49 U.S.C. § 32903 — Credits for exceeding average fuel econ-

Page 964 TITLE 49—TRANSPORTATION § 32903 1 So in original. Probably should be followed by a comma. percent and increase their fuel efficiency by as much as 25 percent with the use of existing technologies; (b) Include fuel efficiency and greenhouse gas emis- sions standards that take into account the market structure of the trucking industry and the unique de- mands of heavy-duty vehicle applications; seek harmo- nization with applicable State standards; consider the findings and recommendations published in the Na- tional Academy of Science report on medium- and heavy-duty truck regulation; strengthen the industry and enhance job creation in the United States; and (c) Seek input from all stakeholders, while recog- nizing the continued leadership role of California and other States. SEC. 2. Passenger Cars and Light-Duty Trucks. Building on the earlier joint rulemaking, and in order to provide greater certainty and incentives for long- term innovation by automobile and light-duty vehicle manufacturers, I request that the Administrators of the EPA and the NHTSA develop, through notice and comment rulemaking, a coordinated national program under the CAA and the EISA to improve fuel efficiency and to reduce greenhouse gas emissions of passenger cars and light-duty trucks of model years 2017–2025. The national program should seek to produce joint Federal standards that are harmonized with applicable State standards, with the goal of ensuring that automobile manufacturers will be able to build a single, light-duty national fleet. The program should also seek to achieve substantial annual progress in reducing transportation sector greenhouse gas emissions and fossil fuel con- sumption, consistent with my Administration’s overall energy and climate security goals, through the in- creased domestic production and use of existing, ad- vanced, and emerging technologies, and should strengthen the industry and enhance job creation in the United States. As part of implementing the na- tional program, I request that the Administrators of the EPA and the NHTSA: (a) Work with the State of California to develop by September 1, 2010, a technical assessment to inform the rulemaking process, reflecting input from an array of stakeholders on relevant factors, including viable tech- nologies, costs, benefits, lead time to develop and de- ploy new and emerging technologies, incentives and other flexibilities to encourage development and de- ployment of new and emerging technologies, impacts on jobs and the automotive manufacturing base in the United States, and infrastructure for advanced vehicle technologies; and (b) Take all measures consistent with law to issue by September 30, 2010, a Notice of Intent to Issue a Pro- posed Rule that announces plans for setting stringent fuel economy and greenhouse gas emissions standards for light-duty vehicles of model year 2017 and beyond, including plans for initiating joint rulemaking and gathering any additional information needed to support regulatory action. The Notice should describe the key elements of the program that the EPA and the NHTSA intend jointly to propose, under their respective statu- tory authorities, including potential standards that could be practicably implemented nationally for the 2017–2025 model years and a schedule for setting those standards as expeditiously as possible, consistent with providing sufficient lead time to vehicle manufactur- ers. SEC. 3. Cleaner Vehicles and Fuels and Necessary Infra- structure. The success of our efforts to achieve enhanced energy security and to protect the environment also depends upon the development of infrastructure and promotion of fuels, including biofuels, which will enable the devel- opment and widespread deployment of advanced tech- nologies. Therefore, I further request that: (a) The Administrator of the EPA review for ade- quacy the current nongreenhouse gas emissions regula- tions for new motor vehicles, new motor vehicle en- gines, and motor vehicle fuels, including tailpipe emis- sions standards for nitrogen oxides and air toxics, and sulfur standards for gasoline. If the Administrator of the EPA finds that new emissions regulations are re- quired, then I request that the Administrator of the EPA promulgate such regulations as part of a com- prehensive approach toward regulating motor vehicles; and [sic] (b) The Secretary of Energy promote the deployment of advanced technology vehicles by providing technical assistance to cities preparing for deployment of elec- tric vehicles, including plug-in hybrids and all-electric vehicles; and (c) The Department of Energy work with stake- holders on the development of voluntary standards to facilitate the robust deployment of advanced vehicle technologies and coordinate its efforts with the Depart- ment of Transportation, the NHTSA, and the EPA. SEC. 4. General Provisions. (a) This memorandum shall be implemented con- sistent with applicable law, including international trade obligations, and subject to the availability of ap- propriations. (b) This memorandum is not intended to, and does not, create any right or benefit, substantive or proce- dural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person. (c) Nothing in this memorandum shall be construed to impair or otherwise affect: (1) authority granted by law to a department, agency, or the head thereof; or (2) functions of the Director of the Office of Manage- ment and Budget relating to budgetary, administra- tive, or legislative proposals. SEC. 5. Publication. The Secretary of Transportation is hereby authorized and directed to publish this memorandum in the Fed- eral Register. BARACK OBAMA. § 32903. Credits for exceeding average fuel econ- omy standards (a) EARNING AND PERIOD FOR APPLYING CRED- ITS.—When the average fuel economy of pas- senger automobiles manufactured by a manufac- turer in a particular model year exceeds an ap- plicable average fuel economy standard under subsections (a) through (d) of section 32902 (de- termined by the Secretary of Transportation without regard to credits under this section), the manufacturer earns credits. The credits may be applied to— (1) any of the 3 consecutive model years im- mediately before the model year for which the credits are earned; and (2) to the extent not used under paragraph (1) 1 any of the 5 consecutive model years im- mediately after the model year for which the credits are earned. (b) PERIOD OF AVAILABILITY AND PLAN FOR FU- TURE CREDITS.—(1) Except as provided in para- graph (2) of this subsection, credits under this section are available to a manufacturer at the end of the model year in which earned. (2)(A) Before the end of a model year, if a man- ufacturer has reason to believe that its average fuel economy for passenger automobiles will be less than the applicable standard for that model year, the manufacturer may submit a plan to the Secretary of Transportation demonstrating that the manufacturer will earn sufficient cred- its under this section within the next 3 model years to allow the manufacturer to meet that Page 965 TITLE 49—TRANSPORTATION § 32903 standard for the model year involved. Unless the Secretary finds that the manufacturer is un- likely to earn sufficient credits under the plan, the Secretary shall approve the plan. Those credits are available for the model year involved if— (i) the Secretary approves the plan; and (ii) the manufacturer earns those credits as provided by the plan. (B) If the average fuel economy of a manufac- turer is less than the applicable standard under subsections (a) through (d) of section 32902 after applying credits under subsection (a)(1) of this section, the Secretary of Transportation shall notify the manufacturer and give the manufac- turer a reasonable time (of at least 60 days) to submit a plan. (c) DETERMINING NUMBER OF CREDITS.—The number of credits a manufacturer earns under this section equals the product of— (1) the number of tenths of a mile a gallon by which the average fuel economy of the pas- senger automobiles manufactured by the man- ufacturer in the model year in which the cred- its are earned exceeds the applicable average fuel economy standard under subsections (a) through (d) of section 32902; times (2) the number of passenger automobiles manufactured by the manufacturer during that model year. (d) APPLYING CREDITS FOR PASSENGER AUTO- MOBILES.—The Secretary of Transportation shall apply credits to a model year on the basis of the number of tenths of a mile a gallon by which the manufacturer involved was below the applicable average fuel economy standard for that model year and the number of passenger automobiles manufactured that model year by the manufac- turer. Credits applied to a model year are no longer available for another model year. Before applying credits, the Secretary shall give the manufacturer written notice and reasonable op- portunity to comment. (e) APPLYING CREDITS FOR NON-PASSENGER AUTOMOBILES.—Credits for a manufacturer of automobiles that are not passenger automobiles are earned and applied to a model year in which the average fuel economy of that class of auto- mobiles is below the applicable average fuel economy standard under section 32902(a) of this title, to the same extent and in the same way as provided in this section for passenger auto- mobiles. (f) CREDIT TRADING AMONG MANUFACTURERS.— (1) IN GENERAL.—The Secretary of Transpor- tation may establish, by regulation, a fuel economy credit trading program to allow man- ufacturers whose automobiles exceed the aver- age fuel economy standards prescribed under section 32902 to earn credits to be sold to man- ufacturers whose automobiles fail to achieve the prescribed standards such that the total oil savings associated with manufacturers that exceed the prescribed standards are pre- served when trading credits to manufacturers that fail to achieve the prescribed standards. (2) LIMITATION.—The trading of credits by a manufacturer to the category of passenger automobiles manufactured domestically is limited to the extent that the fuel economy level of such automobiles shall comply with the requirements of section 32902(b)(4), with- out regard to any trading of credits from other manufacturers. (g) CREDIT TRANSFERRING WITHIN A MANUFAC- TURER’S FLEET.— (1) IN GENERAL.—The Secretary of Transpor- tation shall establish by regulation a fuel economy credit transferring program to allow any manufacturer whose automobiles exceed any of the average fuel economy standards prescribed under section 32902 to transfer the credits earned under this section and to apply such credits within that manufacturer’s fleet to a compliance category of automobiles that fails to achieve the prescribed standards. (2) YEARS FOR WHICH USED.—Credits trans- ferred under this subsection are available to be used in the same model years that the man- ufacturer could have applied such credits under subsections (a), (b), (d), and (e), as well as for the model year in which the manufac- turer earned such credits. (3) MAXIMUM INCREASE.—The maximum in- crease in any compliance category attrib- utable to transferred credits is— (A) for model years 2011 through 2013, 1.0 mile per gallon; (B) for model years 2014 through 2017, 1.5 miles per gallon; and (C) for model year 2018 and subsequent model years, 2.0 miles per gallon. (4) LIMITATION.—The transfer of credits by a manufacturer to the category of passenger automobiles manufactured domestically is limited to the extent that the fuel economy level of such automobiles shall comply with the requirements under section 32904(b)(4), without regard to any transfer of credits from other categories of automobiles described in paragraph (6)(B). (5) YEARS AVAILABLE.—A credit may be transferred under this subsection only if it is earned after model year 2010. (6) DEFINITIONS.—In this subsection: (A) FLEET.—The term ‘‘fleet’’ means all automobiles manufactured by a manufac- turer in a particular model year. (B) COMPLIANCE CATEGORY OF AUTO- MOBILES.—The term ‘‘compliance category of automobiles’’ means any of the following 3 categories of automobiles for which compli- ance is separately calculated under this chapter: (i) Passenger automobiles manufactured domestically. (ii) Passenger automobiles not manufac- tured domestically. (iii) Non-passenger automobiles. (h) REFUND OF COLLECTED PENALTY.—When a civil penalty has been collected under this chap- ter from a manufacturer that has earned credits under this section, the Secretary of the Treas- ury shall refund to the manufacturer the amount of the penalty to the extent the penalty is attributable to credits available under this section. (Pub. L. 103–272, § 1(e), July 5, 1994, 108 Stat. 1061; Pub. L. 110–140, title I, § 104(a), Dec. 19, 2007, 121 Stat. 1501.) Page 966 TITLE 49—TRANSPORTATION § 32904 HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 32903(a) ...... 15:2002(l)(1)(B), (4). Oct. 20, 1972, Pub. L. 92–513, 86 Stat. 947, § 502(l); added Oct. 10, 1980, Pub. L. 96–425, § 6(b), 94 Stat. 1826. 32903(b)(1) .. 15:2002(l)(1)(A). 32903(b)(2) .. 15:2002(l)(1)(C). 32903(c) ...... 15:2002(l)(1)(D). 32903(d) ...... 15:2002(l)(1)(E). 32903(e) ...... 15:2002(l)(2). 32903(f) ....... 15:2002(l)(3). In this section, various forms of the words ‘‘apply credits’’ are substituted for various forms of ‘‘credits are available to be taken into account’’ to be more con- cise and to make more clear the distinction between when credits are available and to what years they may be applied. In subsection (a), before clause (1), the text of 15:2002(l)(4) is omitted as surplus because of 49:322(a). The words ‘‘any adjustment under subsection (d) of this section’’ are omitted because 15:2002(d) is omitted from the revised title as executed. The words ‘‘calculated under subparagraph (C)’’ (which apparently should be ‘‘calculated under subparagraph (D)’’) are omitted as surplus. In clauses (1) and (2), the words ‘‘with respect to the average fuel economy of that manufacturer’’ are omitted as surplus. The words ‘‘year for which the cred- its are earned’’ are substituted for ‘‘year in which such manufacturer exceeds such applicable average fuel economy standard’’ to eliminate unnecessary words. Subsection (b)(1) is substituted for 15:2002(l)(1)(A) to eliminate unnecessary words. In subsection (b)(2)(A) is substituted for 15:2002(l)(1)(C)(i)–(iii) to eliminate unnecessary words. In subsection (e), the words ‘‘as provided in this sec- tion for passenger automobiles’’ are substituted for ‘‘as provided for under paragraph (1)’’ for clarity. The text of 15:2002(l)(2) (last sentence) is omitted as expired. Editorial Notes AMENDMENTS 2007—Subsec. (a). Pub. L. 110–140, § 104(a)(1), sub- stituted ‘‘subsections (a) through (d) of section 32902’’ for ‘‘section 32902(b)–(d) of this title’’ in introductory provisions. Subsec. (a)(2). Pub. L. 110–140, § 104(a)(2), substituted ‘‘paragraph (1)’’ for ‘‘clause (1) of this subsection,’’ and ‘‘5 consecutive’’ for ‘‘3 consecutive’’. Subsecs. (b)(2)(B), (c)(1). Pub. L. 110–140, § 104(a)(1), substituted ‘‘subsections (a) through (d) of section 32902’’ for ‘‘section 32902(b)–(d) of this title’’. Subsecs. (f) to (h). Pub. L. 110–140, § 104(a)(3), (4), added subsecs. (f) and (g) and redesignated former sub- sec. (f) as (h). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2007 AMENDMENT Amendment by Pub. L. 110–140 effective on the date that is 1 day after Dec. 19, 2007, see section 1601 of Pub. L. 110–140, set out as an Effective Date note under sec- tion 1824 of Title 2, The Congress. § 32904. Calculation of average fuel economy (a) METHOD OF CALCULATION.—(1) The Adminis- trator of the Environmental Protection Agency shall calculate the average fuel economy of a manufacturer subject to— (A) section 32902(a) of this title in a way pre- scribed by the Administrator; and (B) section 32902(b)–(d) of this title by divid- ing— (i) the number of passenger automobiles manufactured by the manufacturer in a model year; by (ii) the sum of the fractions obtained by dividing the number of passenger auto- mobiles of each model manufactured by the manufacturer in that model year by the fuel economy measured for that model. (2)(A) In this paragraph, ‘‘electric vehicle’’ means a vehicle powered primarily by an elec- tric motor drawing electrical current from a portable source. (B) If a manufacturer manufactures an electric vehicle, the Administrator shall include in the calculation of average fuel economy under para- graph (1) of this subsection equivalent petro- leum based fuel economy values determined by the Secretary of Energy for various classes of electric vehicles. The Secretary shall review those values each year and determine and pro- pose necessary revisions based on the following factors: (i) the approximate electrical energy effi- ciency of the vehicle, considering the kind of vehicle and the mission and weight of the ve- hicle. (ii) the national average electrical genera- tion and transmission efficiencies. (iii) the need of the United States to con- serve all forms of energy and the relative scar- city and value to the United States of all fuel used to generate electricity. (iv) the specific patterns of use of electric vehicles compared to petroleum-fueled vehi- cles. (b) SEPARATE CALCULATIONS FOR PASSENGER AUTOMOBILES MANUFACTURED DOMESTICALLY AND NOT DOMESTICALLY.—(1)(A) Except as provided in paragraphs (6) and (7) of this subsection, the Administrator shall make separate calculations under subsection (a)(1)(B) of this section for— (i) passenger automobiles manufactured do- mestically by a manufacturer (or included in this category under paragraph (5) of this sub- section); and (ii) passenger automobiles not manufactured domestically by that manufacturer (or ex- cluded from this category under paragraph (5) of this subsection). (B) Passenger automobiles described in sub- paragraph (A)(i) and (ii) of this paragraph are deemed to be manufactured by separate manu- facturers under this chapter, except for the pur- poses of section 32903. (2) In this subsection (except as provided in paragraph (3)), a passenger automobile is deemed to be manufactured domestically in a model year if at least 75 percent of the cost to the manufacturer is attributable to value added in the United States or Canada, unless the as- sembly of the automobile is completed in Can- ada and the automobile is imported into the United States more than 30 days after the end of the model year. (3)(A) In this subsection, a passenger auto- mobile is deemed to be manufactured domesti- cally in a model year, as provided in subpara- graph (B) of this paragraph, if at least 75 percent of the cost to the manufacturer is attributable to value added in the United States, Canada, or Mexico, unless the assembly of the automobile is completed in Canada or Mexico and the auto- mobile is imported into the United States more than 30 days after the end of the model year.