover the improvement factor (not the credit value)
if--
    (1) The FEL is generated by GEM or 5-cycle testing;
    (2) The technology is not changed or paired with any other off-
cycle technology;
    (3) The improvement factor only applies to approved vehicle or
engine families;
    (4) The agencies do not expect the technology to be incorporated
into GEM at any point during the Phase 2 program; and

    (D) The documentation to carryover credits that would primarily
justify the difference in fuel efficiency between real world and
compliance protocols is the same for both Phase 1 and Phase 2
compliance protocols. The agencies must approve the justification. If
the agencies do not approve the justification, the manufacturer must
recertify.

Sec.  535.8  Reporting and recordkeeping requirements.

    (a) General requirements. Manufacturers producing heavy-duty
vehicles and engines applicable to fuel consumption standards in Sec.
535.5, for each given model year, must submit the required information
as specified in paragraphs (b) through (h) of this section.
    (1) The information required by this part must be submitted by the
deadlines specified in this section and must be based upon all the
information and data available to the manufacturer 30 days before
submitting information.
    (2) Manufacturers must submit information electronically through
the EPA database system as the single point of entry for all
information required for this national program and both agencies will
have access to the information. In special circumstances, data may not
be able to be received electronically (i.e., during database system
development work). The agencies will inform manufacturer of the
alternatives can be used for submitting information. The format for the
required information will be specified by EPA in coordination with
NHTSA.
    (3) Manufacturers providing incomplete reports missing any of the
required information or providing untimely reports are considered as
not complying with standards (i.e., if good-faith estimates of U.S.-
directed production volumes for EPA certificates of conformity are not
provided) and are liable to pay civil penalties in accordance with 49
U.S.C. 32912.
    (4) Manufacturers certifying a vehicle or engine family using an
FEL or FCL below the applicable fuel consumption standard as described
in Sec.  535.5 may choose not to generate fuel consumption credits for
that family. In which case, the manufacturer is not required to submit
reporting or keep the associated records described in this part for
that family.
    (5) Manufacturers must use good engineering judgment and provide
comparable fuel consumption information to that of the information or
data provided to EPA under 40 CFR 86.1865, 1036.250, 1036.730, 1036.825
1037.250, 1037.730, and 1037.825.
    (6) Any information that must be sent directly to NHTSA. In
instances in which EPA has not created an electronic pathway to receive
the information, the information should be sent through an electronic
portal identified by NHTSA or through the NHTSA CAFE database (i.e.,
information on fuel consumption credit transactions). If hardcopy
documents must be sent, the information should be sent to the Associate
Administrator of Enforcement at 1200 New Jersey Avenue, NVS-200, Office
W45-306, SW., Washington, DC 20590.
    (b) Pre-model year reports. Manufacturers producing heavy-duty
pickup trucks and vans must submit reports in advance of the model year
providing early estimates demonstrating how their fleet(s) would comply
with GHG emissions and fuel consumption standards. Note, the agencies
understand that early model year reports contain estimates that may
change over the course of a model year and that compliance information
manufacturers submit prior to the beginning of a new model year may not
represent the final compliance outcome. The agencies view the necessity
for requiring early model reports as a manufacturer's good faith
projection for demonstrating compliance with emission and fuel
consumption standards.
    (1) Report deadlines. For model years 2013 and later, manufacturer
of heavy-duty pickup trucks and vans complying with voluntary and
mandatory standards must submit a pre-model year report for the given
model year as early as the date of the manufacturer's annual
certification preview meeting with EPA and NHTSA, or prior to
submitting its first application for a certificate of conformity to EPA
in accordance with 40 CFR 86.1819-14(d). For example, a manufacturer
choosing to comply in model year 2014 could submit its pre-model year
report during its precertification meeting which could occur before
January 2, 2013, or could provide its pre-model year report any time
prior to submitting its first application for certification for the
given model year.
    (2) Contents. Each pre-model year report must be submitted
including the following information for each model year.
    (i) A list of each unique subconfiguration in the manufacturer's
fleet describing the make and model designations, attribute based-
values (i.e., GVWR, GCWR, Curb Weight and drive configurations) and
standards;
    (ii) The emission and fuel consumption fleet average standard
derived from the unique vehicle configurations;
    (iii) The estimated vehicle configuration, test group and fleet
production volumes;
    (iv) The expected emissions and fuel consumption test group results
and fleet average performance;
    (v) If complying with MY 2013 fuel consumption standards, a
statement must be provided declaring that the manufacturer is
voluntarily choosing to comply early with the EPA and NHTSA programs.
The manufacturers must also acknowledge that once selected, the
decision cannot be reversed and the manufacturer will continue to
comply with the fuel consumption standards for subsequent model years
for all the vehicles it manufacturers in each regulatory category for a
given model year;
    (vi) If complying with MYs 2014, 2015 or 2016 fuel consumption
standards, a statement must be provided declaring whether the
manufacturer will use fixed or increasing standards in accordance with
Sec.  535.5(a). The manufacturer must also acknowledge that once
selected, the decision cannot be reversed and the manufacturer must
continue to comply with the same alternative for subsequent model years
for all the vehicles it manufacturers in each regulatory category for a
given model year;
    (vii) If complying with MYs 2014 or 2015 fuel consumption
standards, a statement must be provided declaring that the manufacturer
is voluntarily choosing to comply with NHTSA's voluntary fuel
consumption standards in accordance with Sec.  535.5(a)(4). The
manufacturers must also acknowledge that once selected, the decision
cannot be reversed and the manufacturer will continue to comply with
the fuel consumption standards for subsequent model years for all the
vehicles it manufacturers in each regulatory category for a given model
year;
    (viii) The list of Class 2b and 3 incomplete vehicles (cab-complete
or chassis complete vehicles) and the method used to certify these
vehicles as complete pickups and vans identifying the most similar
complete sister- or other complete vehicles used to derive the target
standards and performance test results;
    (ix) The list of Class 4 and 5 incomplete and complete vehicles and
the method use to certify these vehicles as complete pickups and vans
identifying the most similar complete or sister vehicles used to derive
the target standards and performance test results;
    (x) List of loose engines included in the heavy-duty pickup and van
category

and the list of vehicles used to derive target standards and
performance test results;
    (xi) Copy of any notices a vehicle manufacturer sends to the engine
manufacturer to notify the engine manufacturers that their engines are
subject to emissions and fuel consumption standards and that it intends
to use their engines in excluded vehicles;
    (xii) A fuel consumption credit plan as specified Sec.  535.7(a)
identifying the manufacturers estimated credit balances, planned credit
flexibilities (i.e., credit balances, planned credit trading,
innovative, advanced and early credits and etc.) and if needed a credit
deficit plan demonstrating how it plans to resolve any credit deficits
that might occur for a model year within a period of up to three model
years after that deficit has occurred; and
    (xiii) The supplemental information specified in paragraph (h) of
this section.

    Note to paragraph (b): NHTSA may also ask a manufacturer to
provide additional information if necessary to verify compliance
with the fuel consumption requirements of this section.

    (c) Applications for certificate of conformity. Manufacturers
producing vocational vehicles, tractors and heavy-duty engines are
required to submit applications for certificates of conformity to EPA
in accordance with 40 CFR 1036.205 and 1037.205 in advance of
introducing vehicles for commercial sale. Applications contain early
model year information demonstrating how manufacturers plan to comply
with GHG emissions. For model years 2013 and later, manufacturers of
vocational vehicles, tractors and engine complying with NHTSA's
voluntary and mandatory standards must submit applications for
certificates of conformity in accordance through the EPA database
including both GHG emissions and fuel consumption information for each
given model year.
    (1) Submission deadlines. Applications are primarily submitted in
advance of the given model year to EPA but cannot be submitted any
later than December 31 of the given model year.
    (2) Contents. Each application for certificates of conformity
submitted to EPA must include the following equivalent fuel
consumption.
    (i) Equivalent fuel consumption values for emissions CO2
FCLs values used to certify each engine family in accordance with 40
CFR 1036.205(e). This provision applies only to manufacturers producing
heavy-duty engines.
    (ii) Equivalent fuel consumption values for emission CO2
data engines used to comply with emission standards in 40 CFR 1036.108.
This provision applies only to manufacturers producing heavy-duty
engines.
    (iii) Equivalent fuel consumption values for emissions
CO2 FELs values used to certify each vehicle families or
subfamilies in accordance with 40 CFR 1037.205(k). This provision
applies only to manufacturers producing vocational vehicles and
tractors.
    (iv) Report modeling results for ten configurations in terms of
CO2 emissions and equivalent fuel consumption results in
accordance with 40 CFR 1037.205(o). Include modeling inputs and
detailed descriptions of how they were derived. This provision applies
only to manufacturers producing vocational vehicles and tractors.
    (v) Credit plans including the fuel consumption credit plan
described in Sec.  535.7(a).
    (3) Additional supplemental information. Manufacturers are required
to submit additional information as specified in paragraph (h) of this
section for the NHTSA program before or at the same time it submits its
first application for a certificate of conformity to EPA. Under limited
conditions, NHTSA may also ask a manufacturer to provide additional
information directly to the Administrator if necessary to verify the
fuel consumption requirements of this regulation.
    (d) End of the Year (EOY) and Final reports. Heavy-duty vehicle and
engine manufacturers participating in the ABT program are required to
submit EOY and final reports containing information for NHTSA as
specified in paragraph (d)(2) of this section and in accordance with 40
CFR 86.1865, 1036.730, and 1037.730. Only manufacturers without credit
deficits may decide not to participate in the ABT or may waive the
requirement to send an EOY report. The EOY and final reports are used
to review a manufacturer's preliminary or final compliance information
and to identify manufacturers that might have a credit deficit for the
given model year. For model years 2013 and later, heavy-duty vehicle
and engine manufacturers complying with NHTSA's voluntary and mandatory
standards must submit EOY and final reports through the EPA database
including both GHG emissions and fuel consumption information for each
given model year.
    (1) Report deadlines. (i) For model year 2013 and later, heavy-duty
vehicle and engine manufacturers complying with NHTSA voluntary and
mandatory standards must submit EOY reports through the EPA database
including both GHG emissions and fuel consumption information within 90
days after the end of the given model year and no later than March 31
of the next calendar year.
    (ii) For model year 2013 and later, heavy-duty vehicle and engine
manufacturers complying with NHTSA voluntary and mandatory standards
must submit final reports through the EPA database including both GHG
emissions and fuel consumption information within 270 days after the
end of the given model year and no later than September 30 of the next
calendar year.
    (iii) A manufacturer may ask NHTSA and EPA to extend the deadline
of a final report by up to 30 days. A manufacturer unable to provide,
and requesting to omit an emissions rate or fuel consumption value from
a final report must obtain approval from the agencies prior to the
submission deadline of its final report.
    (iv) If a manufacturer expects differences in the information
reported between the EOY and the final year report specified in 40 CFR
1036.730 and 1037.730, it must provide the most up-to-date fuel
consumption projections in its final report and identify the
information as preliminary.
    (v) If the manufacturer cannot provide any of the required fuel
consumption information, it must state the specific reason for the
insufficiency and identify the additional testing needed or explain
what analytical methods are believed by the manufacturer will be
necessary to eliminate the insufficiency and certify that the results
will be available for the final report.
    (2) Contents. Each EOY and final report must be submitted including
the following fuel consumption information for each model year. EOY
reports contain preliminary final estimates and final reports must
include the manufacturer's final compliance information.
    (i) Engine and vehicle family designations and averaging sets.
    (ii) Engine and vehicle regulatory subcategory and fuel consumption
standards including any alternative standards used.
    (iii) Engine and vehicle family FCLs and FELs in terms of fuel
consumption.
    (iv) Production volumes for engines and vehicles.
    (v) A summary as specified in paragraph (g)(7) of this section
describing the vocational vehicles and vocational tractors that were
exempted as heavy-duty off-road vehicles. This applies to manufacturers
participating

and not participating in the ABT program.
    (vi) A summary describing any advanced or innovative technology
engines or vehicles including alternative fueled vehicles that were
produced for the model year identifying the approaches used to
determinate compliance and the production volumes.
    (vii) A list of each unique subconfiguration included in a
manufacturer's fleet of heavy-duty pickup trucks and vans identifying
the attribute based-values (GVWR, GCWR, Curb Weight, and drive
configurations) and standards. This provision applies only to
manufacturers producing heavy-duty pickup trucks and vans.
    (viii) The fuel consumption fleet average standard derived from the
unique vehicle configurations. This provision applies only to
manufacturers producing heavy-duty pickup trucks and vans.
    (ix) The subconfiguration and test group production volumes. This
provision applies only to manufacturers producing heavy-duty pickup
trucks and vans.
    (x) The fuel consumption test group results and fleet average
performance. This provision applies only to manufacturers producing
heavy-duty pickup trucks and vans.
    (xi) Manufacturers may correct errors in EOY and final reports as
follows:
    (A) Manufacturers may correct any errors in their end-of-year
report when preparing the final report, as long as manufacturers send
us the final report by the time it is due.
    (B) If manufacturers or the agencies determine within 270 days
after the end of the model year that errors mistakenly decreased he
manufacturer's balance of fuel consumption credits, manufacturers may
correct the errors and recalculate the balance of its fuel consumption
credits. Manufacturers may not make any corrections for errors that are
determined more than 270 days after the end of the model year. If
manufacturers report a negative balance of fuel consumption credits,
NHTSA may disallow corrections under this paragraph (d)(2)(xi)(B).
    (C) If manufacturers or the agencies determine any time that errors
mistakenly increased its balance of fuel consumption credits,
manufacturers must correct the errors and recalculate the balance of
fuel consumption credits.
    (xii) Under limited conditions, NHTSA may also ask a manufacturer
to provide additional information directly to the Administrator if
necessary to verify the fuel consumption requirements of this
regulation.
    (e) Amendments to applications for certification. At any time, a
manufacturer modifies an application for certification in accordance
with 40 CFR 1036.225 and 1037.225, it must submit GHG emissions changes
with equivalent fuel consumption values for the information required in
paragraphs (b) through (e) and (h) of this section.
    (f) Confidential information. Manufacturers must submit a request
for confidentiality with each electronic submission specifying any part
of the for information or data in a report that it believes should be
withheld from public disclosure as trade secret or other confidential
business information. Information submitted to EPA should follow EPA
guidelines for treatment of confidentiality. Requests for confidential
treatment for information submitted to NHTSA must be filed in
accordance with the requirements of 49 CFR part 512, including
submission of a request for confidential treatment and the information
for which confidential treatment is requested as specified by part 512.
For any information or data requested by the manufacturer to be
withheld under 5 U.S.C. 552(b)(4) and 49 U.S.C. 32910(c), the
manufacturer shall present arguments and provide evidence in its
request for confidentiality demonstrating that--
    (1) The item is within the scope of 5 U.S.C. 552(b)(4) and 49
U.S.C. 32910(c);
    (2) The disclosure of the information at issue would cause
significant competitive damage;
    (3) The period during which the item must be withheld to avoid that
damage; and
    (4) How earlier disclosure would result in that damage.
    (g) Additional required information. The following additional
information is required to be submitted through the EPA database. NHTSA
reserves the right to ask a manufacturer to provide additional
information if necessary to verify the fuel consumption requirements of
this regulation.
    (1) Small businesses. For model years 2013 through 2020, vehicles
and engines produced by small business manufacturers meeting the
criteria in 13 CFR 121.201 are exempted from the requirements of this
part. Qualifying small business manufacturers must notify EPA and NHTSA
Administrators before importing or introducing into U.S. commerce
exempted vehicles or engines. This notification must include a
description of the manufacturer's qualification as a small business
under 13 CFR 121.201. Manufacturers must submit this notification to
EPA, and EPA will provide the notification to NHTSA. The agencies may
review a manufacturer's qualification as a small business manufacturer
under 13 CFR 121.201.
    (2) Emergency vehicles. For model years 2021 and later, emergency
vehicles produced by heavy-duty pickup truck and van manufacturers are
exempted except those produced by manufacturers voluntarily complying
with standards in Sec.  535.5(a). Manufacturers must notify the
agencies in writing if using the provisions in Sec.  535.5(a) to
produce exempted emergency vehicles in a given model year, either in
the report specified in 40 CFR 86.1865 or in a separate submission.
    (3) Early introduction. The provision applies to manufacturers
seeking to comply early with the NHTSA's fuel consumption program prior
to model year 2014. The manufacturer must send the request to EPA
before submitting its first application for a certificate of
conformity.
    (4) NHTSA voluntary compliance model years. Manufacturers must
submit a statement declaring whether the manufacturer chooses to comply
voluntarily with NHTSA's fuel consumption standards for model years
2014 through 2015. The manufacturers must acknowledge that once
selected, the decision cannot be reversed and the manufacturer will
continue to comply with the fuel consumption standards for subsequent
model years. The manufacturer must send the statement to EPA before
submitting its first application for a certificate of conformity.
    (5) Alternative engine standards. Manufacturers choosing to comply
with the alternative engine standards must notify EPA and NHTSA of
their choice and include in that notification a demonstration that it
has exhausted all available credits and credit opportunities. The
manufacturer must send the statement to EPA before submitting its EOY
report.
    (6) Alternate phase-in. Manufacturers choosing to comply with the
alternative engine phase-in must notify EPA and NHTSA of their choice.
The manufacturer must send the statement to EPA before submitting its
first application for a certificate of conformity.
    (7) Off-road exclusion (tractors and vocational vehicles only). (i)
Tractors and vocational vehicles primarily designed to perform work in
off-road environments such as forests, oil fields, and construction
sites may be exempted without request from the requirements of this
regulation as specified in 49 CFR 523.2 and Sec.  535.5(b). Within 90
days after the end of each model year,

manufacturers must send EPA and NHTSA through the EPA database a report
with the following information:
    (A) A description of each excluded vehicle configuration, including
an explanation of why it qualifies for this exclusion.
    (B) The number of vehicles excluded for each vehicle configuration.
    (ii) A manufacturer having an off-road vehicle failing to meet the
criteria under the agencies' off-road exclusions will be allowed to
request an exclusion of such a vehicle from EPA and NHTSA. The approval
will be granted through the certification process for the vehicle
family and will be done in collaboration between EPA and NHTSA in
accordance with the provisions in 40 CFR 1037.150, 1037.210, and
1037.631.
    (8) Vocational tractors. Tractors intended to be used as vocational
tractors may comply with vocational vehicle standards in Sec.
535.5(b). Manufacturers classifying tractors as vocational tractors
must provide a description of how they meet the qualifications in their
applications for certificates of conformity as specified in 40 CFR
1037.205.
    (9) Approval of alternate methods to determine drag coefficients
(tractors only). Manufacturers seeking to use alternative methods to
determine aerodynamic drag coefficients must provide a request and gain
approval by EPA in accordance with 40 CFR 1037.525. The manufacturer
must send the request to EPA before submitting its first application
for a certificate of conformity.
    (10) Innovative and off-cycle technology credits. Manufacturers
pursuing innovative and off-cycle technology credits must submit
information to the agencies and may be subject to a public evaluation
process in which the public would have opportunity for comment if the
manufacturer is not using a test procedure in accordance with 40 CFR
1037.610(c). Whether the approach involves on-road testing, modeling,
or some other analytical approach, the manufacturer would be required
to present a final methodology to EPA and NHTSA. EPA and NHTSA would
approve the methodology and credits only if certain criteria were met.
Baseline emissions and fuel consumption and control emissions and fuel
consumption would need to be clearly demonstrated over a wide range of
real world driving conditions and over a sufficient number of vehicles
to address issues of uncertainty with the data. Data would need to be
on a vehicle model-specific basis unless a manufacturer demonstrated
model-specific data was not necessary. The agencies may publish a
notice of availability in the Federal Register notifying the public of
a manufacturer's proposed alternative off-cycle credit calculation
methodology and provide opportunity for comment. Any notice will
include details regarding the methodology, but not include any
Confidential Business Information.
    (11) Credit trades. If a manufacturer trades fuel consumption
credits, it must send EPA and NHTSA a fuel consumption credit plan as
specified in Sec.  535.7(a) and provide the following additional
information:
    (i) As the seller, the manufacturer must include the following
information:
    (A) The corporate names of the buyer and any brokers.
    (B) A copy of any contracts related to the trade.
    (C) The averaging set corresponding to the engine families that
generated fuel consumption credits for the trade, including the number
of fuel consumption credits from each averaging set.
    (ii) As the buyer, the manufacturer or entity must include the
following information in its report:
    (A) The corporate names of the seller and any brokers.
    (B) A copy of any contracts related to the trade.
    (C) How the manufacturer or entity intends to use the fuel
consumption credits, including the number of fuel consumption credits
it intends to apply for each averaging set.
    (D) A copy of the contract with signatures from both the buyer and
the seller.
    (12) Production reports. Within 90 days after the end of the model
year and no later than March 31st, manufacturers participating and not-
participating in the ABT program must send to EPA and NHTSA a report
including the total U.S.-directed production volume of vehicles it
produced in each vehicle and engine family during the model year (based
on information available at the time of the report) as required by 40
CFR 1036.250 and 1037.250. Trailer manufacturers must include a
separate report including the total U.S.-directed production volume of
excluded trailers as allowed by Sec.  535.3(e). Each manufacturer shall
report by vehicle or engine identification number and by configuration
and identify the subfamily identifier. Report uncertified vehicles sold
to secondary vehicle manufacturers. Small business manufacturers may
omit reporting. Identify any differences between volumes included for
EPA but excluded for NHTSA.
    (13) Transition to engine-based model years. The following
provisions apply for production and ABT reports during the transition
to engine-based model year determinations for tractors and vocational
vehicles in 2020 and 2021:
    (i) If a manufacturer installs model year 2020 or earlier engines
in the manufacturer's vehicles in calendar year 2020, include all those
Phase 1 vehicles in its production and ABT reports related to model
year 2020 compliance, although the agencies may require the
manufacturer to identify these separately from vehicles produced in
calendar year 2019.
    (ii) If a manufacturer installs model year 2020 engines in its
vehicles in calendar year 2021, submit production and ABT reports for
those Phase 1 vehicles separate from the reports it submits for Phase 2
vehicles with model year 2021 engines.
    (h) Public information. Based upon information submitted by
manufacturers and EPA, NHTSA will publish fuel consumption standards
and performance results.
    (i) Information received from EPA. NHTSA will receive information
from EPA as specified in 40 CFR 1036.755 and 1037.755.
    (j) Recordkeeping. NHTSA has the same recordkeeping requirements as
the EPA, specified in 40 CFR 86.1865-12(k), 1036.250, 1036.735,
1036.825, 1037.250, 1037.735, and 1037.825. The agencies each reserve
the right to request information contained in reports separately.
    (1) Manufacturers must organize and maintain records for NHTSA as
described in this section. NHTSA in conjunction or separately from EPA
may review a manufacturers records at any time.
    (2) Keep the records required by this section for at least eight
years after the due date for the end-of-year report. Manufacturers may
not use fuel consumption credits for any engines if it does not keep
all the records required under this section. Manufacturers must
therefore keep these records to continue to bank valid credits. Store
these records in any electronic format and on any media, as long as the
manufacturer can promptly send the agencies organized records in
English if the agencies ask for them. Manufacturers must keep these
records readily available. NHTSA may review them at any time.
    (3) Keep a copy of the reports required in Sec.  535.8 and 40 CFR
1036.725,1036.730, 1037.725 and 1037.730.
    (4) Keep records of the vehicles and engine identification number
(usually the serial number) for each vehicle and

engine produced that generates or uses fuel consumption credits under
the ABT program. Manufacturers may identify these numbers as a range.
If manufacturers change the FEL after the start of production, identify
the date started using each FEL/FCL and the range of vehicles or engine
identification numbers associated with each FEL/FCL. Manufacturers must
also identify the purchaser and destination for each vehicle and engine
produced to the extent this information is available.
    (5) The agencies may require manufacturers to keep additional
records or to send relevant information not required by this section in
accordance with each agency's authority.
    (6) If collected separately and NHTSA finds that information is
provided fraudulent or grossly negligent or otherwise provided in bad
faith, the manufacturer may be liable to civil penalties in accordance
with each agency's authority.

Sec.  535.9  Enforcement approach.

    (a) Compliance. (1) Each year NHTSA will assess compliance with
fuel consumption standards as specified in Sec.  535.10.
    (i) NHTSA may conduct audits or verification testing prior to first
sale throughout a given model year or after the model year in order to
validate data received from manufacturers and will discuss any
potential issues with EPA and the manufacturer. Audits may periodically
be performed to confirm manufacturers credit balances or other credit
transactions.
    (ii) NHTSA may also conduct field inspections either at
manufacturing plants or at new vehicle dealerships to validate data
received from manufacturers. Field inspections will be carried out in
order to validate the condition of vehicles, engines or technology
prior to first commercial sale to verify each component's certified
configuration as initially built. NHTSA reserves the right to conduct
inspections at other locations but will target only those components
for which a violation would apply to OEMs and not the fleets or vehicle
owners. Compliance inspections could be carried out through a number of
approaches including during safety inspections or during compliance
safety testing.
    (iii) NHTSA will conduct audits and inspections in the same manner
and, when possible, in conjunction with EPA. NHTSA will also attempt to
coordinate inspections with EPA and share results.
    (iv) Documents collected under NHTSA safety authority may be used
to support fuel efficiency audits and inspections.
    (2) At the end of each model year NHTSA will confirm a
manufacturer's fleet or family performance values against the
applicable standards and, if a manufacturer uses a credit flexibility,
the amount of credits in each averaging set. The averaging set balance
is based upon the engines or vehicles performance above or below the
applicable regulatory subcategory standards in each respective
averaging set and any credits that are traded into or out of an
averaging set during the model year.
    (i) If the balance is positive, the manufacturer is designated as
having a credit surplus.
    (ii) If the balance is negative, the manufacturer is designated as
having a credit deficit.
    (iii) NHTSA will provide notification to each manufacturer
confirming its credit balance(s) after the end of each model year
directly or through EPA.
    (3) Manufacturer are required to confirm the negative balance and
submit a fuel consumption credit plan as specified in Sec.  535.7(a)
along with supporting documentation indicating how it will allocate
existing credits or earn (providing information on future vehicles,
engines or technologies), and/or acquire credits, or else be liable for
a civil penalty as determined in paragraph (b) of this section. The
manufacturer must submit the information within 60 days of receiving
agency notification.
    (4) Credit shortfall within an averaging set may be carried forward
only three years, and if not offset by earned or traded credits, the
manufacturer may be liable for a civil penalty as described in
paragraph (b) of this section.
    (5) Credit allocation plans received from a manufacturer will be
reviewed and approved by NHTSA. NHTSA will approve a credit allocation
plan unless it determines that the proposed credits are unavailable or
that it is unlikely that the plan will result in the manufacturer
earning or acquiring sufficient credits to offset the subject credit
shortfall. In the case where a manufacturer submits a plan to acquire
future model year credits earned by another manufacturer, NHTSA will
require a signed agreement by both manufacturers to initiate a review
of the plan. If a plan is approved, NHTSA will revise the respective
manufacturer's credit account accordingly by identifying which existing
or traded credits are being used to address the credit shortfall, or by
identifying the manufacturer's plan to earn future credits for
addressing the respective credit shortfall. If a plan is rejected,
NHTSA will notify the respective manufacturer and request a revised
plan. The manufacturer must submit a revised plan within 14 days of
receiving agency notification. The agency will provide a manufacturer
one opportunity to submit a revised credit allocation plan before it
initiates civil penalty proceedings.
    (6) For purposes of this regulation, NHTSA will treat the use of
future credits for compliance, as through a credit allocation plan, as
a deferral of civil penalties for non-compliance with an applicable
fuel consumption standard.
    (7) If NHTSA receives and approves a manufacturer's credit
allocation plan to earn future credits within the following three model
years in order to comply with regulatory obligations, NHTSA will defer
levying civil penalties for non-compliance until the date(s) when the
manufacturer's approved plan indicates that credits will be earned or
acquired to achieve compliance, and upon receiving confirmed
CO2 emissions and fuel consumption data from EPA. If the
manufacturer fails to acquire or earn sufficient credits by the plan
dates, NHTSA will initiate civil penalty proceedings.
    (8) In the event that NHTSA fails to receive or is unable to
approve a plan for a non-compliant manufacturer due to insufficiency or
untimeliness, NHTSA may initiate civil penalty proceedings.
    (9) In the event that a manufacturer fails to report accurate fuel
consumption data for vehicles or engines covered under this rule,
noncompliance will be assumed until corrected by submission of the
required data, and NHTSA may initiate civil penalty proceedings.
    (10) If EPA suspends or revoke a certificate of conformity as
specified in 40 CFR 1036.255 or 1037.255, and a manufacturer is unable
to take a corrective action allowed by EPA, noncompliance will be
assumed, and NHTSA may initiate civil penalty proceedings or revoke
fuel consumption credits.
    (b) Civil penalties--(1) Generally. NHTSA may assess a civil
penalty for any violation of this part under 49 U.S.C. 32902(k). This
section states the procedures for assessing civil penalties for
violations of Sec.  535.3(h). The provisions of 5 U.S.C. 554, 556, and
557 do not apply to any proceedings conducted pursuant to this section.
    (2) Initial determination of noncompliance. An action for civil
penalties is commenced by the execution of a Notice of Violation. A
determination by NHTSA's Office of

Enforcement of noncompliance with applicable fuel consumption standards
utilizing the certified and reported CO2 emissions and fuel
consumption data provided by the Environmental Protection Agency as
described in this part, and after considering all the flexibilities
available under Sec.  535.7, underlies a Notice of Violation. If NHTSA
Enforcement determines that a manufacturer's averaging set of vehicles
or engines fails to comply with the applicable fuel consumption
standard(s) by generating a credit shortfall, the incomplete vehicle,
complete vehicle or engine manufacturer, as relevant, shall be subject
to a civil penalty.
    (3) Numbers of violations and maximum civil penalties. Any
violation shall constitute a separate violation with respect to each
vehicle or engine within the applicable regulatory averaging set. The
maximum civil penalty is not more than $37,500.00 per vehicle or
engine. The maximum civil penalty under this section for a related
series of violations shall be determined by multiplying $37,500.00
times the vehicle or engine production volume for the model year in
question within the regulatory averaging set. NHTSA may adjust this
civil penalty amount to account for inflation.
    (4) Factors for determining penalty amount. In determining the
amount of any civil penalty proposed to be assessed or assessed under
this section, NHTSA shall take into account the gravity of the
violation, the size of the violator's business, the violator's history
of compliance with applicable fuel consumption standards, the actual
fuel consumption performance related to the applicable standards, the
estimated cost to comply with the regulation and applicable standards,
the quantity of vehicles or engines not complying, and the effect of
the penalty on the violator's ability to continue in business. The
``estimated cost to comply with the regulation and applicable
standards,'' will be used to ensure that penalties for non-compliance
will not be less than the cost of compliance.
    (5) NHTSA enforcement report of determination of non-compliance.
(i) If NHTSA Enforcement determines that a violation has occurred,
NHTSA Enforcement may prepare a report and send the report to the NHTSA
Chief Counsel.
    (ii) The NHTSA Chief Counsel will review the report prepared by
NHTSA Enforcement to determine if there is sufficient information to
establish a likely violation.
    (iii) If the Chief Counsel determines that a violation has likely
occurred, the Chief Counsel may issue a Notice of Violation to the
party.
    (iv) If the Chief Counsel issues a Notice of Violation, he or she
will prepare a case file with recommended actions. A record of any
prior violations by the same party shall be forwarded with the case
file.
    (6) Notice of violation. (i) The Notice of Violation will contain
the following information:
    (A) The name and address of the party;
    (B) The alleged violation(s) and the applicable fuel consumption
standard(s) violated;
    (C) The amount of the proposed penalty and basis for that amount;
    (D) The place to which, and the manner in which, payment is to be
made;
    (E) A statement that the party may decline the Notice of Violation
and that if the Notice of Violation is declined within 30 days of the
date shown on the Notice of Violation, the party has the right to a
hearing, if requested within 30 days of the date shown on the Notice of
Violation, prior to a final assessment of a penalty by a Hearing
Officer; and
    (F) A statement that failure to either pay the proposed penalty or
to decline the Notice of Violation and request a hearing within 30 days
of the date shown on the Notice of Violation will result in a finding
of violation by default and that NHTSA will proceed with the civil
penalty in the amount proposed on the Notice of Violation without
processing the violation under the hearing procedures set forth in this
subpart.
    (ii) The Notice of Violation may be delivered to the party by--
    (A) Mailing to the party (certified mail is not required);
    (B) Use of an overnight or express courier service; or
    (C) Facsimile transmission or electronic mail (with or without
attachments) to the party or an employee of the party.
    (iii) At any time after the Notice of Violation is issued, NHTSA
and the party may agree to reach a compromise on the payment amount.
    (iv) Once a penalty amount is paid in full, a finding of ``resolved
with payment'' will be entered into the case file.
    (v) If the party agrees to pay the proposed penalty, but has not
made payment within 30 days of the date shown on the Notice of
Violation, NHTSA will enter a finding of violation by default in the
matter and NHTSA will proceed with the civil penalty in the amount
proposed on the Notice of Violation without processing the violation
under the hearing procedures set forth in this subpart.
    (vi) If within 30 days of the date shown on the Notice of Violation
a party fails to pay the proposed penalty on the Notice of Violation,
and fails to request a hearing, then NHTSA will enter a finding of
violation by default in the case file, and will assess the civil
penalty in the amount set forth on the Notice of Violation without
processing the violation under the hearing procedures set forth in this
subpart.
    (vii) NHTSA's order assessing the civil penalty following a party's
default is a final agency action.
    (7) Hearing Officer. (i) If a party timely requests a hearing after
receiving a Notice of Violation, a Hearing Officer shall hear the case.
    (ii) The Hearing Officer will be appointed by the NHTSA
Administrator, and is solely responsible for the case referred to him
or her. The Hearing Officer shall have no other responsibility, direct
or supervisory, for the investigation of cases referred for the
assessment of civil penalties. The Hearing Officer shall have no duties
related to the light-duty fuel economy or medium- and heavy-duty fuel
efficiency programs.
    (iii) The Hearing Officer decides each case on the basis of the
information before him or her.
    (8) Initiation of action before the Hearing Officer. (i) After the
Hearing Officer receives the case file from the Chief Counsel, the
Hearing Officer notifies the party in writing of--
    (A) The date, time, and location of the hearing and whether the
hearing will be conducted telephonically or at the DOT Headquarters
building in Washington, DC;
    (B) The right to be represented at all stages of the proceeding by
counsel as set forth in paragraph (b)(9) of this section; and
    (C) The right to a free copy of all written evidence in the case
file.
    (ii) On the request of a party, or at the Hearing Officer's
direction, multiple proceedings may be consolidated if at any time it
appears that such consolidation is necessary or desirable.
    (9) Counsel. A party has the right to be represented at all stages
of the proceeding by counsel. A party electing to be represented by
counsel must notify the Hearing Officer of this election in writing,
after which point the Hearing Officer will direct all further
communications to that counsel. A party represented by counsel bears
all of its own attorneys' fees and costs.
    (10) Hearing location and costs. (i) Unless the party requests a
hearing at which the party appears before the

Hearing Officer in Washington, DC, the hearing may be held
telephonically. In Washington, DC, the hearing is held at the
headquarters of the U.S. Department of Transportation.
    (ii) The Hearing Officer may transfer a case to another Hearing
Officer at a party's request or at the Hearing Officer's direction.
    (iii) A party is responsible for all fees and costs (including
attorneys' fees and costs, and costs that may be associated with travel
or accommodations) associated with attending a hearing.
    (11) Hearing procedures. (i) There is no right to discovery in any
proceedings conducted pursuant to this subpart.
    (ii) The material in the case file pertinent to the issues to be
determined by the Hearing Officer is presented by the Chief Counsel or
his or her designee.
    (iii) The Chief Counsel may supplement the case file with
information prior to the hearing. A copy of such information will be
provided to the party no later than three business days before the
hearing.
    (iv) At the close of the Chief Counsel's presentation of evidence,
the party has the right to examine respond to and rebut material in the
case file and other information presented by the Chief Counsel. In the
case of witness testimony, both parties have the right of cross-
examination.
    (v) In receiving evidence, the Hearing Officer is not bound by
strict rules of evidence. In evaluating the evidence presented, the
Hearing Officer must give due consideration to the reliability and
relevance of each item of evidence.
    (vi) At the close of the party's presentation of evidence, the
Hearing Officer may allow the introduction of rebuttal evidence that
may be presented by the Chief Counsel.
    (vii) The Hearing Officer may allow the party to respond to any
rebuttal evidence submitted.
    (viii) After the evidence in the case has been presented, the Chief
Counsel and the party may present arguments on the issues in the case.
The party may also request an opportunity to submit a written statement
for consideration by the Hearing Officer and for further review. If
granted, the Hearing Officer shall allow a reasonable time for
submission of the statement and shall specify the date by which it must
be received. If the statement is not received within the time
prescribed, or within the limits of any extension of time granted by
the Hearing Officer, it need not be considered by the Hearing Officer.
    (ix) A verbatim transcript of the hearing will not normally be
prepared. A party may, solely at its own expense, cause a verbatim
transcript to be made. If a verbatim transcript is made, the party
shall submit two copies to the Hearing Officer not later than 15 days
after the hearing. The Hearing Officer shall include such transcript in
the record.
    (12) Determination of violations and assessment of civil penalties.
(i) Not later than 30 days following the close of the hearing, the
Hearing Officer shall issue a written decision on the Notice of
Violation, based on the hearing record. This may be extended by the
Hearing officer if the submissions by the Chief Counsel or the party
are voluminous. The decision shall address each alleged violation, and
may do so collectively. For each alleged violation, the decision shall
find a violation or no violation and provide a basis for the finding.
The decision shall set forth the basis for the Hearing Officer's
assessment of a civil penalty, or decision not to assess a civil
penalty. In determining the amount of the civil penalty, the gravity of
the violation, the size of the violator's business, the violator's
history of compliance with applicable fuel consumption standards, the
actual fuel consumption performance related to the applicable standard,
the estimated cost to comply with the regulation and applicable
standard, the quantity of vehicles or engines not complying, and the
effect of the penalty on the violator's ability to continue in
business. The assessment of a civil penalty by the Hearing Officer
shall be set forth in an accompanying final order. The Hearing
Officer's written final order is a final agency action.
    (ii) If the Hearing Officer assesses civil penalties in excess of
$1,000,000, the Hearing Officer's decision shall contain a statement
advising the party of the right to an administrative appeal to the
Administrator within a specified period of time. The party is advised
that failure to submit an appeal within the prescribed time will bar
its consideration and that failure to appeal on the basis of a
particular issue will constitute a waiver of that issue in its appeal
before the Administrator.
    (iii) The filing of a timely and complete appeal to the
Administrator of a Hearing Officer's order assessing a civil penalty
shall suspend the operation of the Hearing Officer's penalty, which
shall no longer be a final agency action.
    (iv) There shall be no administrative appeals of civil penalties
assessed by a Hearing Officer of less than $1,000,000.
    (13) Appeals of civil penalties in excess of $1,000,000. (i) A
party may appeal the Hearing Officer's order assessing civil penalties
over $1,000,000 to the Administrator within 21 days of the date of the
issuance of the Hearing Officer's order.
    (ii) The Administrator will review the decision of the Hearing
Officer de novo, and may affirm the decision of the hearing officer and
assess a civil penalty, or
    (iii) The Administrator may--
    (A) Modify a civil penalty;
    (B) Rescind the Notice of Violation; or
    (C) Remand the case back to the Hearing Officer for new or
additional proceedings.
    (iv) In the absence of a remand, the decision of the Administrator
in an appeal is a final agency action.
    (14) Collection of assessed or compromised civil penalties. (i)
Payment of a civil penalty, whether assessed or compromised, shall be
made by check, postal money order, or electronic transfer of funds, as
provided in instructions by the agency. A payment of civil penalties
shall not be considered a request for a hearing.
    (ii) The party must remit payment of any assessed civil penalty to
NHTSA within 30 days after receipt of the Hearing Officer's order
assessing civil penalties, or, in the case of an appeal to the
Administrator, within 30 days after receipt of the Administrator's
decision on the appeal.
    (iii) The party must remit payment of any compromised civil penalty
to NHTSA on the date and under such terms and conditions as agreed to
by the party and NHTSA. Failure to pay may result in NHTSA entering a
finding of violation by default and assessing a civil penalty in the
amount proposed in the Notice of Violation without processing the
violation under the hearing procedures set forth in this part.
    (c) Changes in corporate ownership and control. Manufacturers must
inform NHTSA of corporate relationship changes to ensure that credit
accounts are identified correctly and credits are assigned and
allocated properly.
    (1) In general, if two manufacturers merge in any way, they must
inform NHTSA how they plan to merge their credit accounts. NHTSA will
subsequently assess corporate fuel consumption and compliance status of
the merged fleet instead of the original separate fleets.
    (2) If a manufacturer divides or divests itself of a portion of its
automobile manufacturing business, it must inform NHTSA how it plans to
divide the manufacturer's credit holdings into two or more accounts.
NHTSA will subsequently distribute holdings as directed by the
manufacturer, subject to provision for

reasonably anticipated compliance obligations.
    (3) If a manufacturer is a successor to another manufacturer's
business, it must inform NHTSA how it plans to allocate credits and
resolve liabilities per 49 CFR part 534.

Sec.  535.10  How do manufacturers comply with fuel consumption
standards?

    (a) Pre-certification process. (1) Regulated manufacturers
determine eligibility to use exemptions or exclusions in accordance
with Sec.  535.3.
    (2) Manufacturers may seek preliminary approvals as specified in 40
CFR 1036.210 and 40 CFR 1037.210 from EPA and NHTSA, if needed.
Manufacturers may request to schedule pre-certification meetings with
EPA and NHTSA prior to submitting approval requests for certificates of
conformity to address any joint compliance issues and gain informal
feedback from the agencies.
    (3) The requirements and prohibitions required by EPA in special
circumstances in accordance with 40 CFR 1037.601 and 40 CFR part 1068
apply to manufacturers for the purpose of complying with fuel
consumption standards. Manufacturers should use good judgment when
determining how EPA requirements apply in complying with the NHTSA
program. Manufacturers may contact NHTSA and EPA for clarification
about how these requirements apply to them.
    (4) In circumstances in which EPA provides multiple compliance
approaches manufacturers must choose the same compliance path to comply
with NHTSA's fuel consumption standards that they choose to comply with
EPA's greenhouse gas emission standards.
    (5) Manufacturers may not introduce new vehicles into commerce
without a certificate of conformity from EPA. Manufacturers must attest
to several compliance standards in order to obtain a certificate of
conformity. This includes stating comparable fuel consumption results
for all required CO2 emissions rates. Manufacturers not
completing these steps do not comply with the NHTSA fuel consumption
standards.
    (6) Manufacturers apply the fuel consumption standards specified in
Sec.  535.5 to vehicles, engines and components that represent
production units and components for vehicle and engine families, sub-
families and configurations consistent with the EPA specifications in
40 CFR 86.1819, 1036.230, and 1037.230.
    (7) Only certain vehicles and engines are allowed to comply
differently between the NHTSA and EPA programs as detailed in this
section. These vehicles and engines must be identified by manufacturers
in the ABT and production reports required in Sec.  535.8.
    (b) Model year compliance. Manufacturers are required to conduct
testing to demonstrate compliance with CO2 exhaust emissions
standards in accordance with EPA's provisions in 40 CFR part 600,
subpart B, 40 CFR 1036, subpart F, 40 CFR part 1037, subpart R, and 40
CFR part 1066. Manufacturers determine equivalent fuel consumption
performance values for CO2 results as specified in Sec.
535.6 and demonstrate compliance by comparing equivalent results to the
applicable fuel consumption standards in Sec.  535.5.
    (c) End-of-the-year process. Manufacturers comply with fuel
consumption standards after the end of each model year, if--
    (1) For heavy-duty pickup trucks and vans, the manufacturer's fleet
average performance, as determined in Sec.  535.6, is less than the
fleet average standard; or
    (2) For truck tractors, vocational vehicles, engines and box
trailers the manufacturer's fuel consumption performance for each
vehicle or engine family (or sub-family), as determined in Sec.  535.6,
is lower than the applicable regulatory subcategory standards in Sec.
535.5.
    (3) For non-box and non-aero trailers, a manufacturer is considered
in compliance with fuel consumption standards if all trailers meet the
specified standards in Sec.  535.5(e)(1)(i).
    (4) NHTSA will use the EPA final verified values as specified in 40
CFR 86.1819, 40 CFR 1036.755, and 1037.755 for making final
determinations on whether vehicles and engines comply with fuel
consumption standards.
    (5) A manufacturer fails to comply with fuel consumption standards
if its final reports are not provided in accordance with Sec.  535.8
and 40 CFR 86.1865, 1036.730, and 1037.730. Manufacturers not providing
complete or accurate final reports or any plans by the required
deadlines do not comply with fuel consumption standards. A manufacturer
that is unable to provide any emissions results along with comparable
fuel consumption values must obtain permission for EPA to exclude the
results prior to the deadline for submitting final reports.
    (6) A manufacturer that would otherwise fail to directly comply
with fuel consumption standards as described in paragraphs (c)(1)
through (3) of this section may use one or more of the credit
flexibilities provided under the NHTSA averaging, banking and trading
program, as specified in Sec.  535.7, but must offset all credit
deficits in its averaging sets to achieve compliance.
    (7) A manufacturer failing to comply with the provisions specified
in this part may be liable to pay civil penalties in accordance with
Sec.  535.9.
    (8) A manufacturer may also be liable to pay civil penalties if
found by EPA or NHTSA to have provided false information as identified
through NHTSA or EPA enforcement audits or new vehicle verification
testing as specified in Sec.  535.9 and 40 CFR parts 86, 1036, and
1037.

PART 538--MANUFACTURING INCENTIVES FOR ALTERNATIVE FUEL VEHICLES

0
382. Revise the authority citation for part 538 to read as follows:

    Authority:  49 U.S.C. 32901, 32905, and 32906; delegation of
authority at 49 CFR 1.95.

0
383. Revise Sec.  538.5 to read as follows:

Sec.  538.5  Minimum driving range.

    (a) The minimum driving range that a passenger automobile must have
in order to be treated as a dual fueled automobile pursuant to 49
U.S.C. 32901(c) is 200 miles when operating on its nominal useable fuel
tank capacity of the alternative fuel, except when the alternative fuel
is electricity or compressed natural gas. Beginning model year 2016, a
natural gas passenger automobile must have a minimum driving range of
150 miles when operating on its nominal useable fuel tank capacity of
the alternative fuel to be treated as a dual fueled automobile,
pursuant to 49 U.S.C. 32901(c)(2).
    (b) The minimum driving range that a passenger automobile using
electricity as an alternative fuel must have in order to be treated as
a dual fueled automobile pursuant to 49 U.S.C. 32901(c) is 7.5 miles on
its nominal storage capacity of electricity when operated on the EPA
urban test cycle and 10.2 miles on its nominal storage capacity of
electricity when operated on the EPA highway test cycle.

    Dated: August 16, 2016.
Anthony Foxx,
Secretary,Department of Transportation.
    Dated: August 16, 2016.
Gina McCarthy,
Administrator, Environmental Protection Agency.
[FR Doc. 2016-21203 Filed 10-24-16; 8:45 am]
 BILLING CODE 6560-50-P