49 CFR § 535.7 - Averaging, banking, and trading (ABT) credit program.

§ 535.7 Averaging, banking, and trading (ABT) credit program.

(a) General provisions. After the end of each model year, manufacturers must comply with the fuel consumption standards in § 535.5 for averaging, banking and trading credits. Trailer manufacturers are excluded from this section except for those producing full-aero box trailers, which may comply with special provisions in paragraph (e) of this section. Manufacturers comply with standards if the sum of averaged, banked and traded credits generate a “zero” credit balance or a credit surplus within an averaging set of vehicles or engines. Manufacturers fail to comply with standards if the sum of the credit flexibilities generate a credit deficit (or shortfall) in an averaging set. Credit shortfalls must be offset by banked or traded credits within three model years after the shortfall is incurred. These processes are hereafter referenced as the NHTSA ABT credit program. The following provisions apply to all fuel consumption credits.

(1) Credits (or fuel consumption credits (FCCs)). Credits in this part mean a calculated weighted value representing the difference between the fuel consumption performance and the standard of a vehicle or engine family or fleet within a particular averaging set. Positive credits represent cases where a vehicle or engine family or fleets perform better than the applicable standard (the fuel consumption performance is less than the standard) whereas negative credits represent underperforming cases. The value of a credit is calculated according to paragraphs (b) through (e) of this section. FCCs are only considered earned or useable for averaging, banking or trading after EPA and NHTSA have verified the information in a manufacturer's final reports required in § 535.8. Types of FCCs include the following:

(i) Conventional credits. Credits generated by vehicle or engine families or fleets containing conventional vehicles (i.e., gasoline, diesel and alternative fueled vehicles).

(ii) Early credits. Credits generated by vehicle or engine families or fleets produced for model year 2013. Early credits are multiplied by an incentive factor of 1.5 times.

(iii) Advanced technology credits. Credits generated by vehicle or engine families or subconfigurations containing vehicles with advanced technologies (i.e., hybrids with regenerative braking, vehicles equipped with Rankine-cycle engines, electric and fuel cell vehicles) and incentivized under this ABT credit program in paragraph (f)(1) of this section and by EPA under 40 CFR 86.1819-14(d)(7), 1036.615, and 1037.615.

(iv) Innovative and off-cycle technology credits. Credits can be generated by vehicle or engine families or subconfigurations having fuel consumption reductions resulting from technologies not reflected in the GEM simulation tool or in the FTP chassis dynamometer and that were not in common use with heavy-duty vehicles or engines before model year 2010 that are not reflected in the specified test procedure. Manufacturers should prove that these technologies were not in common use in heavy-duty vehicles or engines before model year 2010 by demonstrating factors such as the penetration rates of the technology in the market. NHTSA will not approve any request if it determines that these technologies do not qualify. The approach for determining innovative and off-cycle technology credits under this fuel consumption program is described in paragraph (f)(2) of this section and by EPA under 40 CFR 86.1819-14(d)(13), 1036.610, and 1037.610.

(2) Averaging. Averaging is the summing of a manufacturer's positive and negative FCCs for engines or vehicle families or fleets within an averaging set. The principle averaging sets are defined in § 535.4.

(i) A credit surplus occurs when the net sum of the manufacturer's generated credits for engines or vehicle families or fleets within an averaging set is positive (a zero credit balance is when the sum equals zero).

(ii) A credit deficit occurs when the net sum of the manufacturer's generated credits for engines or vehicle families or fleets within an averaging set is negative.

(iii) Positive credits, other than advanced technology credits, generated and calculated within an averaging set may only be used to offset negative credits within the same averaging set.

(iv) Manufacturers may certify one or more vehicle families (or subfamilies) to an FEL above the applicable fuel consumption standard, subject to any applicable FEL caps and other provisions allowed by EPA in 40 CFR parts 1036 and 1037, if the manufacturer shows in its application for certification to EPA that its projected balance of all FCC transactions in that model year is greater than or equal to zero or that a negative balance is allowed by EPA under 40 CFR 1036.745 and 1037.745.

(v) If a manufacturer certifies a vehicle family to an FEL that exceeds the otherwise applicable standard, it must obtain enough FCC to offset the vehicle family's deficit by the due date of its final report required in § 535.8. The emission credits used to address the deficit may come from other vehicle families that generate FCCs in the same model year (or from the next three subsequent model years), from banked FCCs from previous model years, or from FCCs generated in the same or previous model years that it obtained through trading. Note that the option for using banked or traded credits does not apply for trailers.

(vi) Manufacturers may certify a vehicle or engine family using an FEL (as described in § 535.6) below the fuel consumption standard (as described in § 535.5) and choose not to generate conventional fuel consumption credits for that family. Manufacturers do not need to calculate fuel consumption credits for those families and do not need to submit or keep the associated records described in § 535.8 for these families. Manufacturers participating in NHTSA's FCC program must provide reports as specified in § 535.8.

(3) Banking. Banking is the retention of surplus FCC in an averaging set by the manufacturer for use in future model years for the purpose of averaging or trading.

(i) Surplus credits may be banked by the manufacturer for use in future model years, or traded, given the restriction that the credits have an expiration date of five model years after the year in which the credits are generated. For example, banked credits earned in model year 2014 may be utilized through model year 2019. Surplus credits will become banked credits unless a manufacturer contacts NHTSA to expire its credits.

(ii) Surplus credits become earned or usable banked FCCs when the manufacturer's final report is approved by both agencies. However, the agencies may revoke these FCCs at any time if they are unable to verify them after reviewing the manufacturer's reports or auditing its records.

(iii) Banked FCC retain the designation from the averaging set and model year in which they were generated.

(iv) Banked credits retain the designation of the averaging set in which they were generated.

(v) Trailer manufacturers generating credits in paragraph (e) of this section may not bank credits except to resolve credit deficits in the same model year or from up to three prior model years.

(4) Trading. Trading is a transaction that transfers banked FCCs between manufacturers or other entities in the same averaging set. A manufacturer may use traded FCCs for averaging, banking, or further trading transactions.

(i) Manufacturers may only trade banked credits to other manufacturers to use for compliance with fuel consumption standards. Traded FCCs, other than advanced technology credits, may be used only within the averaging set in which they were generated. Manufacturers may only trade credits to other entities for the purpose of expiring credits.

(ii) Advanced technology credits can be traded across different averaging sets.

(iii) The agencies may revoke traded FCCs at any time if they are unable to verify them after reviewing the manufacturer's reports or auditing its records.

(iv) If a negative FCC balance results from a transaction, both the buyer and seller are liable, except in cases the agencies deem to involve fraud. See § 535.9 for cases involving fraud. EPA also may void the certificates of all vehicle families participating in a trade that results in a manufacturer having a negative balance of emission credits. See 40 CFR 1037.745.

(v) Trailer manufacturers generating credits in paragraph (e) of this section starting in model year 2027 may not bank or trade credits. These manufacturers may only use credits for the purpose of averaging.

(vi) Manufacturers with deficits or projecting deficits before or during a production model year may not trade credits until its available credits exceed the deficit. Manufacturers with a deficit may not trade credits if the deadline to offset that credit deficit has passed.

(5) Credit deficit (or credit shortfall). A credit shortfall or deficit occurs when the sum of the manufacturer's generated credits for engines or vehicle families or fleets within an averaging set is negative. Credit shortfalls must be offset by an available credit surplus within three model years after the shortfall was incurred. If the shortfall cannot be offset, the manufacturer is liable for civil penalties as discussed in § 535.9.

(6) FCC credit plan.

(i) Each model year manufacturers submit credit plan in their certificates of conformity as required in 40 CFR 1036.725(b)(2) and 40 CFR 1037.725(b)(2). The plan is required to contain equivalent fuel consumption information in accordance § 535.8(c). The plan must include:

(A) Detailed calculations of projected emission and fuel consumption credits (positive or negative) based on projected U.S.-directed production volumes. The agencies may require a manufacturer to include similar calculations from its other engine or vehicle families to project its net credit balances for the model year. If a manufacturer projects negative emission and/or fuel consumption credits for a family, it must state the source of positive emission and/or fuel 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 § 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 § 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 § 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 § 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 § 535.4. Calculate credits for each fleet separately using the following equation:

Total MY Fleet FCC (gallons) = (Std − Act) × (Volume) × (UL) × (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 § 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 § 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) × (Payload) × (Volume) × (UL) × (103)
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 or below 33,000 pounds GVWR 185,000.
Vocation HHD Vehicles and tractors at or above 33,000 pounds GVWR 435,000.

(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 = Σ 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 § 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 § 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 § 535.6. These FELs serve as the fuel consumption standards for the vehicle subfamily instead of the standards specified in this § 535.5(b)(6). Manufacturers may not use averaging for motor homes, coach buses, emergency vehicles or concrete mixers meeting standards under § 535.5(b)(5).

(7) Manufacturers may not use averaging for vehicles meeting standards § 535.5(b)(6)(iv) through (vi), and manufacturers may not use fuel consumption credits for banking or trading for any vehicles certified under § 535.5(b)(6).

(8) Manufacturers certifying any vehicles under § 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 § 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) × (CF) × (Volume) × (UL) × (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 = Σ 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 § 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 § 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 § 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 § 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 § 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 § 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:

Model year Credit life
for transition
option 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 § 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) × (Payload) × (Volume) × (UL) × (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 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 = Σ 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 · 10 6 gallons (for advanced technology credits based upon compression-ignition engines) or 6.76 · 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 × 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 § 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) × Production × 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.

[81 FR 74238, Oct. 25, 2016, as amended at 85 FR 25274, Apr. 30, 2020]

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