(a) Application for waiver

Any covered person subject to section 13251 of this title and any State subject to section 13257(o) of this title may petition the Secretary for a waiver of the applicable requirements of section 13251 or 13257(o) of this title.

(b) Grant of waiver

The Secretary shall grant a waiver of the requirements of section 13251 or 13257(o) of this title on a showing that the fleet owned, operated, leased, or otherwise controlled by the State or covered person—

(1) will achieve a reduction in the annual consumption of petroleum fuels by the fleet equal to—

(A) the reduction in consumption of petroleum that would result from 100 percent cumulative compliance with the fuel use requirements of section 13251 of this title; or

(B) in the case of an entity covered under section 13257(o) of this title, a reduction equal to the annual consumption by the State entity of alternative fuels if all of the cumulative alternative fuel vehicles of the State entity given credit under section 13258 of this title were to use alternative fuel 100 percent of the time; and

(2) is in compliance with all applicable vehicle emission standards established by the Administrator of the Environmental Protection Agency under the Clean Air Act (42 U.S.C. 7401 et seq.).

Not later than December 31 of a model year, any State or covered person granted a waiver under this section for the preceding model year shall submit to the Secretary an annual report that—

(1) certifies the quantity of the petroleum motor fuel reduction of the State or covered person during the preceding model year; and

(2) projects the baseline quantity of the petroleum motor fuel reduction of the State or covered person during the following model year.

(d) Revocation of waiver

If a State or covered person that receives a waiver under this section fails to comply with this section, the Secretary—

(1) shall revoke the waiver; and

(2) may impose on the State or covered person a penalty under section 13262 of this title.