II 115th CONGRESS 2d Session S. 3664 IN THE SENATE OF THE UNITED STATES November 28, 2018 Mr. Merkley (for himself and Mr. Whitehouse ) introduced the following bill; which was read twice and referred to the Committee on Environment and Public Works A BILL To amend the Clean Air Act to create a national zero-emission vehicle standard, and for other purposes.

1. Short title This Act may be cited as the Zero-Emission Vehicles Act of 2018 . 2. National zero-emission vehicle standard (a) National zero-Emission vehicle standard Part A of title II of the Clean Air Act ( 42 U.S.C. 7521 et seq.) is amended by adding at the end the following: 220. National zero-emission vehicle standard (a) Definitions In this section: (1) Base quantity of new passenger vehicle sales The term base quantity of new passenger vehicle sales means the total quantity of new passenger vehicles sold by a vehicle manufacturer during the most recent calendar year. (2) Passenger vehicle The term passenger vehicle has the meaning given the term passenger motor vehicle in section 32101 of title 49, United States Code. (3) Qualified electric vehicle The term qualified electric vehicle means a passenger vehicle that is— (A) a new qualified hybrid motor vehicle (as defined in section 30B(d)(3) of the Internal Revenue Code of 1986); or (B) a new qualified plug-in electric drive motor vehicle (as defined in section 30D(d) of the Internal Revenue Code of 1986). (4) Retire The term retire , with respect to a zero-emission vehicle credit, means to disqualify the zero-emission vehicle credit for any subsequent use under this section, including sale, transfer, exchange, or submission in satisfaction of a compliance obligation. (5) Vehicle manufacturer (A) In general The term vehicle manufacturer means an entity that— (i) engaged in the manufacturing of new passenger vehicles; and (ii) sold not fewer than 100 new passenger vehicles to ultimate purchasers, either directly or through an affiliate, such as a dealer. (B) Exclusions The term vehicle manufacturer does not include— (i) a motor vehicle parts supplier; or (ii) a dealer. (6) Zero-emission vehicle The term zero-emission vehicle means a passenger vehicle that produces zero exhaust emissions of any criteria pollutant, precursor pollutant, or greenhouse gas in any mode of operation or condition, as determined by the Administrator. (b) Compliance For calendar year 2030 and each calendar year thereafter, each vehicle manufacturer shall meet the requirements of subsections (c) and (d) by submitting to the Administrator, not later than April 1 of the following calendar year, as applicable— (1) for a vehicle manufacturer that fails to meet the minimum required percentage of new zero-emission vehicle sales for the applicable calendar year, as determined under subsection (c), a quantity of zero-emission vehicle credits sufficient to offset that excess, as determined by the Administrator; or (2) for a vehicle manufacturer that meets or exceeds the minimum required percentage of new zero-emission vehicle sales for the applicable calendar year, as determined under subsection (c), a certification of that compliance, as the Administrator determines to be appropriate. (c) Minimum required annual percentage of new zero-Emission vehicle sales For calendar years 2030 through 2040, in annual increments, the minimum annual percentage of the base quantity of new passenger vehicle sales of a vehicle manufacturer that shall be zero-emission vehicles, or otherwise credited towards the percentage requirement pursuant to subsection (e), shall be the applicable percentage specified in the following table: Minimum Required Annual Percentage of New Zero-Emission Vehicle Sales Calendar Year Percentage 2030 50.0 2031 55.0 2032 60.0 2033 65.0 2034 70.0 2035 75.0 2036 80.0 2037 85.0 2038 90.0 2039 95.0 2040 100.0. (d) Requirement for 2040 and thereafter For calendar year 2040 and each calendar year thereafter, a vehicle manufacturer shall sell only zero-emission vehicles. (e) Zero-Emission vehicle credits (1) In general A vehicle manufacturer may satisfy the requirements of subsection (b) through the submission of zero-emission vehicle credits— (A) issued to the vehicle manufacturer under subsection (f); or (B) obtained by purchase, transfer, or exchange under subsection (g). (2) Limitation A zero-emission vehicle credit may be counted toward compliance with subsection (b) only once. (f) Issuance of zero-Emission vehicle credits (1) In general Not later than 2 years after the date of enactment of this section, the Administrator shall establish by rule a program— (A) to verify and issue zero-emission vehicle credits to vehicle manufacturers; (B) to track the sale, transfer, exchange, carry over, and retirement of zero-emission vehicle credits; and (C) to enforce the requirements of this section. (2) Application (A) In general A vehicle manufacturer that sold, either directly or through an affiliate, such as a dealer, a new zero-emission vehicle or a qualified electric vehicle in the United States may apply to the Administrator for the issuance of a zero-emission vehicle credit. (B) Eligibility To be eligible for the issuance of a zero-emission vehicle credit, a vehicle manufacturer shall demonstrate to the Administrator that the vehicle manufacturer sold 1 or more zero-emission vehicles or qualified electric vehicles in the previous calendar year. (C) Contents The application shall indicate— (i) the type of zero-emission vehicle or qualified electric vehicle that was sold; (ii) the State in which the zero-emission vehicle or qualified electric vehicle was sold; and (iii) any other information determined to be appropriate by the Administrator. (D) Aggregation An application for a zero-emission vehicle credit under subparagraph (A) may aggregate information on all zero-emission vehicles and qualified electric vehicles sold by the vehicle manufacturer in the applicable calendar year. (3) Quantity of zero-emission vehicle credits (A) Zero-emission vehicles The Administrator shall issue to a vehicle manufacturer the application under paragraph (2) of which is approved 1 zero-emission vehicle credit for each zero-emission vehicle sold in the United States. (B) Qualified electric vehicles For a qualified electric vehicle sold by a vehicle manufacturer the application under paragraph (2) of which is approved, the Administrator shall issue a partial zero-emission vehicle credit based on the estimated proportion of the mileage driven on the battery of the qualified electric vehicle, as determined by the Administrator. (C) Fuel-efficient vehicles The Administrator may issue a partial zero-emission vehicle credit for a passenger vehicle that consumes less gasoline, as compared to comparable passenger vehicles (as identified by the Administrator), based on the estimated proportion of fuel savings, as determined by the Administrator. (D) Credit banking A zero-emission vehicle credit issued for any calendar year that is not submitted to comply with the minimum annual percentage of new zero-emission vehicles requirement of subsection (c) during that calendar year may be carried forward for use pursuant to subsection (b)(1) within the next 5 years, but not later than 2040. (g) Zero-Emission vehicle credit trading (1) In general A zero-emission vehicle credit for any calendar year before 2040 that is not submitted to the Administrator to comply with the minimum annual percentage of new zero-emission vehicles requirement of subsection (c) for that calendar year may be sold, transferred, or exchanged by the vehicle manufacturer to which the credit is issued or by any other entity that acquires the zero-emission vehicle credit. (2) Delegation The Administrator may delegate to an appropriate market-making entity the administration of a national tradeable zero-emission vehicle credit market for purposes of creating a transparent national market for the sale or trade of zero-emission vehicle credits. (h) Zero-Emission vehicle credit retirement (1) In general Any entity that obtains legal rights to a zero-emission vehicle credit may retire the zero-emission vehicle credit in any calendar year. (2) Use of retired zero-emission vehicle credit A zero-emission vehicle credit retired under paragraph (1) may not be used for compliance with subsection (b) in— (A) the calendar year in which the zero-emission vehicle credit is retired; or (B) any subsequent calendar year. (i) Information collection The Administrator may collect the information necessary to verify and audit— (1) the annual sales of passenger vehicles of any vehicle manufacturer; (2) a zero-emission vehicle credit submitted by a vehicle manufacturer pursuant to subsection (b)(1); (3) the validity of a zero-emission vehicle credit submitted for compliance by a vehicle manufacturer to the Administrator; and (4) the quantity of passenger vehicle sales in the United States of all vehicle manufacturers. (j) State programs (1) In general Nothing in this section shall preempt the authority of a State or political subdivision of a State to adopt or enforce any law (including regulations) relating to motor vehicles, including the authority to set standards for motor vehicle emissions and zero-emission vehicle requirements under section 177 and section 209. (2) Compliance with section No law or regulation of a State or political subdivision of a State shall relieve any vehicle manufacturer from compliance with any requirement otherwise applicable under this section. (k) Regulations Not later than 1 year after the date of enactment of this section, the Administrator shall promulgate regulations to implement this section. (l) Enforcement (1) Civil penalty (A) In general A vehicle manufacturer that fails to comply with subsection (b) shall be liable for a civil penalty, assessed by the Administrator, in an amount that is equal to twice the average value of the aggregate quantity of zero-emission vehicle credits that the vehicle manufacturer failed to submit in violation of that subsection, as determined by the Administrator. (B) Enforcement The Administrator shall assess any civil penalty under subparagraph (A). (C) Deposit With respect to any civil penalty paid to the Administrator pursuant to subparagraph (A), the Administrator shall deposit the amount into the Highway Trust Fund established by section 9503(a) of the Internal Revenue Code of 1986. (2) Injunction After calendar year 2040, the Administrator may issue an injunction on the manufacture of any passenger vehicles other than zero-emission vehicles by a vehicle manufacturer. . (b) Table of contents amendment The table of contents of the Clean Air Act (42 U.S.C. prec. 7401) is amended by adding at the end of the items relating to part A of title II the following: Sec. 220. National zero-emission vehicle standard. .