(a) General.

(1) The Administrator shall administer this credit program to enable vehicle manufacturers who are required to participate in the California Pilot Test Program to meet the clean-fuel vehicle sales requirements through the use of credits. Participation in this credit program is voluntary.

(2) All credit-generating vehicles must meet the applicable emission standards and other requirements contained in subpart A of this part.

(b) Credit generation.

(1) Credits may be generated by any of the following means:

(i) Sale of qualifying clean-fuel vehicles earlier than required. Manufacturers may earn these credits starting with the 1992 model year, contingent upon the requirements of paragraph (g) of this section.

(ii) Sale of a greater number of qualifying clean-fuel vehicles than required.

(iii) Sale of qualifying clean-fuel vehicles that meet more stringent emission standards than those required.

(2) For light-duty vehicles and light-duty trucks, credit values shall be determined in accordance with the following:

(i) For model-years through 2000, credit values shall be determined in accordance with table B-1 of this subpart.

(ii) For the 2001 and subsequent model-years, credit values shall be determined according to table B-2 of this subpart. The sale of light-duty vehicles classified as Transitional Low-Emission Vehicles shall not receive credits starting in model year 2001.

(iii) For the calculation of credits for the sale of more clean-fuel vehicles than required, the manufacturer shall designate which sold vehicles count toward compliance with the sales requirement. The remaining balance of vehicles will be considered as sold beyond the sales requirement for credit calculations.

(3) Vehicles greater than 8500 lbs gvwr may not generate credits.

(c) Credit use.

(1) All credits generated in accordance with these provisions may be freely averaged, traded, or banked for later use. Credits may not be used to remedy any nonconformity determined by enforcement testing.

(2) There is one averaging and trading group containing all light-duty vehicles and light-duty trucks.

(3) A vehicle manufacturer desiring to demonstrate full or partial compliance with the sales requirements by the redemption of credits, shall surrender sufficient credits, as established in this paragraph (c). In lieu of selling a clean-fuel vehicle, a manufacturer shall surrender credits equal to the credit value for the corresponding vehicle class and model year found in table B-1.3 or table B-2.3 of this subpart.

(d) Participation in the credit program.

(1) During certification, the manufacturer shall calculate the projected credits, if any, based on required sales projections.

(2) Based on information from paragraph (d)(1) of this section, each manufacturer's certification application under this section must demonstrate:

(i) That at the end of the model-year production, there is a net vehicle credit balance of zero or more with any credits obtained from averaging, trading, or banking.

(ii) It is recommended but not required that the source of the credits to be used to comply with the minimum sales requirements be stated. All such reports should include all credits involved in averaging, trading, or banking.

(3) During the model year, manufacturers must:

(i) Monitor projected versus actual production to be certain that compliance with the sales requirement is achieved at the end of the model year.

(ii) Provide the end of model year reports required under this subpart.

(iii) Maintain the records required under this subpart.

(4) Projected credits based on information supplied in the certification application may be used to obtain a certificate of conformity. However, any such credits may be revoked based on review of end-of-model year reports, follow-up audits, and any other verification steps deemed appropriate by the Administrator.

(5) Compliance under averaging, banking, and trading will be determined at the end of the model year.

(6) If EPA or the manufacturer determines that a reporting error occurred on an end-of-year report previously submitted to EPA under this section, the manufacturer's credits and credit calculations will be recalculated.

(i) If EPA review of a manufacturer's end-of-year report indicates an inadvertent credit shortfall, the manufacturer will be permitted to purchase the necessary credits to bring the credit balance to zero.

(ii) If within 90 days of receipt of the manufacturer's end-of-year report, EPA review determines a reporting error in the manufacturer's favor (i.e., resulting in a positive credit balance) or if the manufacturer discovers such an error within 90 days of EPA receipt of the end-of-year report, the credits will be restored for use by the manufacturer.

(e) Averaging. Averaging will only be allowed between clean-fuel vehicles under 8500 lbs gvwr.

(f) Banking—(1) Credit deposits.

(i) Under this program, credits can be banked starting in the 1992 model year.

(ii) A manufacturer may bank credits only after the end of the model year and after EPA has reviewed its end-of-year report. During the model year and before submittal of the end-of-year report, credits originally designated in the certification process for banking will be considered reserved and may be redesignated for trading or averaging.

(2) Credit withdraws.

(i) After being generated, banked/reserved credits shall be available for use and shall maintain their original value for an infinite period of time.

(ii) A manufacturer withdrawing banked credits shall indicate so during certification and in its credit reports.

(3) Banked credits may be used in averaging, trading, or in any combination thereof, during the certification period. Credits declared for banking from the previous model year but unreviewed by EPA may also be used. However, they may be revoked at a later time following EPA review of the end-of-year report or any subsequent audit actions.

(g) Early credits. Beginning in model year 1992 appropriate credits, as determined from the given credit table, will be given for the sale of vehicles certified to the clean-fuel vehicle standards for TLEVs, LEVs, ULEVs, and ZEVs, where appropriate. For LDVs and light LDTs (<6000 lbs GVWR), early credits can be earned from model year 1992 to the beginning of the Pilot Program sales requirements in 1996. For heavy LDTs (>6000 lbs GVWR), early credits can be earned from model years 1992 through 1997. The actual calculation of early credits shall not begin until model year 1996.

[57 FR 60046, Dec. 17, 1992, as amended at 61 FR 127, Jan. 3, 1996]