Final Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08
Adopted: 12/17/08 1 Final Regulation Order – Part 2

ZERO-EMISSION VEHICLE STANDARDS FOR 2005 THROUGH 20 08 MODEL YEAR PASSENGER CARS, LIGHT-DUTY TRUCKS, AND MEDIUM-DUTY VEHICLES.

Amend Title 13, Motor Vehicles, Division 3, Air Res ources Board, Chapter 1, Motor Vehicle Pollution Control Devices, Article 1, Gener al Provisions, § 1962 to read :

§ 1962. Zero-Emission Vehicle Standards for 2005 t hrough 2008 and Subsequent

Model Year Passenger Cars, Light-Duty Trucks, and Medium-Duty Vehicles.

(a) ZEV Emission Standard. The Executive Officer shall certify new 2005 through 2008 and Subsequent model passenger cars, light-duty trucks and medium

duty vehicles as ZEVs if the vehicles produce zero exhaust emissions of any criteria pollutant (or precursor pollutant) under any and al l possible operational modes and conditions. Incorporation of a fuel-fired heater s hall not preclude a vehicle from being certified as a ZEV provided: (1) the fuel-fired hea ter cannot be operated at ambient temperatures above 40 o F, (2) the heater is demonstrated to have zero fuel evaporative emissions under any and all possible operational mo des and conditions, and (3) the emissions of any pollutant from the fuel-fired heat er when operated at an ambient temperature between 68 o F and 86 o F do not exceed the emission standard for that pollutant for a ULEV under section 1961(a)(1).

A vehicle that would meet the emissions standards for a ZEV except that it uses a fuel-fired heater that can be operated at ambient temperatures above 40 o F, that cannot be demonstrated to have zero fuel evaporativ e emissions under any and all possible operation modes and conditions, or that ha s emissions of any pollutant exceeding the emission standard for that pollutant for a ULEV under section 1961(a)(1),

shall be certified based on the emission level of t he fuel-fired heater.

(b) Percentage ZEV Requirements.

(1) General Percentage ZEV Requirement.

(A) Basic Requirement. The minimum percentage ZEV requirement for

each manufacturer is listed in the table below as t he percentage of the PCs and LDT1s, and LDT2s to the extent required by section (b)(1)( C), produced by the manufacturer

and delivered for sale in California that must be Z EVs, subject to the conditions in this section 1962(b).

Model Years Minimum ZEV Requirement

2005 through 2008 10 percent 2009 through 2011 11 percent 2012 through 2014 12 percent 2015 through 2017 14 percentFinal Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08

Adopted: December 17, 2008 2

2018 and subsequent 16 percent

(B) Calculating the Number of Vehicles to Which the Per centage ZEV Requirement is Applied

. A manufacturer’s volume of PCs and LDT1s produced and delivered for sale in California will be averaged f or the 1997, 1998, and 1999 model years to determine the California PC and LDT1 produ ction volume for the model year 2005 ZEV requirements. For subsequent the three-year periods following model year 2005, a manufacturer’s California production volume of PCs and LDT1s, and LDT2s as applicable, will be based on a three-year average o f the manufacturer’s volume of PCs and LDT1s, and LDT2s as applicable, produced and de livered for sale in California in the prior fourth, fifth and sixth years (e.g. 2006 to 2008 model-year ZEV requirements will be based on California production volumes of P Cs and LDT1s, and LDT2s as applicable, for 2000 to 2002 model years). This pr oduction averaging is used to determine ZEV requirements only, and has no effect on a manufacturer’s size determination. As an alternative to the three year averaging of prior year production described above, a manufacturer may during model ye ar 2005 or the first model year of a subsequent three year period elect to base its ZE V obligation on the number of PCs and LDT1s, and LDT2s to the extent required by sect ion (b)(1)(C), produced by the

manufacturer and delivered for sale in California t hat same year. If a manufacturer elects to use this method after model year 2005 it must be used for each year of the three-year period. In applying the ZEV requirement , a PC, LDT1, or LDT2 as applicable, (beginning in the 2007 model year) that is produced by a small volume manufacturer, but is marketed in California by anot her manufacturer under the other manufacturer’s nameplate, shall be treated as havin g been produced by the marketing

manufacturer.

(C) Phase-in of ZEV Requirements for LDT2s

. Beginning with t T he ZEV requirements for the 2007 2008 model year, 34% of a manufacturer’s LDT2 production shall be included in determining the man ufacturer’s overall ZEV requirement under section (b)(1)(A). in the increasing percentages shown the table belo w.

2007 2008

2009

2010

2011 2 012+

17% 34% 51% 68% 85% 100%

(D) Exclusion of ZEVs in Determining a Manufacturer’s S ales Volume. In calculating for purposes of sections 1962(b)(1)( B) and 1962(b)(1)(C) the volume of PCs, LDT1s and LDT2s a manufacturer has produced an d delivered for sale in California, the manufacturer shall exclude the numb er of ZEVs produced by the manufacturer, or by a subsidiary in which the manuf acturer has a greater than 50% ownership interest, and delivered for sale in Calif ornia.Final Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08

Adopted: December 17, 2008 3 (2) Requirements for Large Volume Manufacturers.

(A) Primary Requirements for Large Volume Manufacturers

.

In the 2005 through 2008 model years, a large-volum e manufacturer must meet at least 20% of its ZEV requirement with ZEVs or ZEV credits generated by such vehicles, and at least another 20% with ZEVs, advan ced technology PZEVs, or credits generated by such vehicles. The remainder of the l arge-volume manufacturer’s ZEV requirement may be met using PZEVs or credits gener ated by such vehicles.

As the ZEV requirement increases over t ime from 10% in model year 2005 to 16% in model years 2018 and subsequent, the maximum portion of a large volume manufacturer’s percentage ZEV requirement th at may be satisfied by PZEVs that are not advanced technology PZEVs, or credits generated by such v ehicles, is limited to 6% of the manufacturer’s applicable Cali fornia PC, LDT1, and LDT2 production volume; advanced technology PZEVs or cre dits generated by such vehicles may be used to meet up to one

- half of the manufacturer’s remaining ZEV requiremen t.

(B) Alternative Requirements for Large Volume Manufactu rers.

1. Minimum Floor for Production of Type III ZEVs

.

a. Requirement For the 2005-2008 Model Years. A large volume manufacturer electing to be subject to the alternat ive compliance requirements during model years 2005 through 2008 must produce, deliver for sale, and place in service in California enough 2001-2008 model-year Type III ZEV s to generate ZEV credits sufficient to meet a cumulative percentage ZEV requ irement of 1.09 percent of the manufacturer’s average annual California sales of P Cs and LDT1s over the five year period from model years 1997 through 2001, or submi t an equivalent number of credits generated by such vehicles. The manufacturer may m eet up to one half of this requirement with [i] 2004-2008 model-year Type I or Type II ZEVs, provided that 20 Type I ZEVs or 10 Type II ZEVs will equal one Type III ZEV, and [ii] 1997-2003 modelyear Type I or Type II ZEVs that qualify for an ext ended service multiplier under section 1962(f) for a year primarily during calendar years 2004-2008, provided that 33 years of such a multiplier will equal one Type III ZEV.

b. [RESERVED]

Requirement For the 2009

- 2011 Model Years. A large volume manufacturer electing to be subject to the alternative comp liance requirements during model years 2009 through 2011 m ust produce, deliver for sale, and place in service in California enough 2009

- 2011 model

- year Type III ZEVs to generate ZEV credits sufficient to meet the 2009

- 2011 alternative path percentage, as

c alculated pursuant to section 1962(b)(2)(B)1.e., of the manufacturer's section 1962(b)(1) percentage ZEV requirement for the 2010 model year, based on the prior year method described in section 1962(b)(1)(B), or submit an equivalent number of credits gener ated by such vehicles. The manufacturer may meet u p to one half of this requirement with [i] 2009

- 2011 model

- year Type I or Type II ZEVs, provided that 20 Type I ZEVs or 10 Type II ZEVs will equal one Type III ZEV, and [ii] 1997

- 2003 model

-Final Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08

Adopted: December 17, 2008 4 year ZEVs that qualify for an extended service multiplier under se ction 1962(f) for a year primarily during calendar years 2009

- 2011, provided that 33 years of such a multiplier will equal one Type III ZEV.

c. [RESERVED]

Requirement For the 2012

- 2014 Model Years

. A

lar ge volume manufacturer electing to be subject to th e alternative compliance requirements during model years 2012 through 2014 m ust produce, deliver for sale, and place in service in California enough 2012

- 2014 model

- year Type III ZEVs to generate ZEV credi ts sufficient to meet the 2012

- 2014 alternative path percentage, as calculated pursuant to section 1962(b)(2)(B)1.e., o f the manufacturer's section 1962(b)(1) percentage ZEV requirement for the 2013 model year, based on the prior year method described in s ection 1962(b)(1)(B), or submit an equivalent numbe r of credits generated by such vehicles. The manufactur er may meet up to one half of this requirement with 2012

- 2014 model

- year Type I or Type II ZEVs, provided that 10 Type I ZEVs or 5 Type II ZEVs will equal one Type III ZEV.

d. [RESERVED]

Requirement For the 2015

- 2017 Model Years. A large volume manufacturer electing to be subject to the alternative compliance requirements during model years 2015 through 2017 m ust produce, deliver for sale, and place i n service in California enough 2015

- 2017 model

- year Type III ZEVs to generate ZEV credits sufficient to meet the 2015

- 2017 alternative path percentage, as calculated in section 1962(b)(2)(B)1.e., of the man ufacturer's section 1962(b)(1) percentage ZEV requ irement for the 2016 model year, based on the prior year method described in section 1962(b)(1)(B), or submit an eq uivalent number of credits generated by such vehicles. The manufacturer may meet up to one half of this requirement with

2015

- 2017 model

- yea r Type I or Type II ZEVs, provided that 10 Type I Z EVs or 5 Type II ZEVs will equal one Type III ZEV.

e. [RESERVED] Calculation of a Manufacturer’s Alternative Path Percentage. A manufacturer’s alternative path percentage for a given time period is

calcu lated as the target number of credits for each time period divided by the applicable combined model year ZEV obligation of all large vol ume manufacturers for that same time period, where:

Time

Period Target

Number of

Alternative Path Type III

ZEVs Credits

per Vehicl

e Target

Number of

Credits Combined

Model Year

ZEV Obligation Alternative

Path Percentage

2009

– 2011 2,500 4 10,000 A (10,000/A)x100

2012

– 2014 25,000 3 75,000 B (75,000/B)x100

2015

– 2017 50,000 3 150,000 C (150,000/C)x10

0Final Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08

Adopted: December 17, 2008 5 And where:

A = The combined total section 1962(b)(1) percentage ZEV requirement, based on the prior year method described in section 1962(b)(1)(B ), that would apply for all large manufacturers for the 2010 model year, B = The combined total section 1962(b)(1) percenta ge ZEV requirement, based on the prior year method described in section 1962(b)(1)(B ), that would apply for all large manufacturers for the 2013 model year, and C = The combined total section 1962(b)(1) percentag e ZEV requirement, based on the prior year m ethod described in section 1962(b)(1)(B), that woul d apply for all large manufacturers for the 2016 model year.

f. Exclusion of Additional Credits for Transportation Systems. Any additional credits for transportation systems g enerated in accordance with section 1962(g)(5) shall not be counted towards compliance with this section 1962(b)(2)(B)1.a.

- d

.

g. Carry-over of Excess Credits

. Where a manufacturer generates more qualifying ZEV credits than are needed to meet the minimum floor requirement for the pro duction of Type III ZEVs in one of the periods iden tified in section 1962(b)(2)(B)1.a.

- c., the qualifying ZEV credits may be used towards meeting the minimum floor requirement for the production of Typ e III ZEVs in a subsequent period, provided that the va lue of these carryover credits shall be based on th e model year in

which the credits are used. ZEV credits generated from excess production in mod el years 2005 through 2008 may be carried forward and applied to the 2009 through 2011 minimum floor requirement specified in 1962.1(b)(2) (B)1.b. provided that the value of these carryover credits shall be based on the model year in which the credits are used.

h. Failure to Meet Requirement for Production of Type III ZEVs

. A manufacturer that, after electing to be subject to the alternative requirements in section 1962(b)(2)(B) for any model year from 2005 through 2017 2008 , fails to meet the requirement in section 1962(b)(2)(B)1.a..

- d . by the end of the specified three or four year period in which the model year falls, shall be treated as subject to the primary requirements in section 1962(b)(2)(A) for all model years in the specified three or four year period.

i. The number of Type III ZEVs needed for a manufactu rer under section 1962(b)(2)(B)1.a.- d shall be rounded to the nearest whole number.

2. Compliance With Percentage ZEV Requirements. In the 2005 through 2008 model years, a large volume manufactur er electing to be subject to the alternative compliance requirements in a given mode l year must meet at least 40 percent of its ZEV requirement for that model year with ZEVs, advanced technology PZEVs, or credits generated from such vehicles. Th e remainder of the large volume manufacturer’s ZEV requirement may be met using PZE Vs or credits generated from such vehicles. As the ZEV requirement increases ov er time from 11% in model yearFinal Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08

Adopted: December 17, 2008 6 2009 to 16% in model years 2018 and subsequent, the maximum portion of the large volume manufacturer’s percentage ZEV requirement th at may be satisfied by PZEVs

that are not ad vanced technology PZEVs, or credits generated by su ch vehicles, is limited to 6% of the manufacturer’s applicable Cali fornia PC, LDT1, and LDT2 production volume; ZEVs, advanced technology PZEVs, or credits generated by such vehicles may be used to meet th e manufacturer’s remaining ZEV requirement.

3. [RESERVED]

Sunset of Alternative Requirements After the

2017 Model Year. The alternative requirements in section 1962(b)(2 )(B) are not available after the 2017 model year.

(C) Election of the Primary or Alternative Requirements for Large Volume Manufacturers for the 2005 through 2008 Mode l Years

. A large volume manufacturer shall be subject to the primary ZEV re quirements for the 2005 model year unless it notifies the Executive Officer in writing prior to the start of the 2005 model year that it is electing to be subject to the alternativ e compliance requirements for that model year. Thereafter, through the 2008 model year, a manufacturer shall be subject to the same compliance option as applied in the previous m odel year unless it notifies the Executive Officer in writing prior to the start of a new model year that it is electing to switch to the other compliance option for that new model year. However, a large volume manufacturer that has previously elected to be subject to the primary ZEV requirements for one or more of the model years in the three or four year periods

identified in section 1961 2 (b)(1 2) (B)1.a.

- d . may prior to the end of the three or four year period elect to become subject to the alternative c ompliance requirements for the full

three or four year period upon a demonstration that it has c omplied with all of the applicable requirements for that period in section 1962(b)(2)(B)1.a.

- d

.

(D) Use of Credits from Model Year 2003-2004 PZEVs

. A large volume manufacturer may produce, and deliver for sa le in California, model year 2003 or 2004 PZEVs that generate credits exceeding the n umber of credits equal to 6 percent of the average annual volume of 1997, 1998 and 1999 PCs and LDT1s produced and delivered for sale in California by th e manufacturer. In that event, the manufacturer may use those excess credits as AT PZE V credits in the 2005 and 2006 model years.

(3) Requirements for Intermediate Volume Manufacturers

. In the 2005 through 2008 an d subsequent model years, an intermediate volume manufacturer m ay meet its ZEV requirement with up to 100 percent PZE Vs or credits generated by such

vehicles.

(4) Requirements for Small Volume Manufacturers and Ind ependent Low

Volume Manufacturers

. A small volume manufacturer or an independent low volume manufacturer is not required to meet the percentage ZEV requirements. However, a small volume manufacturer or an independent low vol ume manufacturer may earn and market credits for the ZEVs or PZEVs it produces an d delivers for sale in California.Final Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08

Adopted: December 17, 2008 7 (5) Counting ZEVs and PZEVs in Fleet Average NMOG Calcu lations

. For the purposes of calculating a manufacturer’s fleet average NMOG value and NMOG credits under sections 1960.1(g)(2) and 1961(b) and (c), a vehicle certified as a ZEV is counted as one ZEV, and a PZEV is counted as one SU LEV certified to the 150,000 mile standards regardless of any ZEV or PZEV multip liers.

(6) Implementation Prior to 2005 Model Year

. Prior to the 2005 model year, a manufacturer that voluntarily produces vehi cles meeting the ZEV emission standards applicable to 2005 and subsequent model y ear vehicles may certify the vehicles to those standards and requirements for pu rposes of calculating fleet average

NMOG exhaust emission values and NMOG credits under sections 1960.1(g)(2) and 1961(b) and (c), and for calculating ZEV credits as set forth in section 1962(d).

(7) Changes in Small Volume, Independent Low Volume, an d

Intermediate Volume Manufacturer Status.

(A) Increases in California Production Volume

. In the 2003 and subsequent through 2008 model years, if a small volume manufacturer’s avera ge California production volume exceeds 4,500 units of new PCs, LDTs, and MDVs based on the average number of vehicles produced and deli vered for sale for the three previous consecutive model years, or if an independ ent low volume manufacturer’s average California production volume exceeds 10,000 units of new PCs, LDTs, and MDVs based on the average number of vehicles produc ed and delivered for sale for the three previous consecutive model years, or if an in termediate volume manufacturer’s average California production volume exceeds 60,000 units of new PCs, LDTs, and MDVs based on the average number of vehicles produc ed and delivered for sale for the three previous consecutive model years (i.e., total production volume exceeds 180,000 in a three-year period) , the manufacturer shall no longer be treated as a small volume, independent low volume, or intermediate volume manu facturer, as applicable, and shall comply with the ZEV requirements for independent lo w volume, intermediate volume or large volume manufacturers, as applicable, beginnin g with the sixth model year after the last of the three consecutive model years. The lead time shall be four rather than six years Requirements will begin in the fourth model year ra ther than the sixth model

year where a manufacturer ceases to be a small or interm ediate volume manufacturer in the 2003 or subsequent through 2008 model years due to the aggregation requirements in majority ownership situations, exce pt that if the majority ownership in the manufacturer was acquired prior to the 2001 mod el year, the manufacturer must comply with the stepped-up ZEV requirements startin g in the 2010 model year.

(B) Decreases in California Production Volume

. If a manufacturer’s average California production volume falls below 4, 500, 10,000 or 60,000 units of new PCs, LDTs, and MDVs, as applicable, based on the av erage number of vehicles produced and delivered for sale for the three previ ous consecutive model years, the manufacturer shall be treated as a small volume, in dependent low volume, or intermediate volume manufacturer, as applicable, an d shall be subject to theFinal Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08

Adopted: December 17, 2008 8 requirements for a small volume, independent low vo lume, or intermediate volume manufacturer beginning with the next model year.

(C) Calculating California Production Volume in Change of Ownership Situations. Where a manufacturer experiences a change in owners hip in a particular model year, the change will affect app lication of the aggregation requirements on the manufacturer starting with the next model year. The

manufacturer’s small or intermediate volume manufac turer status for the next model year shall be based on the average California produ ction volume in the three previous consecutive model years of those manufacturers whos e production volumes must be aggregated for that next model year. For example, where a change of ownership during the 2004 model year results in a requirement that the production volume of Manufacturer A be aggregated with the production vo lume of Manufacturer B, Manufacturer A’s status for the 2005 model year wil l be based on the production

volumes of Manufacturers A and B in the 2002-2004 m odel years. Where the production volume of Manufacturer A must be aggrega ted with the production volumes of Manufacturers B and C for the 2004 model year, a nd during that model year a change in ownership eliminates the requirement that Manufacturer B’s production volume be aggregated with Manufacturer A’s, Manufac turer A’s status for the 2005 model year will be based on the production volumes of Manufacturers A and C in the 2002-2004 model years. In either case, the lead ti me provisions in section 1962(b)(5 7 )(A) and (B) will apply.

(c) Partial ZEV Allowance Vehicles (PZEVs)

.

(1) Introduction. This section 1962(c) sets forth the criteria for identifying

vehicles delivered for sale in California as PZEVs. A PZEV is a vehicle that cannot be certified as a ZEV but qualifies for a PZEV allowan ce of at least 0.2.

(2) Baseline PZEV Allowance

. In order for a vehicle to be eligible to receive a PZEV allowance, the manufacturer must demonstrate compliance with all of the following requirements. A qualifying vehicle will receive a baseline PZEV allowance of

0.2.

(A) SULEV Standards. Certify the vehicle to the 150,000-mile SULEV

exhaust emission standards for PCs and LDTs in sect ion 1961(a)(1) (for model years 2003 through 2006, existing SULEV intermediate in-u se compliance standards shall apply to all PZEVs). Bi-fuel, fuel-flexible and du al-fuel vehicles must certify to the applicable 150,000-mile SULEV exhaust emission stan dards when operating on both fuels;

(B) Evaporative Emissions. Certify the vehicle to the evaporative emission standards in section 1976(b)(1)(E) (“ zero” -fuel evaporative emissions standards);Final Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08

Adopted: December 17, 2008 9

(C) OBD. Certify that the vehicle will meet the applicable on-board diagnostic requirements in sections 1968.1 or 1968.2, as applicable, for 150,000 miles;

and

(D) Extended Warranty

. Extend the performance and defects warranty period set forth in sections 2037(b)(2) an d 2038(b)(2) to 15 years or 150,000 miles, whichever occurs first, except that the time period is to be 10 years for a zero emission energy storage device used for traction po wer (such as a battery, ultracapacitor, or other electric storage device).

(3) Zero-Emission VMT PZEV Allowance

.

(A) Calculation of Zero Emission VMT Allowance

. A vehicle that meets the requirements of section 1962(c)(2) and ha s zero-emission vehicle miles traveled (“VMT”) capability will generate an additi onal zero emission VMT PZEV

allowance calculated as follows:

Urban All-Electric Range Zero-emission VMT Allowance

< 10 miles 0.0

10 miles to 90 miles ( 33.8 + [0.5 x Urban AER])/35

>90 miles 2.25

The urban all-electric range shall be determined in accordance with section E.3.(2)(a) 2.1 of the “California Exhaust Emission Standards and Test Procedures for 2005 and Subsequent through 2008 Model Zero-Emission Vehicles, and 2001 and Subsequent Model Hybrid Electric Vehicles, in the Passenger Car, Light-Duty Truck and Medium-Duty Vehicle Classes,” incorporate d by reference in section 1962(h).

(B) Alternative Procedures. As an alternative to determining the

zero-emission VMT allowance in accordance with the preceding section 1962(c)(3)(A), a manufacturer may submit for Executive Officer app roval an alternative procedure for determining the zero-emission VMT potential of the vehicle as a percent of total VMT, along with an engineering evaluation that adequatel y substantiates the zero-emission VMT determination. For example, an alternative pro cedure may provide that a vehicle

with zero- emissions of one regulated pollutant (e.g. NOx) and not another (e.g. NMOG) will qualify for a zero-emission VMT allowance of 1 .5.

(C) Additional Allowances for Qualifying HEVs. The Executive Officer shall approve an additional 0.1 zero-emissi on VMT partial ZEV allowance for an HEV with an all-electric range if the manufacturer demonstrates to the reasonable

satisfaction of the Executive Officer that the HEV is equipped with software and/or other strategies that would promote maximum use of off-ve hicle charging, and that the strategies employed are reasonably reliable and tam per-proof.Final Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08

Adopted: December 17, 2008 10 (4) PZEV Allowance for Advanced ZEV Componentry

. A vehicle that meets the requirements of section 1962(c)(2) may qu alify for an advanced componentry PZEV allowance as provided in this section 1962(c)( 4).

(A) Use of High Pressure Gaseous Fuel or Hydrogen Stora ge System

. A vehicle equipped with a high pressure gaseous f uel storage system capable of refueling at 3600 pounds per square inch or more and operating exclusively on this gaseous fuel shall qualify for an advanced componen try PZEV allowance of 0.2. A vehicle capable of operating exclusively on hydroge n stored in a high pressure system capable of refueling at 3600 pounds per square inch or more, or stored in nongaseous form, shall instead qualify for an advanced compone ntry PZEV allowance of 0.3.

(B) Use of a Qualifying HEV Electric Drive System.

1. Classification of HEVs. HEVs qualifying for additional allowances or allowances that may be used in the AT PZEV categ ory are classified in one of five types of HEVs based on the criteria in the followin g table.

Characteristics Type A Type B Type C Type D Type E

Electric Drive System Peak Power Output >= 4 kW >= 4 kW

<10 kW >= 10 kW >= 10 kW >= 50 kW

Traction Drive System Voltage <60

Volts >= 60

Volts < 60 Volts >= 60

Volts >= 60

volts

Traction Drive

Boost Yes Yes Yes Yes Yes

Regenerative Braking Yes Yes Yes Yes Yes

Idle Start/Stop Yes Yes Yes Yes Yes

2. Type A HEVs. A 2008 or earlier model-year PZEV that the

manufacturer demonstrates to the reasonable satisfa ction of the Executive Officer meets all of the criteria for a Type A HEV does not receive an additional allowance for meeting those criteria but generates credits that m ay be used in the AT PZEV category through the 2008 model year.

3. Type B HEVs. A 2008 or earlier model-year PZEV that the

manufacturer demonstrates to the reasonable satisfa ction of the Executive Officer meets all of the criteria for a Type B HEV qualifie s for an additional advanced componentry allowance of 0.2.Final Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08

Adopted: December 17, 2008 11

4. Type C HEVs. A 2011 2008 or earlier model-year PZEV that the

manufacturer demonstrates to the reasonable satisfa ction of the Executive Officer meets all of the criteria for a Type C HEV, and tha t is equipped with an advanced traction energy storage system – such as nickel met al-hydride batteries, ultracapacitors, or other similar systems – with a design lifetime o f at least 10 years, qualifies for an additional advanced componentry allowance of 0.2.

5. Type D HEVs. A PZEV that the manufacturer demonstrates to the

reasonable satisfaction of the Executive Officer me ets all of the criteria for a Type D HEV qualifies for an additional advanced componentr y allowance of 0.4 in the 2003 through 2011 2008 model years, 0.35 in the 2012 through 2014 model ye ars, and 0.25 in the 2015 and subsequent model years

.

6. Type E HEVs. A PZEV that the manufacturer demonstrates to the

reasonable satisfaction of the Executive Officer me ets all of the criteria for a Type E HEV qualifies for an additional advanced componentr y allowance of 0.5 in the 2003 through 2011 2008 model years, 0.45 in the 2012 through 2014 model years, and 0.35 in the 2015 and subsequent model years

.

7. Severability. In the event that all or part of section 1962(c)(4)(B)1.-6. is found invalid, the re mainder of section 1962, including the remainder of section 1962(c)(4)(B)1.-6. if any, rem ains in full force and effect.

(5) PZEV Allowance for Low Fuel-Cycle Emissions

. A vehicle that uses fuel(s) with very low fuel-cycle emissions shall re ceive a PZEV allowance not to exceed 0.3 (0.15 in the case of an HEV that uses for propu lsion any fuel that does not have very low fuel-cycle emissions). In order to receiv e the fuel-cycle PZEV allowance, a

manufacturer must demonstrate to the Executive Offi cer, using peer-reviewed studies or other relevant information, that NMOG emissions associated with the fuel(s) used by the vehicle (on a grams/mile basis) are lower than or equal to 0.01 grams/mile. Fuelcycle emissions must be calculated based on near-te rm production methods and infrastructure assumptions, and the uncertainty in the results must be quantified. The fuel-cycle PZEV allowance is calculated according t o the following formula:

PZEV Fuel Cycle Allowance = 0.3 x [(percent of VM T using fuel(s) meeting the requirements of the preceding paragraph) / 100]

A manufacturer’s demonstration to the Executive Off icer that a vehicle qualifies for a fuel-cycle PZEV allowance shall include test result s and/or empirical data supporting the estimate of the relative proportion of VMT whil e operating on fuel(s) with very low fuel-cycle emissions.

(6) Calculation of

PZEV Allowance.

(A) Calculation of Combined PZEV Allowance for a Vehicl e

. The combined PZEV allowance for a qualifying vehicle in a particular model year is the sumFinal Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08

Adopted: December 17, 2008 12 of the PZEV allowances listed in this section 1962( c)(6), multiplied by any PZEV introduction phase-in multiplier listed in section 1962(c)(7), subject to the caps in section 1962(c)(6)(B).

1. Baseline PZEV Allowance. The baseline PZEV allowance of 0.2 for vehicles meeting the criteria in section 1962(c )(2);

2. Zero-Emission VMT PZEV Allowance. The zero-emission VMT PZEV allowance, if any, determined in accordance wi th section 1962(c)(3);

3. Advanced Componentry PZEV Allowance. The advanced ZEV componentry ZEV allowance, if any, determined in ac cordance with section 1962(c)(4);

and

4. Fuel-Cycle Emissions PZEV Allowance. The fuel-cycle emissions PZEV allowance, if any, determined in acc ordance with section 1962(c)(5).

(B) Caps on the Value of an AT PZEV Allowance.

1. [RESERVED] Cap for 2012 and Subsequent Model

- Year

Vehicles. The maximum value of AT PZEV allowances a 2012 an d subsequent model

year vehicle may earn, including the baseline PZEV allowance, is 3.0.

2. Cap Based on the Credit Value of a Type III ZEV. In no case may the combined AT PZEV allowance for a qualifying vehicle in a particular model year, including the baseline PZEV allowance, exceed the ZEV credits for a Type III ZEV placed in service in the same model year.

(7) PZEV Multipliers.

(A) PZEV Introduction Phase-In Multiplier. Each 2000 through 2005 model-year PZEV that is produced and delivered for sale in California, other than a PZEV qualifying for a phase-in multiplier under sec tion 1962(c)(7)(B), qualifies for a PZEV introduction phase-in multiplier as follows:

MY 2000-2003 MY 2004 MY 2005 Multiplier 4.0 2.0 1.33

(B) Introduction Phase-In Multiplier for PZEVs That Ear n a Zero

Emission VMT Allowance

. Each 2000 through 2011 2008 model year PZEV that

earns a zero emission VMT allowance under section 1 962(c)(3) and is produced and delivered for sale in California qualifies for a ph ase-in multiplier as follows:

MY 2000-2008 MY 2009

- 2011 Multiplier 6.0 3.0Final Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08

Adopted: December 17, 2008 13 (d) Qualification for ZEV Multipliers and Credits

.

(1) 1996-1998 Model-Year ZEV Multipliers.

(A) 1996-1998 Model-Year ZEV Multiplier Based on Vehicl e Range

. 1996-1998 model-year ZEVs shall qualify for a ZEV m ultiplier based on vehicle range

as follows:

Vehicle Range (miles)

ZEV Multiplier Model Years

1996 and 1997 Model Year

1998

2 any ≥ 100

3 ≥ 70 ≥ 130

Range shall be determined in accordance with sectio n 9.f.(2)(a) of the “California

Exhaust Emission Standards and Test Procedures for 1988 Through 2000 Model Passenger Cars, Light-Duty Trucks and Medium-Duty V ehicles,” incorporated by reference in section 1960.1(k).

(B) 1996-1998 Model-Year ZEV Multiplier Based on Specif ic Energy of Battery

. 1996-1998 model-year ZEVs shall qualify for a ZEV multiplier based on specific energy of the battery as follows:

ZEV Multiplier Specific Energy of Battery (w-hr/kg)

2 any

3 ≥ 40

(C) Election of Multiplier. A 1996-1998 model-year ZEV may qualify for a ZEV multiplier according to section 1962(d)(1 )(A) or section 1962(d)(1)(B), but not

both.

(2) 1999-2000 Model-Year ZEV Multiplier Calculation for Extended Electric Range Vehicles. Each ZEV that is produced and delivered for sale in California in the 1999-2000 model years and that ha s an extended electric range shall qualify for a ZEV multiplier as follows:

All-electric range MY 1999-2000

100-175 6-10Final Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08

Adopted: December 17, 2008 14 ZEV multipliers under the above schedule will be de termined by linear interpolation

between the values shown in the above schedule. Ra nge shall be determined in accordance with Section E.3.(2)(a) of the “Californ ia Exhaust Emission Standards and

Test Procedures for 2003 5 an d Subsequent through 2008 Model Zero-Emission Vehicles, and 2001 and Subsequent Model Hybrid Elec tric Vehicles, in the Passenger Car, Light-Duty Truck and Medium-Duty Vehicle Class es,” incorporated by reference in section 1962(h). ZEVs that have a refueling time o f less than 10 minutes and a range of 100 miles or more shall be counted as having unl imited all-electric range, and shall consequently earn the maximum allowable ZEV multipl ier for a specific model year. ZEVs that have a range of 80 to 99 miles shall qual ify for ZEV multipliers in the 1999- 2000 model years in accordance with the following e quation:

ZEV multiplier = (6) x (AER equivalent to a 10 m inute recharge/100) x 0.5.

As an option to the above mechanism, the manufactur er of a 1999 model-year ZEV may elect to have its multiplier based on the regul atory requirements pertaining to multipliers based on range or specific energy in se ction 1960.1(g)(2) and (h)(2). title 13, California Code of Regulations that were applicable to 1999 model-year ZEVs immediately before this section 1962 became operati ve on November 27, 1999 as a result of the “LEV II” rulemaking.

(3) ZEV Multipliers for 2001-2002 Model Years.

(A) ZEV Phase-In Multiplier

. Each 2001 and 2002 model-year ZEV that is placed in service in California by Septembe r 30, 2003 qualifies for a ZEV phasein multiplier of 4.0. A 2001 or 2002 model-year ZE V that is placed in service in California after September 30, 2003 earns credits in accordance with section 1962(d)(5) instead of section 1962(d)(3).

(B) ZEV Extended Electric Range Multiplier.

1. Basic Multiplier Schedule. Each 2001 and 2002 model-year ZEV that is placed in service in California and that ha s an extended urban electric range qualifies for a ZEV extended electric range multipl ier as follows:

Urban All-Electric Range Multiplier

< 50 miles 1

> ≥ 50 miles to < 275 miles (Urban AER-25)/25

> ≥ 275 miles 10Final Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08

Adopted: December 17, 2008 15 A NEV is not eligible to earn a ZEV extended electr ic range multiplier. In determining ZEV range multipliers, specialty ZEVs may, upon Exe cutive Officer approval, be tested at the parameters used to determine the ZEV multipl iers for the existing ZEV.

2. Fast refueling.

a. Full Fueling in 10 Minutes or Less

. A 2001-2002 model-year ZEV with the demonstrated capability to accept fuel or electric charge until achieving at least 95% SOC or rated fuel capacity in 10 minutes or less when starting from all operationally allowable SOC or fuel states is count ed as having unlimited zero emission range and qualifies for the maximum allowable ZEV e xtended electric range multiplier.

b. At Least 60-Mile Range in Less Than 10 Minutes. A 2001-2002 model year ZEV with the demonstrated capacity to ac cept fuel or electric charge equivalent to at least 60 miles of UDDS range when starting from 20% SOC in less than 10 minutes is counted as having 60 additional miles (up to a 275 mile maximum) of UDDS range in the range multiplier determination in section 1962(d)(3)(C)1.

(C) Combined ZEV Multiplier

. During the 2001-2002 model years, the combined ZEV multiplier for each ZEV in a specific model year is the product of:

1. The ZEV phase-in multiplier if any as set forth in section 1962(d)(3)(A), times

2. The extended electric range multiplier if any as s et forth in section 1962(d)(3)(B).

(4) Effect of ZEV Multipliers in the 1996-2002 Model Ye ars. In calculating the number of ZEVs produced and delivered for sale in California by a manufacturer in the 1996-2002 model years and the ZEV credits from such vehicles, the number of ZEVs qualifying for a particular ZEV multiplier sha ll be multiplied by the combined ZEV multiplier.

(5) ZEV Credits for the 2003 and Subsequent through 2008 Model Years.

(A) ZEV Tiers for Credit Calculations

. Starting in the 2003 model year, ZEV credits from a particular ZEV are based o n the assignment of a given ZEV into one of the following five ZEV tiers:Final Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08

Adopted: December 17, 2008 16 ZEV Tier Common

Description UDDS ZEV

Range Fast Refueling Capability

NEV NEV No minimum N/A Type 0 Utility EV <50 miles N/A Type I City EV >= 50, <100

miles N/A

Type II Full Function

EV >= 100 miles N/A

Type III Fuel Cell EV >= 100 miles Must be capable of replacing 95% maximum rated energy capacity

in <= 10 minutes Must be capable of replacing 95 miles (UDDS ZEV range) in

≤ 10 minutes per section 1962.1(d)(5)(B)

A specialty ZEV that has the same zero emission ene rgy storage device and chassis as an existing ZEV from which it was modified may, upo n Executive Officer approval, be categorized on the basis of that existing ZEV. A s pecialty vehicle that is optimized for a particular duty cycle that conflicts with optimizat ion for maximum vehicle range may be promoted to the next higher ZEV tier upon a determi nation by the Executive Officer that the specialty vehicle has ZEV componentry equivalen t to that utilized by ZEVs in the next tier and would meet the requirements for the n ext tier if optimized for maximum

range.

(B) ZEV Credits for 2003 and Subsequent through 2008 ModelYear ZEVs. A 2003 and subsequent through 2008 model-year ZEV, other than a NEV, earns 1 ZEV credit when it is produced and delivere d for sale in California. A 2003 and subsequent through 2008 model-year ZEV earns additional credits based on th e earliest model year in which the ZEV is placed in service (not ea rlier than the ZEV’s model year). The following table identifies the to tal credits that a ZEV in each of the five ZEV tiers will earn, including the credit not contingent on placement in service, if it is placed in service in the specified model calendar year or by June 30 after the end of the specified model calendar year.Final Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08

Adopted: December 17, 2008 17 Total Credit Earned by ZEV Type and Model Year for Production and Delivery for

Sale and for Placement

Tier Model Calendar Year in Which ZEV is Placed in Service

200

3 2004 2005 2006 2007 200

8 2009 201

0 201

1 2012+

NEV 1.25 0.62

5 0.62

5 0.15 0.15 0.15 0.15 0.15 0.15 0.15

Type 0 ( Utility) 1.5 1.5 1.5 1.5 1.5 1.5 1 1 1 1

Type 1 I (City) 8 8 8 7 7 7 2 2 2 2

Type II 12 12 12 10 10 10 3 3 3 3

Type III 40 40 40 40 40 40 4 4 4 3

(C) Multiplier for Certain Type I and Type II ZEVs. A 2004 through

2011 2008 model-year Type I and Type II ZEV shall qualify fo r a multiplier of 1.25 if it is

either sold to a motorist or is leased for three or more years to a motorist who is given the option to purchase or re-lease the vehicle for two years or more at the end of the

first lease term.

(D) Counting a Type III ZEVs Placed in a Section 177 St ate. Through the 2011 2008 model year, a Type III ZEV that is certified to th e California ZEV standards and is placed in service in a state that is administering the California ZEV requirements pursuant to section 177 of the federal Clean Air Act (42 U.S.C. § 7507) applicable for the ZEV’s model year may be counted towards compliance with the California percentage ZEV requirements in section 1 962(b), including the requirements in section 1962(b)(2)(B), as if it were delivered f or sale and placed in service in California. Similarly, a 2011 2008 and earlier model-year Type III ZEV that is certif ied to the California ZEV standards and is placed in servi ce in California may be counted towards the percentage ZEV requirements of any stat e that is administering the California ZEV requirements pursuant to section 177 of the federal Clean Air Act, including requirements based on section 1962(b)(2)( B).

(e) [Reserved]

(f) Extended Service Multiplier for 1997-2003 Model-Yea r ZEVs and

PZEVs With ≥

10 Mile Zero Emission Range. Except in the case of a NEV, an additional ZEV or PZEV multiplier will be earned by the manufacturer of a 1997 through 2003 model-year ZEV, or PZEV with ≥ 10 mile zero emission range for each full year it is registered for operation on public roads in Cali fornia beyond its first three years of service, through the 2011 2008 calendar year. For additional years of service st arting earlier than April 24, 2003, the manufacturer will receive 0.1 times the ZEV credit thatFinal Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08

Adopted: December 17, 2008 18 would be earned by the vehicle if it were leased or sold new in that year, including multipliers, on a year-by-year basis beginning in t he fourth year after the vehicle is initially placed in service. For additional years of service starting April 24, 2003 or later,

the manufacturer will receive 0.2 times the ZEV cre dit that would be earned by the vehicle if it were leased or sold new in that year, including multipliers, on a year-by-year basis beginning in the fourth year after the vehicl e is initially placed in service. The extended service multiplier is reported and earned in the year following each continuous year of service. Additional credit cannot be earne d after model year 2011.

(g) Generation and Use of ZEV Credits; Calculation of P enalties

(1) Introduction. A manufacturer that produces and delivers for sal e in California ZEVs or PZEVs in a given model year exce eding the manufacturer’s ZEV requirement set forth in section 1962(b) shall earn ZEV credits in accordance with this section 1962(g).

(2) ZEV Credit Calculations.

(A) Credits from ZEVs. The amount of g/mi ZEV credits earned by a manufacturer in a given model year from ZEVs shall be expressed in units of g/mi NMOG, and shall be equal to the number of credits f rom ZEVs produced and delivered for sale in California that the manufacturer applie s towards meeting the ZEV requirements for the model year subtracted from the number of ZEVs produced and delivered for sale in California by the manufacture r in the model year and then multiplied by the NMOG fleet average requirement fo r PCs and LDT1s for that model

year.

(B) Credits from PZEVs. The amount of g/mi ZEV credits from PZEVs earned by a manufacturer in a given model yea r shall be expressed in units of g/mi NMOG, and shall be equal to the total number o f PZEVs produced and delivered for sale in California that the manufacturer applie s towards meeting its ZEV requirement for the model year subtracted from the total number of PZEV allowances from PZEVs produced and delivered for sale in California by th e manufacturer in the model year and then multiplied by the NMOG fleet average requireme nt for PCs and LDT1s for that model year.

(C) Separate Credit Accounts. The number of credits from a manufacturer’s [i] ZEVs, [ii] advanced technology P ZEVs, and [iii] all other PZEVs shall each be maintained separately.

(3) ZEV Credits for MDVs and LDTs Other Than LDT1s

. ZEVs and PZEVs classified as MDVs or as LDTs other than LDT1s may be counted toward the ZEV requirement for PCs, and LDT1s, and LDT2s as applicable , and included in the calculation of ZEV credits as specified in this sec tion 1962(g) if the manufacturer so designates.Final Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08

Adopted: December 17, 2008 19 (4) ZEV Credits for Advanced Technology Demonstration P rograms. A vehicle, other than a NEV, that is placed in a Cali fornia advanced technology demonstration program may earn ZEV credits even if it is not “delivered for sale. ” or registered with the California Department of Motor Vehicles (DMV). To earn such credits, the manufacturer must demonstrate to the r easonable satisfaction of the Executive Officer that the vehicles will be regular ly used in applications appropriate to evaluate issues related to safety, infrastructure, fuel specifications or public education, and that for more than 50 percent of the first year of placement the vehicle will be situated in California. Such a vehicle is eligible to receive the same allowances and credits that it would have earned if placed in serv ice. To determine vehicle credit, the model-year designation for a demonstration vehicle shall be consistent with the modelyear designation for conventional vehicles placed i n the same timeframe.

(5) ZEV Credits for Transportation Systems.

(A) General

. In model years 2001 through 2011 2008 , a ZEV, advanced technology PZEV or PZEV placed as part of a transportation system may earn additional ZEV credits, which may be used in the same manner as other credits earned by vehicles of that category, except as prov ided in section (g)(5)(C) below. A NEV is not eligible to earn credit for transportati on systems. To earn such credits, the

manufacturer must demonstrate to the reasonable sat isfaction of the Executive Officer that the vehicle will be used as a part of a projec t that uses an innovative transportation system as described in section (g)(5)(B) below.

(B) Credits Earned

. In order to earn additional credit under this section (g)(5), a project must at a minimum demonst rate [i] shared use of ZEVs, AT PZEVs or PZEVs, and [ii] the application of “intell igent” new technologies such as reservation management, card systems, depot managem ent, location management, charge billing and real-time wireless information s ystems. If, in addition to factors [i] and [ii] above, a project also features linkage to transit, the project may receive further additional credit. For ZEVs only, not including NE Vs, a project that features linkage to transit, such as dedicated parking and charging fac ilities at transit stations, but does not demonstrate shared use or the application of intell igent new technologies, may also receive additional credit for linkage to transit. The maximum credit awarded per vehicle shall be determined by the Executive Officer, based upon an application submitted by the manufacturer and, if appropriate, the project m anager. The maximum credit awarded shall not exceed the following:

Type of Vehicle Shared Use, Intelligence Linkage to

Transit

PZEV 2 1 Advanced Technology PZEV 4 2

ZEV 6 3Final Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08

Adopted: December 17, 2008 20

(C) Cap on Use of Credits

.

1. ZEVs

. Credits earned or allocated by ZEVs pursuant to t his section (g)(5), not including all credits earned by the vehicle itself, may be used to satisfy up to one-tenth of a manufacturer’s ZEV obl igation in any given model year.

2. AT PZEVs

. Credits earned or allocated by AT PZEVs pursuant to this section (g)(5), not including all credits earn ed by the vehicle itself, may be used to satisfy up to one-twentieth of a manufacturer’s ZEV obligation in any given model year, but may only be used in the same manner as other cr edits earned by vehicles of that category.

3. PZEVs

. Credits earned or allocated by PZEVs pursuant to this section (g)(5), not including all credits earned by the vehicle itself, may be used to satisfy up to one-fiftieth of the manufacturer’s ZE V obligation in any given model year, but may only be used in the same manner as other cr edits earned by vehicles of that category.

(D) Allocation of Credits

. Credits shall be assigned by the Executive Officer to the project manager or, in the absence o f a separate project manager, to the vehicle manufacturers upon demonstration that a veh icle has been placed in a project.

Credits shall be allocated to vehicle manufacturers by the Executive Officer in

accordance with a recommendation submitted in writi ng by the project manager and signed by all manufacturers participating in the pr oject, and need not be allocated in direct proportion to the number of vehicles placed.

(6) Submittal Use

of ZEV Credits

. A manufacturer may meet the ZEV requirements in any given model year by submitting to the Executive Officer a commensurate amount of g/mi ZEV credits, consistent with section 1962(b). These credits may be earned previously by the manufacture r or acquired from another party, except that beginning with the 2006 model year cred its earned from NEVs offered for sale or placed in service in model years 2001 throu gh 2005 cannot be used to satisfy more than the following portion of a manufacturer’s percentage ZEV obligation that may only be satisfied with credits from ZEVs and, start ing with t he 2009 model year, the manufacturer’s percentage ZEV obligation that may b e satisfied by credits from AT

PZEVs but not PZEVs :

ZEV Category AT PZEV Category

2006 2007-2008 and beyond 2009 2010 and

beyond

75% 50% 75% 50%

This limitation applies to credits earned in model years 2001 through 2005 by the same manufacturer or earned in model years 2001 through 2005 by another manufacturer and acquired. The amount of g/mi ZEV credits requi red to be submitted shall be calculated according to the criteria set forth in t his section 1962(g).Final Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08

Adopted: December 17, 2008 21

(A) Carry forward provisions for LVMs. ZEV credits generated from excess production in model years 2005 through 2008, including those acquired from another party, may be carried forward and applied t o the manufacturer’s percentage ZEV obligation that may only be satisfied by credit s from ZEVs in section 1962.1(b)(2)(B)1.b. Beginning with the 2012 model year, those earned ZEV credits may no longer be used to satisfy the manufacturer’s percentage ZEV obligation that may only be satisfied by credits from ZEVs, but may be used to satisfy the manufacturer’s percentage ZEV obligation that may b e satisfied by credits from Enhanced AT PZEVs, AT PZEVs, or PZEVs. For example , ZEV credit earned in 2008 would retain full flexibility through 2011, at whic h time that credit could only be used as Enhanced AT PZEV, AT PZEV, or PZEV credits.

(B) Carry forward provisions for manufacturers other than LVMs

. ZEV credits generated from 2008 model year producti on by manufacturers that are not LVMs may be carried forward by the manufacturer pro ducing the ZEV credit until the manufacturer becomes subject to the LVM requirement s, after the transition period permitted in section 1962(b)(7)(A). When subject t o the LVM requirements, a manufacturer must comply with the provisions of sec tion 1962(g)(6)(A).

ZEV credits generated from 2008 model year producti on traded by a manufacturer other than a LVM to any other manufacturer, includi ng a LVM, are subject to section 1962(g)(6)(A), applicable beginning 2008 model year (e.g., a 2008 model year ZEV credit traded in calendar year 2010 can only be app lied towards the portion of the manufacturer’s requirement that must be met with ZE Vs through model year 2011; beginning in model year 2012, the credit can only b e applied to the portion of the manufacturer’s requirement that may be met with Enh anced AT PZEVs, AT PZEVs, or PZEVs).

(7) Requirement to Make Up a ZEV Deficit

.

(A) General. A manufacturer that produces and delivers for sal e in California fewer ZEVs than required in a given mode l year shall make up the deficit by

the end of the next third model year by submitting to the Executive Officer a commensurate amount of g/mi ZEV credits, except tha t credits generated from PZEVs may be used to offset d eficits for two model years . The amount of g/mi ZEV credits required to be submitted shall be calculated by [i] adding the number of ZEVs produced and delivered for sale in California by the manufac turer for the model year to the number of ZEV allowances from partial ZEV allowance vehicles produced and delivered for sale in California by the manufacturer for the model year (for a large volume manufacturer, not to exceed that permitted under se ction 1962(b)(2)), [ii] subtracting that total from the number of ZEVs required to be p roduced and delivered for sale in California by the manufacturer for the model year, and [iii] multiplying the resulting value by the fleet average requirements for PCs and LDT1s for the model year in which the

deficit is incurred.Final Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08

Adopted: December 17, 2008 22 (8) Penalty for Failure to Meet ZEV Requirements. Any manufacturer that fails to produce and deliver for sale in California the required number of ZEVs or and submit an appropriate amount of g/mi ZEV credits an d does not make up ZEV deficits within the specified time period shall be subject t o the Health and Safety Code section 43211 civil penalty applicable to a manufacturer th at sells a new motor vehicle that does not meet the applicable emission standards ado pted by the state board. The

cause of action shall be deemed to accrue when the ZEV deficits are not balanced by the end of the specified time period. For the purp oses of Health and Safety Code section 43211, the number of vehicles not meeting t he state board’s standards shall be calculated according to the following equation, pro vided that the percentage of a large volume manufacturer’s ZEV requirement for a given m odel year that may be satisfied with partial ZEV allowance vehicles or ZEV credits from such vehicles may not exceed the percentages permitted under section 1962(b)(2)( A):

(No. of ZEVs required to be produced and delivered for sale in California for the model year) - (No. of ZEVs produced and delivered f or sale in California for the model year) - (No. of ZEV allowances from partial Z EV allowance vehicles produced and delivered for sale in California for t he model year) - [(Amount of ZEV credits submitted for the model year) / (the fl eet average requirement for PCs and LDT1s for the model-year)].

(h) Test Procedures

. The certification requirements and test procedures for determining compliance with this section 1962 are s et forth in “California Exhaust

Emission Standards and Test Procedures for 2005 and Subsequent through 2008 Model Zero-Emission Vehicles, and 2001 and Subseque nt Model Hybrid Electric Vehicles, in the Passenger Car, Light-Duty Truck an d Medium-Duty Vehicle Classes,” adopted by the state board on August 5, 1999, and l ast amended December 19, 2003 December 17, 2008 , which is incorporated herein by reference.

(i) ZEV-Specific Definitions. The following definitions apply to this section

1962.

(1) “Advanced technology PZEV” or “AT PZEV” means any PZEV with an allowance greater than 0.2 before application of th e PZEV early introduction phase-in multiplier

(2) “Battery electric vehicle” means any vehicle that operates solely by use of a battery or battery pack, or that is powered prima rily through the use of an electric battery or battery pack but uses a flywheel or capa citor that stores energy produced by the electric motor or through regenerative braking to assist in vehicle operation.

(2.5 3 ) “Electric drive system” means an electric motor a nd associated power electronics which provide acceleration torque to th e drive wheels sometime during normal vehicle operation. This does not include co mponents that could act as a motor, but are configured to act only as a generator or en gine starter in a particular vehicle application.Final Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08

Adopted: December 17, 2008 23 (3 4 ) “Neighborhood electric vehicle” means a motor veh icle that meets the definition of Low-Speed Vehicle either in section 3 85.5 of the Vehicle Code or in 49 CFR 571.500 (as it existed on July 1, 2000), and is certified to zero-emission vehicle

standards.

(4 5 ) “Placed in service” means having been sold or lea sed to an end-user and not to a dealer or other distribution chain entity, and having been individually registered for on-road use by the California Department of Mot or Vehicles.

(4.5 6 ) “Regenerative braking” means the partial recovery of the energy normally dissipated into friction braking that is returned a s electrical current to an energy storage

device.

(5 7 ) “Specialty ZEV” means a ZEV that is designed for a commercial or governmental fleet application, and either [i] has the same zero emissions energy storage device and chassis as an existing ZEV from which it is modified, or [ii] in the case of a vehicle that is not based on an existing ZEV platform, is optimized for a particular duty cycle, such as urban delivery servi ce, that conflicts with optimization for maximum vehicle range.

(6 8 ) “Type 0, I, II, and III ZEV” all have the meaning s set forth in section 1962(d)(5)(A).Final Regulation Order – Part 2 Final §1962

Hearing Date: 03/27/08

Adopted: December 17, 2008 24 (j) Abbreviations. The following abbreviations are used in this

section 1962:

“AER” means all-electric range. “AT PZEV” means advanced technology partial zero e mission vehicle. “BEV” means battery electric vehicle. “DMV” means the California Department of Motor Veh icles “HEV” means hybrid-electric vehicle. “LDT” means light-duty truck. “LDT1” means a light-truck with a loaded vehicle w eight of 0-3750 pounds. “LDT2” means a “LEV II” light-duty truck with a loa ded vehicle weight of 3751 pounds to a gross vehicle weight of 8500 pounds, or a “LEV I” light-duty truck with a loaded vehicle weight of 3751-5750 pounds. “LVM” means large volume manufacturer. “MDV” means medium-duty vehicle. “Non-Methane Organic Gases” or “NMOG” means the tot al mass of oxygenated and non-oxygenated hydrocarbon emissions. “MY” means model year. “NEV” means neighborhood electric vehicle. “NOx” means oxides of nitrogen. “PC” means passenger car. “PZEV” means any partial zero emission vehicle that is delivered for sale in California and that qualifies for a partial ZEV all owance of at least 0.2. “SOC” means state of charge. “SULEV” means super-ultra-low-emission-vehicle. “UDDS” means urban dynamometer driving cycle. “UF” means utility factor.

“ULEV” means ultra-low emission vehicle.

“VMT” means vehicle miles traveled.

“ZEV” means zero-emission vehicle.

(k) Severability. Each provision of this section is severable, and in the event that any provision of this section is held to be in valid, the remainder of this article

remains in full force and effect.

Note: Authority cited: Sections 39600, 39601, 4301 3, 43018, 43101, 43104 and 43105, Health and Safety Code. Reference: Sections 39002, 39003, 39667, 43000, 43009.5, 43013, 43018, 43100, 43101, 43101.5, 43102, 43104, 43105, 43106, and 43204

43205 , and 43205.5, Health and Safety Code.