Revisions and Additions to Motor Vehicle Fuel Economy Label

Federal RegisterJul 6, 2011

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 85, 86, and 600

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 575

[EPA-HQ-OAR-2009-0865; FRL-9315-1; NHTSA-2010-0087]

RIN 2060-AQ09; RIN 2127-AK73

Revisions and Additions to Motor Vehicle Fuel Economy Label

AGENCY:

Environmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA), DOT.

ACTION:

Final rule.

SUMMARY:

The Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) are issuing a joint final rule establishing new requirements for the fuel economy and environment label that will be posted on the window sticker of all new automobiles sold in the U.S. The labeling requirements apply for model year 2013 and later vehicles with a voluntary manufacturer option for model year 2012. The labeling requirements apply to passenger cars, light-duty trucks, and medium duty passenger vehicles such as larger sport-utility vehicles and vans. The redesigned label provides expanded information to American consumers about new vehicle fuel economy and fuel consumption, greenhouse gas and smog-forming emissions, and projected fuel costs and savings, and also includes a smartphone interactive code that permits direct access to additional Web resources. Specific label designs are provided for gasoline, diesel, ethanol flexible fuel, compressed natural gas, electric, plug-in hybrid electric, and hydrogen fuel cell vehicles. This rulemaking is in response to provisions in the Energy Independence and Security Act of 2007 that imposed several new labeling requirements and new advanced-technology vehicles entering the market. NHTSA and EPA believe that these changes will help consumers to make more informed vehicle purchase decisions, particularly as the future automotive marketplace provides more diverse vehicle technologies from which consumers may choose. These new label requirements do not affect the methodologies that EPA uses to generate consumer fuel economy estimates, or the automaker compliance values for NHTSA's corporate average fuel economy and EPA's greenhouse gas emissions standards. This action also finalizes a number of technical corrections to EPA's light-duty greenhouse gas emission standards program.

DATES:

This final rule is effective on September 6, 2011. The incorporation by reference of certain publications listed in this regulation is approved by the Director of the Federal Register as of September 6, 2011.

ADDRESSES:

EPA and NHTSA have established dockets for this action under Docket ID No. EPA-HQ-OAR-2009-0865 and NHTSA-2010-0087, respectively. All documents in the docket are listed on the

http://www.regulations.gov

Web site. Although listed in the index, some information is not publicly available,

e.g.,

confidential business information (CBI) or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically through

http;//www.regulations.gov

or in hard copy at the following locations:

EPA:

EPA Docket Center (EPA/DC), EPA West, Room 334, 1301 Constitution Ave., NW., Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744.

NHTSA:

NHTSA: Docket Management Facility, M-30, U.S. Department of Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590. The Docket Management Facility is open between 9 a.m. and 5 p.m. Eastern Time, Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT:

EPA:

Lisa Snapp, Office of Transportation and Air Quality, Transportation and Climate Division, Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105; telephone number: 734-214-4282; fax number: 734-214-4958; e-mail address:

snapp.lisa@epa.gov.

DOT/NHTSA:

Rebecca Yoon, Office of Chief Counsel, National Highway Traffic Safety Administration, 1200 New Jersey Avenue, SE., Washington, DC 20590. Telephone: (202) 366-2992.

SUPPLEMENTARY INFORMATION:

A. Does this action apply to me?

This action affects companies that manufacture or sell new light-duty vehicles, light-duty trucks, and medium-duty passenger vehicles, as defined under EPA's CAA regulations,

and passenger automobiles (passenger cars) and non-passenger automobiles (light trucks) as defined under NHTSA's CAFE regulations.

Regulated categories and entities include:

“Light-duty vehicle,” “light-duty truck,” and “medium-duty passenger vehicle” are defined in 40 CFR 86.1803-01. Generally, the term “light-duty vehicle” means a passenger car, the term “light-duty truck” means a pick-up truck, sport-utility vehicle, or minivan of up to 8,500 lbs gross vehicle weight rating, and “medium-duty passenger vehicle” means a sport-utility vehicle or passenger van from 8,500 to 10,000 lbs gross vehicle weight rating. Medium-duty passenger vehicles do not include pick-up trucks.

“Passenger car” and “light truck” are defined in 49 CFR Part 523.

Category

NAICS codes

Examples of potentially regulated entities

Industry

336111

Motor vehicle manufacturers.

336112

Industry

811112

Commercial importers of vehicles and vehicle components.

811198

423110

Industry

336211

Stretch limousine manufacturers and hearse manufacturers.

Industry

441110

Automobile dealers.

North American Industry Classification System (NAICS).

This list is not intended to be exhaustive, but rather provides guidance on entities likely to be regulated by this action. To determine whether particular activities may be regulated by this action, you should carefully examine the regulations. You may direct questions regarding the applicability of this action to the person listed in

FOR FURTHER INFORMATION CONTACT

Table of Contents

I. Overview of Joint EPA/NHTSA New Vehicle Labels

A. Description of the Proposal

B. Description of the Action

C. Rationale for Revising the Label

D. Market Research

II. Statutory Provisions and Legal Authority

A. Energy Policy and Conservation Act (EPCA)

B. Energy Independence and Security Act (EISA)

III. Public Participation and Comment

A. Energy Metrics

B. Rating Systems

C. Form of the Ratings

D. Fuel Economy and Greenhouse Gas Rating Methodology

E. Upstream GHGs

F. Smog Rating

G. Fuel Costs and Savings

H. Range and Charge Time

I. Web Site and QR Code

J. Color

K. Lead Time

L. Harmonization With Other Labels

M. Electric and Plug-in Hybrid Electric Vehicle Test Procedures

N. Utility Factors

IV. Final Label Designs and Format

A. Label Size and Border

B. Upper Box

C. Lower Box

D. Example Labels

V. Additional Related EPA Actions

A. Comparable Class Categories

B. Miscellaneous Amendments and Corrections

VI. Impacts of Final Rule

A. Costs Associated With This Rule

B. Impact of Requiring One Label To Meet EPCA/EISA

C. Benefits of Label Changes

D. Summary of Costs and Benefits

VII. Statutory Authority and Executive Order Reviews

A. Relationship of EPA's Requirements With Other Statues and Regulations

B. Statutory and Executive Order Reviews

List of Acronyms and Abbreviations

A/C Air Conditioning

AC Alternating Current

AIDA Automobile Information Disclosure Act

BTU British Thermal Units

CAA Clean Air Act

CAFE Corporate Average Fuel Economy

ARB California Air Resources Board

CBI Confidential Business Information

CD Charge Depleting

CFR Code of Federal Regulations

Methane

CNG Compressed Natural Gas

CO Carbon Monoxide

Carbon Dioxide

CREE Carbon-related Exhaust Emissions

CS Charge Sustaining

DOE Department of Energy

DOT Department of Transportation

E85 A mixture of 85% ethanol and 15% gasoline

EISA Energy Independence and Security Act of 2007

EO Executive Order

EPA Environmental Protection Agency

EPCA Energy Policy and Conservation Act

EPL Environmental Performance Label

EREV Extended Range Electric Vehicle

EV Electric Vehicle

FCV Fuel Cell Vehicle

FE Fuel Economy

FFV Flexible Fuel Vehicle

FTC Federal Trade Commission

FTP Federal Test Procedure

GHG Greenhouse Gas

GVWR Gross Vehicle Weight Rating

HCHO Formaldehyde

HEV Hybrid Electric Vehicle

HFC Hydrofluorocarbon

HFET Highway Fuel Economy Test

ICI Independent Commercial Importer

IT Information Technology

ICR Information Collection Request

LEV II Low Emitting Vehicle II

LEV II opt 1 Low Emitting Vehicle II, option 1

MDPV Medium Duty Passenger Vehicle

MPG Miles per Gallon

MPGe Miles per Gallon equivalent

MY Model Year

O Nitrous Oxide

NAICS North American Industry Classification System

NCAP New Car Assessment Program

NEC Net Energy Change

NHTSA National Highway Traffic Safety Administration

NMOG Non-methane Organic Gases

Oxides of Nitrogen

NPRM Notice of Proposed Rulemaking

NTTAA National Technology Transfer and Advancement Act of 1995

O&M Operations and Maintenance

OCR Optical Character Recognition

OMB Office of Management and Budget

PEF Petroleum Equivalency Factor

PHEV Plug-in Hybrid Electric Vehicle

PM Particulate Matter

PZEV Partial Zero-Emissions Vehicle

CDA

Actual Charge Depleting Range

RESS Rechargeable Energy Storage System

RFA Regulatory Flexibility Act

SAE Society of Automotive Engineers

SAFETEA-LU Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users

SBA Small Business Administration

SFTP Supplemental Federal Test Procedure

SOC State-of-Charge

SULEV II Super Ultra Low Emission Vehicles II

SUV Sport Utility Vehicle

UDDS Urban Dynamometer Driving Schedule

UF Utility Factor

ULEV II Ultra Low Emission Vehicles II

UMRA Unfunded Mandates Reform Act

ZEV Zero Emission Vehicle

I. Overview

A. Description of the Proposal

EPA and NHTSA co-proposed two label designs, each meeting statutory requirements and relying on the same underlying data, but differing in how the data were presented.

Label 1 utilized a vertical layout that featured a prominent letter grade to communicate the overall greenhouse gas emissions (and fuel economy, which is inversely proportional to GHG emissions for gasoline vehicles), along with projected five-year fuel cost or savings relative to the average new vehicle; fuel economy and annual fuel cost information was retained but displayed much less prominently. Label 2 was more similar to the traditional design and layout of the label and retained the current label's focus on fuel economy values and annual fuel cost projections, with the addition of environmental information in a less prominent position. The agencies also sought comment on an alternative Label 3 that retained the more traditional layout of Label 2 but used different graphical approaches.

75 FR 58078, September 23, 2010.

B. Description of the Action

This final rule requires that a revised fuel economy and environmental label be affixed to all new automobiles sold in the U.S. starting with the 2013 model year and optionally for the remaining portion of the 2012 model year. The agencies heard a wide range of viewpoints and considered a wealth of input from market research, an expert panel, hearings, and public comments in deciding on the final label design and content. We also consulted with ARB with the intention of harmonizing labels that address vehicle environmental performance. The agencies have chosen to require a label that combines the cost-saving element of Label 1 and the GHG rating of Label 3 with key elements of the co-proposed Label 2, using a single additional color besides black and white.

Labels are being required for seven different vehicle technologies: Gasoline, diesel, ethanol flexible fuel vehicles (FFV), compressed natural gas vehicles (CNG), battery electric vehicles (EV), fuel cell vehicles (FCV), and plug-in hybrid electric vehicles (PHEV). The final fuel economy and environment labels retain many of the attributes of the existing fuel economy label; specifically: Estimated annual fuel cost; city, highway, and combined MPG; and fuel economy relative to other vehicles in the same class will remain on the label, although their relative prominence is revised to create space for new features. Vehicles run on liquid fuels will display MPG, while vehicles run on other fuel types will display gasoline-energy equivalent MPG (or MPGe). Test procedures and methodologies for determining label values remain unchanged from proposal. This rulemaking action also requires fuel economy and emissions certification test procedure and calculation methodologies for electric and plug-in hybrid electric vehicles, essentially codifying the procedures that have been in use under EPA's general authority to develop procedures for technologies not specifically discussed in the regulations.

New label features include a vehicle fuel type identifier in the upper right corner, fuel consumption (the inverse of fuel economy), a fuel economy and greenhouse gas rating relative to all new vehicles, the vehicle's carbon dioxide emissions in grams per mile, the projected five-year fuel costs or savings of this vehicle compared to the average new vehicle, and an environmental rating for smog-forming pollutants. The vehicle's projected range when fully fueled will be required on dedicated alternative fuel vehicles such as compressed natural gas vehicles and battery electric vehicles, and also plug-in hybrid electric vehicles, and can be included at the manufacturer's discretion on flexible fuel vehicles, such as those that are E85-capable. This optional inclusion could potentially eliminate the need for manufacturers to apply a separate FTC-required Alternative Fuel Label, pending a formal decision by FTC. For vehicles that use an external electricity source, charge time at 220-240 V (or optionally at 120 V) will also be shown. Several features of the design of the label differ from the current labels, such as the removal of the large image of a fuel pump, the blocking of the label into various defined areas, and the name on the label, as well as other design changes.

Plug-in hybrid electric vehicle labels will reflect energy use during operation when the battery is fully charged (in this mode, some PHEVs operate on electricity only and others operate on both electricity and gasoline) and when the battery is not providing any assistance (the PHEV operates exclusively on gasoline or other non-electricity fuel). As with labels for other technologies, PHEV labels will feature a prominent MPG or MPGe metric, as well as fuel consumption values based on units of purchased fuel; for PHEV labels, these values will be presented for each operating mode. Several values on the label—fuel costs and savings, MPGe relative to other vehicles, carbon dioxide emissions in grams per mile, and the ratings—will be based on assumptions of the relative use of the two fuels, using a standard utility factor approach. For further information on utility factors, please see section III.N. PHEVs which do not operate in blended mode (

i.e.,

using both electricity and gasoline) will show range on electricity only (all electric range), PHEVs which do operate in blended mode will show the range for that mode, and all PHEVs will show total vehicle range for all fuels. Finally, charge time will be displayed as on electric vehicles.

The final label for gasoline-fueled vehicles is illustrated in Figure I-1. Discussion of the placement of specific label elements, along with illustrations of the labels for other vehicle technologies and fuel types, can be found in Section IV, along with information on where to find and view full color versions of the labels.

ER06JY11.000

C. Rationale for Revising the Label

This joint final rule by EPA and NHTSA represents the most significant overhaul of the Federal government's fuel economy label or “sticker” since its inception over 30 years ago.

The current fuel economy label required by EPA on all new passenger cars, light-duty trucks, and medium-duty passenger vehicles focuses on city and highway fuel economy values in units of MPG, a comparison of the vehicle's combined city/highway fuel economy to a range of comparable vehicles, and estimated annual fuel cost. This final rule expands the current fuel economy label to a more comprehensive fuel economy and environment label that includes additional information related to vehicle fuel consumption, GHG and smog-forming emissions, and fuel costs or savings over a 5-year period relative to the average vehicle, a smartphone interactive code that links to a Web site for more detailed information and options for direct vehicle comparisons, and additional information for advanced technology vehicles such as driving range and battery charge time. Label designs for gasoline, diesel, ethanol flexible fuel, compressed natural gas, electric, plug-in hybrid electric, and hydrogen fuel cell vehicles are shown and discussed in section IV.

NHTSA and EPA are undertaking this joint final rule for several reasons.

First, both agencies have statutory responsibilities with respect to vehicle labels. This final rule satisfies each agency's statutory responsibilities in a manner that maximizes usefulness for the consumer, while avoiding unnecessary burden on the manufacturers who prepare the vehicle labels. The Energy Policy and Conservation Act (EPCA) of 1975

mandated that auto manufacturers label all new automobiles pursuant to EPA requirements,

which EPA adopted beginning in model year 1977. As amended, EPCA requires that labels shall contain the following information:

Pub. L. 94-163.

49 U.S.C. 32908(b).

(1) The fuel economy of the automobile;

(2) the estimated annual fuel cost of operating the automobile;

(3) the range of fuel economy of comparable vehicles of all manufacturers;

(4) a statement that a booklet is available from the dealer to assist in making a comparison of fuel economy of other automobiles manufactured by all manufacturers in that model year;

(5) the amount of the automobile fuel efficiency tax (“gas guzzler tax”) imposed on the sale of the automobile under section 4064 of the Internal Revenue Code of 1986 (26 U.S.C. 4064); and

(6) other information required or authorized by the EPA Administrator that is related to the information required by (1) through (4) above.

49 U.S.C. 32908(b).

In the Energy Independence and Security Act (EISA) of 2007,

Congress required that NHTSA, in consultation with EPA and the Department of Energy (DOE), establish regulations to implement several new labeling requirements for new automobiles.

NHTSA was required to develop a label program for new automobiles with information reflecting an automobile's performance with respect to fuel economy and greenhouse gas and other emissions over the useful life of the automobile based on criteria provided by EPA.

NHTSA was also tasked with developing a rating system, based on EPA criteria, that would help consumers easily compare the fuel economy and greenhouse gas and other emissions of automobiles at the point of purchase, including designations of automobiles with the lowest GHG emissions over the useful life of the vehicles and the highest fuel economy.

Pub. L. 110-140.

EISA Sec. 108, codified at 49 U.S.C. 32908(g).

49 U.S.C. 32908(g)(1)(a)(i).

49 U.S.C. 32908(g)(1)(a)(ii).

Second, NHTSA and EPA believe that a single, coordinated fuel economy and environment label is the most appropriate way to meet the statutory requirements described above. The agencies believe that a single, joint label is preferable to a separate label addressing the new EISA requirements that could contain duplicative and overlapping information with the current fuel economy label, causing consumer confusion and imposing unnecessary burden on the manufacturers.

In addition, the agencies have consulted with other agencies (Federal and State) that currently require labels relating to vehicle fuel use or environmental performance, and have designed the new EPA/NHTSA fuel economy and environment label to maximize the potential that it might also satisfy some of the vehicle labeling requirements of the California Air Resources Board and the Federal Trade Commission, which could further reduce consumer confusion and manufacturer burden resulting from the presence of multiple labels on new automobiles. By including information on GHG emissions and fuel economy, this rule continues EPA's and NHTSA's recent efforts at harmonizing our regulatory requirements, such as the joint rulemaking that established harmonized Federal GHG emissions and corporate average fuel economy (CAFE) standards for new cars, light-duty trucks, and medium-duty passenger vehicles for model years 2012-2016.

This effort at harmonization is consistent with the requirements of Executive Order 13563, section 3, which specifically draws attention to the risk of “redundant, inconsistent, or overlapping requirements,” and which directs agencies to reduce costs by “simplifying and harmonizing rules.”

The agencies also raised the issue of the upcoming labeling requirements in the joint rulemaking for MYs 2012-2016 CAFE and GHG standards for light-duty vehicles, 75 FR 25324 (May 7, 2010).

75 FR 25324, May 7, 2010.

Third, the agencies believe this is an opportune time to revise the label given the likelihood of a much more diverse vehicle technology marketplace in the near future that will require different label content to inform consumers of the capabilities of these new technologies. Since the fuel economy label was first established by EPA in 1977, over 99 percent of all new cars and light-duty trucks have been conventional, internal-combustion engine vehicles that run on petroleum-based fuels (or a liquid fuel blend dominated by petroleum). When manufacturers occasionally marketed a non-conventional technology, such as a compressed natural gas (CNG) vehicle, EPA generally addressed labels for new technology vehicles on a case-by-case basis.

Over the next several model years, however, the agencies expect to see increasing numbers of advanced technology vehicles entering the marketplace. By 2012, it is expected that there will be at least one original equipment manufacturer offering of a CNG vehicle, an electric vehicle (EV) and a plug-in hybrid electric vehicle (PHEV) with nationwide availability.

In the next few years, it is highly likely that there will be many more advanced technology vehicles offered for general sale, possibly including fuel cell vehicles (FCV) as well. The agencies believe that it is better to have a single unified approach for these advanced technology vehicle labels,

rather than addressing them on a case-by-case basis. This final rule specifically provides example labels for gasoline vehicles, diesel vehicles, ethanol flexible fuel vehicles, CNG vehicles, EVs, PHEVs,

and hydrogen FCVs. Communicating the energy and environmental performance of some of these advanced technologies can be challenging. For example, PHEVs use two fuels, with blended PHEV designs using the two fuels simultaneously. The two fuels—gasoline and electricity—are very different in many respects, and consumer behavior can have a large impact on PHEV energy and environmental performance (

e.g.,

the relative use of electricity and gasoline can vary greatly depending on the miles driven between battery charges as well as the frequency of battery charging). These technical complexities could lead to significant consumer confusion when multiple advanced technology vehicles begin to compete in the marketplace. We have tried to design the new labels to reduce the confusion and allow consumers to make more informed vehicle purchase decisions. The agencies expect to refine advanced technology vehicle labels over time as we have done with conventional vehicle labels. We also acknowledge the potential for other advanced technology vehicles to enter the marketplace in the future and, as we have historically done, will adapt the labels as needed to accommodate emerging technologies.

Honda has sold a dedicated CNG Civic in selected states for several years, and has announced plans to expand sales to the rest of the U.S. later this year—see “2012 Honda Civic Concepts,” Michael Harley, January 11, 2011, last accessed on March 15, 2011 at

http://www.vehix.com/articles/auto-previews—trends/2012-honda-civic-concepts;

Nissan began limited deliveries of its LEAF EV in December 2010 and plans to expand availability to the rest of the country in 2012—see “Nissan Delivers Hawaii's First 100% Electric Nissan LEAF,” January 31, 2011, last accessed on March 15, 2011 at

http://www.nissanusa.com/leaf-electric-car/index?intcmp=home_ev_micro.Promo.Homepage.Home.P1#/leaf-electric-car/news/press-releases;

the luxury Tesla Roadster EV is also

on the U.S. market—see

http://www.teslamotors.com/roadster

, last accessed on March 15, 2011; Chevrolet introduced the Volt PHEV in December 2010 and plans to expand to nationwide availability later this year—see “Curious About Chevy Volt Availability?”, Andrew Bornhop, February 2, 2011, last accessed on March 15, 2011 at

http://blog.roadandtrack.com/curious-about-chevy-volt-availability/.

The agencies do not claim that every advanced technology vehicle label is or will be exactly the same, that is not always possible due to unique vehicle designs and/or fuel properties, rather that the overall approach to advanced technology labels is consistent.

Plug-in hybrid electric vehicles entail a family of different engineering approaches, and will continue to evolve based on technology maturation and consumer preferences. In Section IV, two basic PHEV label designs are provided that reflect current PHEV energy management strategies and the resultant operating modes. In the future, labels will be tailored to accommodate the operating modes specific to new PHEV designs as they are introduced into the market.

Finally, the agencies believe these new labeling requirements will improve the presentation of relevant information to consumers and thus promote more informed choices, and that the new requirements fit well with current consumer interests and potential changes in coming years. Based on projections from the U.S. Energy Information Administration that future inflation-adjusted gasoline prices will increase over coming decades due to global economic growth and oil demand, we expect that it is likely that consumer interest in fuel economy will continue to grow over time.

Manufacturers are providing more high fuel economy vehicle offerings, and one manufacturer is now including fuel economy information in its monthly sales reports.

In addition, providing information on environmental performance can help people who value this kind of information to make a more informed choice among different vehicles.

Annual Energy Outlook 2010, Department of Energy, Energy Information Administration, DOE/EIA-0383 (2010), May 11, 2010, available at

http://www.eia.doe.gov/oiaf/aeo/index.html.

“A Magic Mark: As Fuel Prices Rise, Shoppers Can Get High MPG Without Sticker Shock,” Rich Kranz, Automotive News, March 28, 2011, which projects that by Fall 2011 there could be ten conventional gasoline,

i.e.,

non-hybrid, models with EPA highway ratings of 40 mpg or more; the automaker Hyundai recently began monthly reporting of vehicle sales with 40 mpg EPA highway fuel economy ratings as well as sales-weighted corporate average fuel economy data (see “Hyundai Motor America Begins Voluntary Monthly Fuel Economy Reporting,'' February 3, 2011, last accessed on March 15, 2011 at

http://www.hyundaiusa.com/about-hyundai/news/Corporate_Fuel_economy_Reporting_release-20110203.aspx

The new labels also have the potential to help consumers learn about fuel economy and vehicle emissions, and informed consumers may decide to place more weight on fuel economy and vehicle emissions for economic or environmental reasons. In this domain, consumers' tastes and values change over time. Of course, individual consumers will always determine the relative priority of fuel economy and environmental considerations vis-a-vis the many factors that go into a new vehicle purchase decision.

D. Market Research

As discussed above, the fuel economy and environment label must contain certain pieces of information by statute and may also contain other pieces of related information EPA considers helpful to consumers. Given that all of the label information should be presented so as to maximize usefulness and minimize confusion for the consumer, EPA and NHTSA embarked upon a consumer research program.

When EPA last redesigned the fuel economy label in 2006, consumer research was valuable in helping to inform the development of that label.

Since this final rule addresses important new elements being added to the existing label as well as new labels for advanced technology vehicles, EPA and NHTSA conducted more comprehensive research than that undertaken in 2006 to help inform the final label content and design. Our research program included a review of literature on the vehicle buying process,

three sets of consumer focus groups and a day-long facilitated consultation with an expert panel that helped inform the development of the proposed label designs, and an Internet survey to test the proposed labels with a wider audience.

The current label was redesigned and implemented for model year (MY) 2008 vehicles. See 71 FR 77871-77969 (December 27, 2006).

Environmental Protection Agency Fuel Economy Label: Literature Review, EPA420-R-10-906, August 2010.

Focus groups were held beginning in late February through May 2010 in four cities: Charlotte, Houston, Chicago, and Seattle. Overall, 32 focus groups were convened with a total of 256 participants. The focus groups were valuable in helping us to identify individual metrics that consumers wanted to see on labels as well as effective label designs. Overall, focus groups indicated that redesigned labels should:

• Create an immediate first impression for consumers

• Be easy to read and understand quickly

• Clearly identify vehicle technology (

e.g.,

gasoline, electric, plug-in hybrid)

• Utilize color

• Chunk information to allow people to deal with “more information”

• Be consistent in content and design across technologies

• Allow for comparison across technologies

• Make it easy to identify the most fuel efficient and environmentally friendly vehicles

Environmental Protection Agency Fuel Economy Label: Phase 1 Focus Groups, EPA420-R-10-903, August 2010; Environmental Protection Agency Fuel Economy Label: Phase 2 Focus Groups, EPA420-R-10-904, August 2010; and Environmental Protection Agency Fuel Economy Label: Phase 3 Focus Groups, EPA420-R-10-905, August 2010.

Following the focus group research, we convened an expert panel for a one-day consultation on June 9, 2010, in Washington, DC. The expert panel provided individual feedback on the draft label designs we developed based on key findings from the focus groups.

We also asked the panel to assist us in identifying additional opportunities and strategies to provide information to consumers to help them assess the costs, emissions, and energy efficiency of different vehicles. The experts came from a variety of fields such as advertising and product development and were chosen because they had led successful national efforts to introduce new products or had spearheaded successful national educational campaigns.

After viewing the draft labels, the various members of the expert panel offered the agencies the following insights and guidance that were key in developing one of the co-proposed label designs (Label 1) and also informed the label content and design being required today, including:

More information on the expert panel, including a list of participants is available in the docket: Environmental Protection Agency Fuel Economy Label: Expert Panel Report, EPA420-R-10-908, August 2010.

• Keep it simple

• Consumers are likely to view the labels for a very short time—roll ratings and metrics up into a single score

• Use cost savings information—a very strong consumer motivator

• Develop a Web site that would be launched in conjunction with the new label. This consumer-focused Web site could provide more detailed information, along with access to tools, applications, and social media.

Environmental Protection Agency Fuel Economy Label: Expert Panel Report, EPA420-R-10-908, August 2010.

We also undertook an Internet survey that was administered at the time of the release of the proposed rule in September, 2010, to determine whether any of the label designs had flaws that could undermine their ability to convey the desired information to the U.S. new car buying population. For the co-proposed labels and the alternative label, we designed the survey to test the understandability of the labels as well as whether the label designs affected consumers' abilities to select efficient and environmentally-friendly vehicles, given their typical travel pattern. The survey had nearly 3200 respondents of self-identified U.S. new vehicle purchasers, each of whom saw only one of the three label designs. Respondents were asked questions that sought to reveal understanding of the information on the label, as well as questions that sought to reveal variations in vehicle selection based on label design.

Overall, the results showed that the differences between the three label designs with respect to understandability were small in magnitude, with label 2 appearing to be a little more understandable than label 1.

Likewise, the variations with regard to vehicle selection were relatively small. Although in all cases the majority of people selected the vehicle with lower projected fuel costs and higher savings, label 1 somewhat enhanced this effect over label 2.

Because the survey did not uncover any “fatal flaw” with any of the three labels that would exclude it or any of its key elements from serious consideration in the final rule, the agencies continued to consider all elements of the three labels in developing the final rule. A report on that survey and its results is available in the public docket and on the Web site for this rule.

PRR, “Internet Survey Results on the Effects of Fuel Economy Labels on Understanding and Selection” November 2010, p. 1-8.

Ibid, p. 9-12.

PRR, “Internet Survey Results on the Effects of Fuel Economy Labels on Understanding and Selection” November 2010. The agencies are acutely aware of the central importance of the best available research to inform judgments about disclosure requirements and will continue to consider such research in the future (including, where feasible and appropriate, randomized controlled trials).

II. Statutory Provisions and Legal Authority

A. Energy Policy and Conservation Act (EPCA)

Under EPCA, EPA is responsible for developing the fuel economy labels that are posted on all new light duty cars and trucks sold in the U.S and, beginning in MY 2011, all new medium-duty passenger vehicles as well. Medium-duty passenger vehicles are a subset of vehicles between 8,500 and 10,000 pounds gross vehicle weight that includes large sport utility vehicles and vans, but not pickup trucks.

EPCA requires the manufacturers of automobiles to attach the fuel economy label in a prominent place on each automobile manufactured in a model year and also requires auto dealerships to maintain the label on the automobile.

EPA's 2006 labeling rule applied to passenger cars, light-trucks, and medium-duty passenger vehicles. Under section 32908(b), a manufacturer is to label each “automobile,” and EPA interpreted that provision as requiring labeling for vehicles that meet the definition of “automobile” under section 32901(a)(3), as well as vehicles under 8,500 pounds gross vehicle weight, whether or not they meet the definition of automobile, pursuant to section 32908(a)(1). See 71 FR 77872, 77876-87, 77915 (December 27, 2006). Since the 2006 rule, EISA revised the definition of automobile in section 32901(a)(3). As with the interpretation discussed in the 2006 rule, the requirements of section 32908(b) continue to apply to passenger cars, light-duty trucks, and medium-duty passenger vehicles.

49 U.S.C. 32908(b)(1).

EPCA specifies the information that is minimally required on every fuel economy label.

As stated above, labels must include:

49 U.S.C. 32908(b)(2)(A) through (F).

• The fuel economy of the automobile,

• The estimated annual fuel cost of operating the automobile.

• The range of fuel economy of comparable automobiles of all manufacturers,

• A statement that a booklet is available from the dealer to assist in making a comparison of fuel economy of other automobiles manufactured by all manufacturers in that model year,

• The amount of the automobile fuel efficiency tax imposed on the sale of the automobile under section 4064 of the Internal Revenue Code of 1986;

and

26 U.S.C. 4064.

• Other information required or authorized by the Administrator that is related to the information required [within the first four items].

Under the provision for “other information” EPA has previously required the statements “your actual mileage will vary depending on how you drive and maintain your vehicle,” and cost estimates “based on 15,000 miles at $2.80 per gallon” be placed on vehicle labels. EPA is adopting all of the labeling requirements discussed below and specified in EPA's regulations, based on its authority under section 32908(b). In addition, the regulations adopted by EPA satisfy the requirement to develop criteria for purposes of section 32908(g).

Additional labeling requirements are found in EPCA for “dedicated” automobiles and “dual fueled” automobiles. A dedicated automobile is an automobile that operates only on an alternative fuel.

Dedicated automobile labels must also display the information noted above.

49 U.S.C. 32901(a)(1) defines “alternative fuel” as including —(A) methanol; (B) denatured ethanol; (C) other alcohols; (D) except as provided in subsection (b) of this section, a mixture containing at least 85 percent of methanol, denatured ethanol, and other alcohols by volume with gasoline or other fuels; (E) natural gas; (F) liquefied petroleum gas; (G) hydrogen; (H) coal derived liquid fuels; (I) fuels (except alcohol) derived from biological materials; (J) electricity (including electricity from solar energy); and (K) any other fuel the Secretary of Transportation prescribes by regulation that is not substantially petroleum and that would yield substantial energy security and environmental benefits.”

A dual fueled vehicle is a vehicle which is “capable of operating on alternative fuel or a mixture of biodiesel and diesel fuel * * *, and on gasoline or diesel fuel” for the minimum driving range (defined by the DOT).

Dual fueled vehicle labels must:

49 U.S.C. 32901(a)(9), (c).

• Indicate the fuel economy of the automobile when operated on gasoline or diesel fuel.

• Clearly identify the automobile as a dual fueled automobile.

• Clearly identify the fuels on which the automobile may be operated; and

• Contain a statement informing the consumer that the additional information required by subsection (c)(2) [the information booklet] is published and distributed by the Secretary of Energy.

49 U.S.C. 32908(b)(3).

EPCA defines “fuel economy” for purposes of these vehicles as “the average number of miles traveled by an automobile for each gallon of gasoline (or equivalent amount of other fuel) used, as determined by the Administrator [of the EPA] under section 32904(c) [of this title].”

49 U.S.C. 32901(a)(11).

Moreover, EPA is required under EPCA to prepare a fuel economy booklet containing information that is “simple and readily understandable.”

The booklet is commonly known as the annual “Fuel Economy Guide.” EPCA further instructs DOE to publish and distribute the booklet. EPA is required to “prescribe regulations requiring dealers to make the booklet available to prospective buyers.”

While the booklet continues to be available in paper form, in 2006, EPA finalized regulations allowing manufacturers and dealers to make the Fuel Economy Guide available electronically to customers as an option.

49 U.S.C. 32908(c).

Id.

71 FR 77915, Dec. 27, 2006.

In this rule where we refer to EPA's statutory authority under EPCA, we are referring to these provisions.

B. Energy Independence and Security Act (EISA)

The 2007 passage of the Energy Independence and Security Act (EISA) amended EPCA by introducing additional new vehicle labeling requirements, to be implemented by the National Highway Traffic Safety Administration (NHTSA).

While EPA retained responsibility for establishing test methods and calculation procedures for determining the fuel economy estimates of automobiles for the purpose of posting fuel economy information on labels and in an annual Fuel Economy Guide, NHTSA gained responsibility for requiring automobiles to be labeled with additional performance metrics and rating systems to help consumers compare vehicles to one another more easily at the point of purchase.

Public Law 110-140.

Specifically, and for purposes of this rulemaking, subsection “(g) Consumer Information” was added to 49 U.S.C. 32908. Subsection (g), in relevant part, directed the Secretary of Transportation (by delegation, the NHTSA Administrator) to “develop and implement by rule a program to require manufacturers—

(A) to label new automobiles sold in the United States with—

(i) information reflecting an automobile's performance on the basis of criteria that the [EPA] Administrator shall develop, not later than 18 months after the date of the of the Ten-in-Ten Fuel Economy Act, to reflect fuel economy and greenhouse gas and other emissions over the useful life of the automobile:

(ii) a rating system that would make it easy for consumers to compare the fuel economy and greenhouse gas and other emissions of automobiles at the point of purchase, including a designation of automobiles—

(I) with the lowest greenhouse gas emissions over the useful life of the vehicles; and

(II) the highest fuel economy* * *”

In this rule where we refer to NHTSA's statutory authority under EISA, we are referring to these provisions.

Thus, both EPA and NHTSA have authority over labeling requirements related to fuel economy and environmental information under EPCA and EISA, respectively. In order to implement that authority in the most coordinated and efficient way, the agencies are issuing this joint final rule with the revised labels presented below.

III. Public Participation and Comment

The agencies proposed the joint label rule on September 23, 2010,

, and received over 6000 comments representing many perspectives. The agencies received oral testimony at two public hearings: one in Chicago on October 14, 2010, and one in Los Angeles on October 21, 2010. Additionally, the agencies received written comments from more than 50 organizations, including auto manufacturers and dealers, state and local governments, environmental groups, consumer organizations, other non-governmental organizations, and thousands of comments from private citizens.

75 FR 58078 (Sept. 23, 2010).

This section addresses the key issues on which public comments were received on the proposed rule and discusses the agencies' final decisions on those issues. Our more detailed responses to public comments are available in the docket in the Response to Comments document associated with this final rule.

A. Energy Metrics

1. Fuel Economy

The agencies proposed to retain the current practice of placing MPG on the label for vehicles that use liquid fuels such as gasoline and diesel. There are two main reasons for this. First, representing the vehicle's fuel economy performance on the label with an estimate of miles per gallon is a core element of the fuel economy information requirements of EPCA, which specifically states that the label must display “the fuel economy of the automobile”

and defines “fuel economy” as “the average number of miles travelled by an automobile for each gallon of gasoline (or equivalent amount of other fuel) used, as determined by the Administrator.”

Historically, the label has presented this information in terms of gallons of purchased fuel, since this is the most meaningful for the consumer. Thus, gasoline vehicle labels have historically displayed miles per gallon of gasoline, while diesel vehicle labels have displayed miles per gallon of diesel.

The proposal retained this approach. Second, consumers are very familiar with the MPG metric, as it has been the ubiquitous fuel economy metric for liquid fuels on vehicle labels since 1977. The familiarity and ubiquity of the metric argue for its continued use (despite its limitation, as discussed below).

49 U.S.C. 32908(b)(1)(A). EISA also requires fuel economy information. See 32908(g)(1)(A).

49 U.S.C. 32901(a)(11).

Similarly, for those manufacturers who elect to put E85 information on the label for a flexible-fueled vehicle, it would be displayed as miles per gallon of E85.

For those vehicles that do not use liquid fuels—such as EVs, PHEVs operating on electricity, and CNG vehicles

— we proposed to use miles

per gallon of gasoline-equivalent (MPGe). This metric is similar to MPG, but, instead of presenting miles per gallon of the vehicle's fuel type, it represents miles per amount of energy used, conveyed as the gallons of gasoline that have the equivalent amount of energy. We proposed MPGe for three reasons. First, as previously noted, EPCA requires a fuel economy value for all labels, defined as the miles travelled for each “gallon of gasoline (or equivalent amount of other fuel) used.”

Second, non-liquid fuels are not typically dispensed by the gallon, which makes it challenging to derive a metric reflecting gallons dispensed. However, a gasoline-equivalent gallon—that is, the amount of energy in the non-liquid fuel that is equivalent to that in a gallon of gasoline—can be derived for each fuel type.

Third, consumer groups preferred some type of comparative fuel economy metric that could be used across technologies, and MPGe allows such a comparison.

While EPA did not propose explicit labels for hydrogen fuel cell vehicles (FCVs), we are including a label design for FCVs because the label design issues for FCVs are very similar to those for other dedicated, non-petroleum vehicles such as CNG vehicles and EVs. In addition, EPA has designed FCV labels in the past on an as-needed basis. EPA did not propose, and is therefore not finalizing, fuel economy and range test procedures for FCVs. Test procedures will continue to be as specified by EPA under the authority of 40 CFR 600.111-08(f), which allows the Administrator to prescribe “special test procedures” under certain circumstances. However, EPA expects to continue to specify the use of SAE J2572, (“Recommended Practice for Measuring Fuel Consumption and Range of Fuel Cell and Hybrid Fuel Cell Vehicles Fuelled by Compressed Gaseous Hydrogen”).

Manufacturers of FCVs should continue to work with EPA to ensure that the procedures are applied according to EPA requirements.

49 U.S.C. 32901(a)(11).

While some non-liquid fuels are sold on a gasoline-equivalent basis (

e.g.,

CNG), some are not (

e.g.,

electricity), and some are not yet widely sold as a vehicle fuel (

e.g.,

hydrogen),

Environmental Protection Agency Fuel Economy Label: Phase 3 Focus Groups, EPA420-R-10-905, August 2010, p. 35.

On the other hand, the agencies discussed in the proposal that MPGe has some drawbacks for a fuel such as electricity: electricity is never purchased by the gallon, and MPGe requires the conversion of electricity to an energy-equivalent amount of gasoline, a fuel which is very different in many ways. An alternative approach for such vehicles that the agencies considered is miles per unit of purchased fuel—for example, miles per kilowatt-hour. Such a metric would be in terms of the fuel that the consumer purchases, which could be more useful for calculating fuel costs and for comparing with other vehicles of the same technology but would not be comparable across technologies. The agencies specifically asked for comments on the merits of using MPGe for non-liquid fuels.

Comments overwhelmingly supported the use of MPG for liquid fuels, although one commenter advocated that diesel vehicle fuel economy values be calculated on an MPGe basis in order to reflect the higher energy content of diesel fuel. The agencies are requiring the use of MPG for liquid fuels for the same reasons articulated in the proposal: Historical implementation of the EPCA requirements, consumer familiarity, and the fact that these fuels are purchased by the gallon. We believe that changing to MPGe for the fuel economy of diesel vehicles would be very confusing to consumers, as label MPGe values would then be inconsistent with all consumer calculations of fuel economy (since diesel is sold in volumetric gallons) as well as fuel economy values shown on vehicle dashboard displays.

The agencies proposed a range of options for ethanol flexible fuel vehicles, including maintaining the current policy of requiring only gasoline-based MPG on the label (with optional inclusion of E85-based MPG), requiring the addition of E85-based MPG, and requiring the addition of E85-based MPGe. Only a few commenters addressed ethanol flexible fuel vehicles, and most who commented on this option supported the current policy. The agencies are requiring a label for ethanol flexible fuel vehicles that is consistent with the principles of the current policy: All label metrics are based on gasoline operation, a statement is provided so that the consumer knows that the values are based on gasoline operation,

and EPA is finalizing that manufacturers may voluntarily include fuel economy estimates on E85 (which would be based on miles per gallon of E85, given that E85 is a liquid fuel).

Data show that, on average, FFVs operate on operate on gasoline nearly 99% of the time, and on E85 fuel about 1% of the time.

In light of this, the agencies believe it is appropriate to require only gasoline values on the label, and to provide E85 information on the Web site.

“Values are based on gasoline and do not reflect performance and ratings on E85.”

In addition, as required under EPA's authority in EPCA, the Fuel Economy Guide and Web site will continue to provide the fuel economy estimates on E85, the driving range on E85, and information about how the performance might change when operating on mixtures of E85 and gasoline.

In 2007, about 7.1 million FFVs were on the road, comprising about 2.8% of the 247,000,000 cars and trucks in use in the U.S. These vehicles used 54 million gallons of E85, which is about 0.04% of the transportation fuel used for automobiles and light trucks (8.8 million BPD or 135 billion gallons per year). The result is that about 1.4% of fuel used in FFVs is E85; the remainder is gasoline. All data from Transportation Energy Data book: Edition 29. U.S. Department of Energy, July 2010. Tables 1.14, 2.4, 3.3, and 6.1.

For non-liquid fuels, the comments on the use of MPGe as a fuel economy metric were split. Supportive comments focused on the value of having a metric that consumers could use to compare across technologies and that was similar to the MPG metric with which people are accustomed. These commenters supported the use of energy equivalency, as proposed, and agreed that this mathematical conversion was the best approach to create a practical comparative tool. One automaker explicitly viewed the MPGe metric to be in direct alignment with EPCA statutory authority for the new label to show a comparison of fuel economy of comparable automobiles.

Those opposed to the use of MPGe for non-liquid fuels directly challenged whether it was, in fact, a good comparative tool for consumers. These commenters argued that MPGe would be misleading by implying that different fuel types were substantially equivalent and ignoring the many effects of obtaining and using very different fuels, such as shifting dependence on foreign oil; that is, that MPGe oversimplifies a complex situation. Some also commented that mathematically converting between gasoline and other fuels on an energy equivalency basis ignores the energy loss inherent in any conversion process. As an alternative, one automaker suggested using miles per purchased unit of energy. No commenter, however, suggested an alternative fuel economy metric that would allow consumers to compare across technologies.

The agencies are requiring the use of MPGe as the fuel economy metric for non-liquid fuels.

Although we understand the concern of some commenters over using energy equivalency for different types of fuels, we continue to believe that one of the primary purposes of the label is to allow such comparisons, and to do so with metrics that do not allow direct comparisons would diminish the usefulness of the label. We believe that the purpose of the fuel economy metric on the label is not to address the differing effects of obtaining and using different fuels, or to consider the energy losses of converting from one to another, but rather to address the energy use of the vehicle itself. Thus, for example, MPGe allows consumers to compare the relative energy consumption of various EVs, thus providing a metric that differentiates between EVs on a factor that is within the automakers' control. We have also concluded, as a result of the market research that was undertaken for this rulemaking, that many

consumers are likely to find it most useful to have an energy metric that allows them to compare vehicle energy efficiency across fuel types and vehicle technologies; the MPGe metric accomplishes this goal as well. In addition, as discussed above, there is a statutory requirement to provide a fuel economy metric per “equivalent amount of other fuel,” which MPGe clearly provides.

As with MPG, the MPGe metric is based on the energy used by the vehicle over the EPA fuel economy and GHG test procedures. For an EV, this is the energy necessary to recharge the battery to its full charge after the test, as measured at the electrical outlet; thus, it includes the energy used to propel the vehicle as well as charging losses. It does not include transmission losses or the energy used at the powerplant.

2. Fuel Consumption

In the past few years, many stakeholders and academics have suggested that a fuel consumption metric—such as gallons per 100 miles—could be beneficial on the fuel economy label as either a replacement for, or a complement to, MPG. The use of a fuel consumption metric could serve to address the fact that, with fuel economy, there is a non-linear relationship between gallons (or gasoline-equivalent gallons) used over a given distance and MPG (or MPGe). Accordingly, a certain MPG improvement at a lower MPG level saves much more fuel (and thus money) than the same MPG improvement at a higher MPG level. If a consumer trades in a car with a 14 MPG rating for one with a 17 MPG rating, he or she will save approximately as much gas and money for a given distance as does a consumer who replaces a 33 MPG car with a 50 MPG car. The non-linearity of the MPG measure is not widely understood and hence many consumers misunderstand the measure. In the empirical literature, this is known as the “MPG illusion.”

Larrick, R.P. and J.B. Soll, “The MPG illusion,” Science 320:1593-1594 (2008). To understand the “MPG illusion,” note that a 20 MPG vehicle uses 25% less fuel than a 15 MPG vehicle, while a 40 MPG vehicles uses only 12.5% less fuel than a 35 MPG vehicle; that is, the same 5 MPG improvement will have different effects on fuel consumption (and fuel costs) depending on the starting point for the improvement. An extreme example is that, at a fuel economy of 1000 MPG, the fuel consumption is so minute (0.001 gallons per mile) that it no longer matters whether the fuel economy is increased to 1010 MPG, 2000 MPG, or even 1,000,000 MPG; the only fuel that can be further saved is some fraction of that 0.001 gallons per mile.

Pointing to the MPG illusion, some stakeholders suggest that the public would be better equipped to make economically sound purchasing decisions with a metric that directly reflects fuel consumption and, correspondingly, fuel costs. In response to these suggestions and concerns over the MPG illusion, the proposal introduced fuel consumption on the label, in the form of gallons per 100 miles for combined city/highway operation, as a complement to the MPG metric for liquid fuels.

For non-petroleum fuels, EPA proposed to include fuel consumption based on the units in which each fuel is sold. For example, CNG is sold in gasoline-equivalent gallons; we proposed the fuel consumption metric of gasoline-equivalent gallons per 100 miles. Similarly, for EVs and PHEVs with all-electric operation, EPA proposed to show fuel consumption in kilowatt-hours per 100 miles. For blended PHEVs, EPA proposed gallons of gasoline equivalent per 100 miles, which represents the inverse of MPGe and combines the two fuels into one consumption metric; for the sake of reducing label clutter, EPA proposed to not show separate electricity and gasoline consumption values.

We received many comments on the general question of whether a fuel consumption metric should be added to gasoline vehicle labels, and there was broad support for doing so. Most supporters cited the non-linearity associated with the MPG illusion and suggested that it was important to begin the process of educating consumers about fuel consumption, while also keeping fuel economy metrics. There were a few opponents to including fuel consumption metrics, who generally argued that it was not important enough to warrant adding yet more numbers to the label.

The widespread commenter support for including fuel consumption metrics echoed EPA's concerns about the MPG illusion. EPA agrees that a fuel consumption metric is a better tool for making economically sound decisions and recognize that it will not become widely utilized if it is not first introduced on the label. Therefore, EPA is requiring the use of fuel consumption on the label—in the form of gallons per 100 miles for combined city/highway operation for liquid fuels—though in reduced prominence relative to the traditional MPG metric. As with MPGe, a further advantage of the energy consumption metric is that it allows consumers to compare the relative energy use of various EVs, thus providing an additional metric that differentiates between EVs.

The issue of the specific fuel consumption metrics for most types of vehicles that operate on non-liquid fuels generated little or no comment, with the exception of PHEVs operated in blended mode. EPA continues to believe that the metrics for vehicles other than blended PHEVs are reasonable and appropriate and are therefore requiring the proposed approaches for EVs and all-electric operation for PHEVs (kilowatt-hours per 100 miles) and for CNG vehicles (gasoline equivalent gallons per 100 miles). EPA is similarly requiring kilograms per 100 miles as the consumption metric for hydrogen FCVs, since hydrogen is sold by the kilogram.

Several comments were received on how to treat blended PHEVs, which use electricity and gasoline simultaneously. The commenters who opposed the use of MPGe also generally opposed the proposed approach of a single fuel consumption metric for blended PHEVs, pointing out that this would not allow a PHEV shopper to compare the relative use of electricity and gasoline. A few commenters suggested that labels for blended PHEVs should report both electricity and gasoline consumption.

While EPA recognizes the tradeoffs associated with adding yet more values to an already busy PHEV label, upon further consideration, EPA agrees with the commenters who suggested that consumers need to be able to differentiate between electricity and gasoline use in a blended PHEV. This will allow the consumer to assess and weigh the relative use of each type of energy as they deem appropriate. In addition, the fuel consumption metric for all other fuels is being finalized on the basis of the units in which the fuel is purchased, and it is reasonable to adopt a parallel approach for blended PHEVs. Accordingly, EPA is requiring fuel consumption separately for both gasoline (in gallons per 100 miles) and electricity (in kilowatt-hours per 100 miles) for a blended PHEV, rather than the gasoline-equivalent gallons per 100 miles as proposed. EPA believes that the combination of the MPGe metric (for those who want a simple comparative metric) and the two separate fuel consumption metrics (for those who want to compare relative gasoline and electricity use) will help to satisfy different consumer needs.

B. Rating Systems

1. Scope of the Ratings

EISA requires that the label include a “rating system that would make it easy for consumers to compare the fuel economy and greenhouse gas and other emissions at the point of purchase . . . ”, including a designation of the automobiles with the lowest greenhouse gas emissions over the useful life of the vehicles, and the highest fuel economy . . . ”

49 U.S.C. 32908(g)(1)(A)(iii).

The co-proposed label designs presented two primary variations on ratings systems for fuel economy and greenhouse gas emissions, based on two interpretations of the statutory language. The first approach, shown on labels 1

and 3, combined fuel economy and greenhouse gas emissions into a single relative rating; we also sought comment on integrating emissions of other pollutants into this rating. The second approach, shown on labels 1 and 2, retained separate ratings for fuel economy, greenhouse gas emissions, and other pollutants. We noted that the two approaches are not mutually exclusive, and a label could display both.

The majority of those who commented on this topic said that these factors should each be displayed separately on the label. The key reason cited was that individual ratings would best provide clarity and transparency for those wishing to take these factors into consideration. On the other hand, some commenters felt that it is appropriate for the government to combine factors into a single rating in order to distill complex information into a more useable format. These commenters focused primarily on the relationship between energy consumption and greenhouse gas emissions, and suggested that a combined rating made sense. Other commenters on this topic contended that it was important for the ratings to show that greenhouse gases and fuel economy do diverge across fuel types, and so the ratings should be separate. Commenters also stated that there was no clear methodology for incorporating emissions of other air pollutants with greenhouse gases and did not support the proposed methodologies for doing so.

We are requiring separate ratings for fuel economy, greenhouse gases, and other emissions. The fuel economy and greenhouse gas ratings will be displayed on the same slider bar, and vehicles that have the same ratings for both factors will combine the two ratings with a single indicator. Vehicles operating on gasoline will always combine the two ratings since they will, by definition, receive the same score for both ratings. The agencies believe that this approach is consistent with the language in EISA, is allowed under the EPCA provisions, and will best allow consumers to compare each of these elements. The agencies also believe that using one slider bar for the fuel economy and greenhouse gas rankings will simplify the design of the label (an important consideration) and will improve the effectiveness of the label. The ratings for fuel economy, greenhouse gases, and other emissions are subsequently described in sections III.C, III.D, and III.F.

2. Span of the Ratings

Each of the ratings systems, as proposed, would include all new vehicles for which labeling is required in a single rating system;

that is, the ratings would be universal across all new vehicles, rather than broken out by vehicle class. This approach was based on the text of EISA requiring a rating “that would make it easy for consumers to compare the fuel economy and greenhouse gas and other emissions of automobiles at the point of purchase * * *”

rather than the EPCA provisions in the statute.

NHTSA's interpretation was that this language was meant to require rating systems that would allow consumers to compare new vehicles against each other without restriction, and that it would not be satisfied by rating systems that spanned less than the entire fleet.

This currently includes all passenger automobiles and light trucks as defined by NHTSA at 49 CFR part 523. More specifically, the rating system would span all automobiles up to 8,500 pounds gross vehicle weight, plus some vehicles (large SUVs and some passenger vans) between 8,500 and 10,000 pounds gross vehicle weight.

49 U.S.C. 32908(g)(1)(A)(ii).

49 U.S.C. 32908(b)(1)(F)

Many commenters supported the proposed approach of having universal rating systems that apply across all vehicle classes. These commenters stated that most people shop in more than one class, and, therefore, a rating system that was solely within class was not particularly useful because it would not allow these consumers to compare the vehicles in which they had interest. Commenters stated that a within-class approach could be misleading by displaying ratings that appear to be comparable but in fact are not, since ratings based on individual classes are not broadly applicable across all vehicles; they are applicable only within the class on which they are based. As such, a within-class approach could assign a high rating to a vehicle that does relatively well within its class, but which emits at relatively high levels compared to vehicles in other, lower-emitting classes. For example, a large car that is low-emitting relative to other large cars could score a 7, while a midsize car with average emissions for its class would score a 5, even though the midsize is lower-emitting than the large car. With a purely within-class approach, the consumer who is considering both of these vehicles would have no way to know that the midsize car is a better environmental choice.

On the other hand, several auto manufacturers commented that many consumers shop solely within vehicle classes, and that therefore a rating that applied across all classes would not be helpful, as it would not indicate the best performers within a class. One auto manufacturer further commented that NHTSA's interpretation of the EISA language is overly restrictive, stating that, in its view, the most useful information to consumers would compare among vehicles of the same class, and that doing so would be consistent with the EISA requirement for easy comparisons.

We are requiring, as proposed, ratings that span all vehicle classes for which labels are required. Although the agencies' consumer research indicates that many consumers narrow their vehicle choices early in the buying decision, our research also indicates that many and perhaps most do not focus narrowly on a single class. Focus group participants indicated that they shopped, on average, across two to three vehicle classes.

For these consumers to be able to compare vehicles in different classes, the information must necessarily span those classes, or it will be of little use or, worse, misleading: A vehicle that is “best” in one class, in terms of the metrics presented on the label, may be less so when compared to other classes. For those consumers shopping across classes who wish to know the relative performance of those choices, a single all-vehicles rating system will enable them to make accurate comparisons across whichever vehicles they choose to shop. Such an approach would still be useful within a class, since each metric will differentiate vehicles regardless of their class.

Environmental Protection Agency Fuel Economy Label: Pre-Focus Groups Online Survey Report, EPA420-R-10-907, August 2010, p. 18.

Additionally, as discussed in the NPRM, NHTSA believes that the clearest interpretation of EISA is that fuel economy, GHG, and other emissions rating systems should apply to all automobiles rather than to specific classes. 49 U.S.C. 32908(g)(1)(A)(ii) states that the agency must develop label rating systems “that would make it easy for consumers to compare the fuel economy and greenhouse gas and other emissions of automobiles at the point of purchase,” in clear contrast to EPCA's requirement, codified at 49 U.S.C. 32908(b)(1)(C) that fuel economy range information be presented for “comparable automobiles.” 32908(g)(1)(A)(ii) also requires that rating systems include designations of the automobiles with the “lowest greenhouse gas emissions” and “highest fuel economy,” which NHTSA believes

is most meaningfully fulfilled by designating the automobiles with the best GHG and fuel economy ratings in the entire fleet. Given this statutory language, NHTSA believes that it is reasonable and appropriate to conclude that if Congress had intended the 32908(g) rating systems to apply only within class, it would have used language more like 32908(b)(1)(C), and that therefore rating systems for fuel economy, GHGs, and other emissions as described in 32908(g) should most reasonably apply to the entire fleet. And even if the statute were taken as ambiguous, NHTSA believes that the chosen approach is the most reasonable way of implementing the statutory goals.

In order to satisfy EPCA requirements,

the label also indicates the range of fuel economy values for the relevant vehicle class. This approach allows those consumers who shop within one class to see the fuel economy of the vehicle under consideration relative to other vehicles within its class. The agencies also believe it addresses the concern of the OEM commenter who argued that within-class comparisons might be more useful to certain consumers—in essence, the EISA and EPCA requirements, when combined, are able to provide consumers with both in-class and fleet-wide information on the metric that many have identified as most important to them, as discussed below.

49 U.S.C. 32908 (b)(1)(C).

C. Form of the Ratings

1. Fuel Economy Rating

EISA requires that the label include a “rating system that would make it easy for consumers to compare the fuel economy and greenhouse gas and other emissions at the point of purchase . . .”

This section addresses the rating for fuel economy, while sections III.D. and III.F. describe the ratings for greenhouse gases and for other emissions, respectively.

49 U.S.C. 32908(g)(1)(A)(iii).

In addition to this new EISA requirement, EPCA specifies that fuel economy labels must include the range of fuel economy of comparable vehicles.

This requirement is currently met with a slider bar indicating the combined city/highway fuel economy of the vehicle model type, anchored at each end with the highest and lowest fuel economy values for all new vehicles within that fuel economy vehicle class.

49 U.S.C. 32908(b)(1)(C).

The agencies proposed an absolute slider bar-type fuel economy rating system bounded by specific MPG values for the “best” and the “worst” vehicles in the fleet, and with specific fuel economy values for the vehicle model type in question identified in the appropriate location on the scale. The scales proposed on label 2 were essentially larger versions of those on label 1, with the addition of a within-class indicator on the fuel economy scale to meet the EPCA requirement for comparison across comparable vehicles. This latter requirement was addressed on label 1 through text indicating the fuel economy for all new vehicles in the model's fuel economy class.

The agencies received relatively few comments on this topic. One auto manufacturer supported the graphical representation of the within-class information as proposed on label 2. A government laboratory commented that the comparison should be on the basis of fuel consumption rather than fuel economy, to provide a linear comparison of the vehicle's energy use and to avoid a visual representation of the fuel economy illusion.

The agencies are requiring a one-to-ten relative fuel economy slider bar similar to the one on alternative label 3 included in the NPRM, which is combined with a one-to-ten relative greenhouse gas slider bar as discussed below. While the rating is expressed in terms of fuel economy, the methodology for determining vehicle ratings will be defined based on fuel consumption in order to mitigate the “MPG illusion” and to provide a more linear representation of vehicle energy use between ratings. The EISA requirement for indicating the highest fuel economy vehicle and the EPCA requirement for providing the fuel economy of vehicles in a comparable class will be met with text located near the vehicle's fuel economy numbers. The methodology for determining the combined fuel economy and greenhouse gas ratings is provided in section III.D.

2. Greenhouse Gas Rating

The agencies proposed several systems to address the EISA requirement for a rating that allows consumers to compare greenhouse gas emissions across new vehicles. Specifically, both labels 1 and 2 included an absolute rating scale that presented the specific tailpipe GHG emission values for the vehicle in grams per mile, bounded by emission rates for the “best” and “worst” vehicles in the fleet in the model year. In addition, label 1 featured a prominent letter grade that reflected the relative levels of tailpipe greenhouse gas emissions (and, for gasoline vehicles, fuel economy, given the inverse relationship of tailpipe GHG emissions and fuel consumption for gasoline vehicles) on an A+ to D scale. The agencies also sought comment on label 3, which, like label 1, included a rating that reflected relative tailpipe GHG emission rates; this approach substituted the letter grade with a numerical rating on a scale of one to ten. NHTSA sought comment on whether this would be an appropriate interpretation of EISA's requirements. The agencies proposed that GHG ratings would be based on combined 5-cycle tailpipe CO

emission rates.

About two-thirds of the more than 6,000 public comments expressed a preference either for or against the letter grade, and nearly every one of the more detailed comments submitted by corporations and organizations addressed the topic, indicating the strong level of interest in this proposed element. As a general rule, the letter grade was supported by consumer organizations, environmental organizations, and academics; about half of the general public that commented on the letter grade supported it. Conversely, it was opposed by most auto companies, auto dealers and their organizations, Federal laboratories, and about half of the general public that commented on this topic.

Commenters in favor of the letter grade spoke to its ease of use and eye-catching appeal; many said that it would be useful for those who do not find more detailed numerical information helpful or compelling and would, for the first time, take their needs into consideration on the label. The letter grade was likened to the New Car Assessment Program (NCAP) safety stars in its potential ability to spark public demand for new vehicle attributes—in this case, relative environmental and energy impact. For these commenters, the influential nature of the letter grade was viewed as a positive attribute.

On the other hand, those opposed to the letter grade commented that it implied an inappropriate value judgment of the vehicle, either in whole or in part. Many commenters indicated that letter grades, in particular, convey an assessment that is value-laden and not in accordance with the intent of the label. These commenters suggested that a prominent letter grade could be misleading insofar as it might imply an assessment of a vehicle's overall quality on a number of attributes beyond fuel economy and tailpipe greenhouse gas emissions. Finally, some commenters felt that its prominence was problematic, either by minimizing other important label elements, such as MPG,

or by overshadowing other Monroney

label elements, such as the NCAP safety stars.

The Monroney label, placed on the window of every new vehicle sold in the U.S., was mandated by the Automobile Information Disclosure Act of 1958, and since amended. It typically includes manufacturer's suggested retail price, vehicle specifications, equipments lists and pricing, warranty information, NHTSA crash test ratings, and the EPA fuel economy label requirements (as allowed under EPCA at 49 U.S.C. 32908(b)). Manufacturers may provide the fuel economy information on a separate label but have historically chosen to incorporate it into the Monroney sticker.

A few commenters stated that the absolute tailpipe greenhouse gas rating in grams per mile was the most straightforward approach and felt that it would be helpful for those wishing to compare emissions across vehicles and clearly meet the EISA requirement. Others found the absolute scale unhelpful, stating that today's public has little awareness of tailpipe greenhouse gas emissions expressed in grams per mile. In particular, these commenters said that an absolute scale for GHGs would be confusing, given that the label also contained a one to ten rating for other emissions, and suggested that a consistent one to ten system for both ratings would be more understandable. Several commenters noted that one to ten ratings are readily understood and are in use today for vehicle emission ratings on both the EPA Green Vehicle Guide Web site and on the California Environmental Performance Label, and that it would be logical to extend that approach to this label.

The agencies are requiring a relative greenhouse gas rating on a one to ten scale, based on combined 5-cycle tailpipe CO

emission rates, as measured by EPA; this rating will be combined with the relative fuel economy rating scale discussed above. The relative GHG rating is intended to address the large number of comments received in support of a relative rating that allows a quick and easy assessment of a vehicle's relative environmental impact. While a letter grade rating can be readily understood, the agencies agree with some commenters' concerns that it may imply more meaning about overall vehicle attributes—such as an assessment of overall quality on a number of factors—than was intended. We recognize that the letter grade is a fairly significant departure from the current fuel economy label, which provides absolute numerical values and no relative ratings. The agencies believe that the one to ten rating fills a middle ground between the absolute numerical values of the current label and a letter grade rating, providing a similar ease of use without the risk of conveying any perceived value judgment that may be associated with a letter grade.

We also agree that having consistent systems for the two environmental ratings on the label may help to minimize confusion and increase comprehension. Finally, the use here of a one to ten system is a logical extension of its use on the EPA Green Vehicle Guide Web site and the California Environmental Performance Label, where it serves a similar purpose. The absolute tailpipe greenhouse gas emissions in grams per mile of the best performing vehicle will be noted in text near the slider bar. This approach meets the EISA requirements for displaying GHG performance information

and for indicating the lowest greenhouse gas vehicle.

49 U.S.C. 32908(g)(1)(A)(i).

Finally, to address concerns raised by some commenters that fuel economy ratings overshadow safety ratings component of the Monroney label, NHTSA is planning to conduct comprehensive consumer research to develop revised safety ratings based on revisions to the fuel economy component of the label under this rule. NHTSA will publish details of the consumer testing in a future

Federal Register

notice.

D. Fuel Economy and Greenhouse Gas Rating Methodology

The agencies proposed a variety of ways to provide information that would rank or rate a vehicle model compared to the rest of the fleet, based on its performance on greenhouse gases and fuel economy, including both absolute and relative scales. In the proposal, one method for a relative fuel economy and greenhouse gas rating was laid out, based on even increments of greenhouse gas emissions. One proposed rating system used a letter grade to represent relative performance. Since fuel economy and greenhouse gases are closely related, this rating was used to represent both of these factors. The CO

emission rates and the gasoline-equivalent MPG values were both provided in the preamble's table of ratings thresholds, with the CO

ratings proposed to be controlling. There was no differentiation across fuels.

For example, for both gasoline and diesel vehicles the CO

emissions rates would determine the rating, not the mpg rate. A gasoline and diesel vehicle with the same mpg performance would have different CO

emissions performance, given the difference in the energy content of the two fuels. The proposed rating thresholds would be determined based on the CO

emissions performance irrespective of the fuel at issue.

For this rating scale, the agencies proposed a system that assigned a letter grade rating for each vehicle relative to the tailpipe GHG emissions of all new vehicle models. Specifically, each of the ratings corresponded to a distinct range of combined 5-cycle tailpipe CO

emission rates. The middle of the rating system was defined as the tailpipe CO

emission rate for the median new vehicle and the range of each rating was defined using equal-sized increments of CO

. Because vehicle GHG values clustered around the middle, the proposed rating system resulted in the majority of vehicles receiving “average” ratings, with the number of vehicles receiving higher or lower ratings falling off quickly. Very few vehicles received the highest or lowest ratings.

The majority of comments on this rating system focused on the form of the rating, generally, the use of a letter grade and its merits and drawbacks. However, some manufacturers and consumer organizations did provide feedback specific to the methodology used to define the ratings. These commenters all examined the distribution of vehicle ratings that resulted from the proposed methodology and requested that the agencies consider strategies to somewhat “flatten” the distribution. This would, in effect, provide more differentiation between vehicles and prevent the ratings from not being—or appearing to not be—technology-neutral. On the other hand, one automaker requested that the agencies consider reserving the highest rating exclusively for specific, pre-defined vehicle technologies.

Commenters also provided feedback on the impact of basing the fuel economy rating on greenhouse gases. Several noted that they are closely related and that having a single rating represent both is appropriate. Others indicated that the relationship between these two factors varies across fuels and that it is important for the label to reflect this fact.

As discussed previously, the label we are adopting will provide relative one to ten ratings for fuel economy and for greenhouse gases. Since fuel economy and tailpipe greenhouse gas emissions are closely related, the agencies have decided to simplify the label by using one slider bar for the two ratings and to combine the two ratings for vehicles that receive the same fuel economy and greenhouse gas scores. We will define the range of CO

emissions and MPG performance assigned to each number in the rating systems (1-10) on the basis of corresponding gasoline CO

emissions performance and gasoline mpg performance. The 1-10 ratings assigned to a model will be based on the tailpipe CO

emissions and MPG (or MPGe)

performance of that model, irrespective of the fuel. Gasoline vehicles will by definition have the same rating for both fuel economy and greenhouse gases. For those vehicles for which the greenhouse gas ratings diverge from the fuel economy ratings, such as some diesel and compressed natural gas vehicles, the slider bar will have a second indicator to reflect this fact. Thus, the fuel economy and greenhouse gas rating will demonstrate both that these factors are closely related and that this relationship is not the same across all fuels.

This could occur, for example, if a diesel vehicle receives a certain number rating based on mpg performance, which is measured in terms of gallons of diesel fuel, but achieves a different number rating based on CO

emissions performance, which is based on both the volume of fuel consumed as well as the carbon content of the fuel. This difference in rating can be expected to occur in a limited number of situations with another example being the mpg performance of a compressed natural gas fueled vehicle and its corresponding lower CO

emissions.

We agree with some commenters that the ratings would be more meaningful and useful for both relative scales if it allowed greater differentiation between vehicles, and that therefore it would be beneficial to alter the rating methodology such that the resulting distribution of vehicle ratings is flatter than proposed, while still reflecting the distribution of the fleet. We also agree with the majority of commenters on this topic that the ratings should avoid the appearance of not being technology-neutral. The challenge to the agencies was to implement this change with a methodology that is simple to implement, robust enough to work for future vehicle fleets, and results in an appropriately flatter distribution of vehicle ratings over the fleet. Finally, the agencies also agreed with some commenters that the fuel economy rating would be most beneficial to consumers if it were in fact based on fuel consumption instead of fuel economy. Basing the rating on fuel consumption allows it to be directly proportional to the actual amount of energy used by the vehicle (and hence to refueling costs) and avoids the “MPG illusion” discussed previously. The range of performance that defines each number in the rating system is determined based on approximately equal increments of fuel consumption, with one adjustment. The use of a system based on equal increments means that the distribution of the fleet will be reflected in the distribution of the ratings.

We believe that, since fuel economy and fuel consumption are simply different mathematical representations of the same characteristic, that a fuel consumption-based rating system is consistent with the EISA requirement for a fuel economy rating system. To ensure that the fuel economy ratings correspond to the MPG or MPGe values displayed on the label, the thresholds for purposes of assigning this rating will be in terms of fuel economy (MPG or MPGe).

The fuel economy rating scale will be created by converting the fuel consumption thresholds into their corresponding fuel economy values and assigning a numeric one to ten rating based on 5-cycle combined fuel economy, rounded to the nearest integer (as reflected on the label). The combined fuel economy value prominently displayed on the label will be used by vehicle manufacturers to determine the fuel economy rating, thus making the connection between the two unambiguous and avoiding situations where two vehicles with the same fuel economy value would receive different fuel economy ratings—an outcome the agencies believe would be confusing to the public.

All liquid fuel vehicles will be evaluated in terms of volumetric gallons of fuel per mile, and all vehicles operating on non-liquid fuels will be evaluated in terms of gallons of gasoline equivalent per mile. The GHG rating scale, in turn, will assign a one to ten numeric rating based on the vehicle's 5-cycle combined tailpipe CO

emissions. For gasoline vehicles, the fuel economy rating and the greenhouse gas rating will be the same, and will be displayed as one rating on the fuel economy and greenhouse gas slider bar. For other fuel types, the ratings may diverge, reflecting the differing carbon content of various fuels. EPA will provide the thresholds that will define the range of values assigned to each of the one to ten ratings applicable to the upcoming model year in annual guidance based on the methodology described below. Ratings will be based on fuel economy data submitted by manufacturers to the EPA, using data from the most recent complete model year. The break point of the ratings (that is, the fuel economy value in integer terms that divides the “5” and 6” categories on the ratings scale) will then be adjusted to reflect the projected achieved fleet wide CAFE level for the model year for which the ratings will apply.

For PHEVs, the ratings will be based on the combination of MPGs across driving modes using the utility factor approach described in section III.N.

In the proposal, the agencies divided the range of all vehicle CO

emissions (and, accordingly, gasoline equivalent fuel consumption), from the highest to lowest, into even increments to define the range of each individual letter grade or numeric rating. For the final label methodology, using fuel economy and tailpipe CO

emission data for all model year 2011 new light duty vehicles, the agencies considered several alternative methodologies for defining both rating scales. For all approaches, we first defined the center of the rating systems as either the mean or median of the fleet data. The analysis focused on two subsequent issues: First, how to define the upper and lower boundaries of the rating system and, second, how to define the range of each individual ratings within the upper and lower boundaries.

For example, we considered a system where the range of each rating effectively “grows” by 25% with each step away from the mean. This approach does somewhat flatten the distribution of ratings over the fleet. However, the agencies decided not to pursue this or similar options because choices such as the rate of bin growth appeared too subjective and would likely have to be reevaluated every year. We also considered a decile system, in which an equal number of vehicles are distributed into each rating, thus completely flattening the distribution. However, because vehicles tend to be clustered on the basis of fuel economy values, it is not possible to equally distribute them across the ratings. This approach also goes further than commenters suggested in flattening the curve.

The fuel consumption rate, and correspondingly, the CO

emissions rate of all new vehicle models, follows a roughly normal distribution. For a set of data with a normal distribution, approximately 95% of all data will fall within plus or minus two standard deviations of the mean. This allows for a mathematically robust methodology that can be applied each model year. The 1-10 rating system will be defined for each model year, using the most recent model year for which we have a complete data set, using an approach in which any vehicle model with a 5-cycle combined fuel consumption rate more than two standard deviations away from the mean vehicle model would receive either the lowest (1) or highest (10) rating. We acknowledge that fuel consumption for new vehicles does not perfectly follow a normal distribution; however, historically, approximately 97% of the fleet has been captured within this two standard deviation range. Assuming this trend continues, approximately 1-2% of new vehicle models will receive the top rating, and

approximately1-2% of new vehicle models will receive the lowest rating.

Thus, for a given year, the highest rating, a 10, will be defined by subtracting two standard deviations from the mean of the data from the most recent model year available, such that any vehicle that achieves a fuel consumption rate less than or equal to two standard deviations below the mean will receive a rating of 10. Conversely, any vehicle that is more than or equal to two standard deviations above the mean will receive the lowest rating, which is a 1. The ratings of 2 through 9, in turn, are defined based on even increments of 5-cycle combined fuel consumption rates between the highest and lowest ratings, with the following adjustment.

The break point of the rating system, which denotes the difference between a CO

emission and fuel economy rating of 5 and of 6 (that is, between the top half (6-10) and bottom half (1-5) of the rating scale), will be pegged to the CO

emissions and MPG values that correspond to the projected achieved CAFE values estimated by the agencies in advance for the fleet as a whole for the applicable model year of the label. That is, after the analysis to determine two standard deviations is complete and the thresholds for each of the ratings are established, the break point between a rating of 5 and a rating of 6 will be adjusted to reflect the projected average fleet label value that would correspond with the projected fleet wide CAFE value that the agencies estimate would be achieved for the model year to which the label applies.

This midpoint correction is important from a policy perspective, as the agencies believe it is appropriate to assign an above-average rating (6 or higher) only to those vehicles whose label value for fuel economy is at or above the projected fleet average for that model year. For model years 2012-2016, the projected achieved fuel economy values from the recent joint light-duty vehicle fuel economy and greenhouse gas rulemaking will be used as the basis for the midpoint defining the threshold between a 5 and a 6. Setting this break point in advance has the added advantage of allowing manufacturers to know their target to achieve an above average rating.

For this purpose, the agencies used the projected fleet-wide achieved CAFE levels for the MY2012-2016 CAFE standards (Table I.B.2-2, 75 Federal Register 25331, May 7, 2010).

Because the 2012-2016 estimated achieved CAFE levels intended to be used to anchor the break point of the rating scale are based on the 2-cycle test, while label values are based in the 5-cycle test, EPA evaluated vehicle test data across all new light duty vehicles to determine an adjustment factor between the projected achieved fleet wide CAFE fuel economy values and the label values. This adjustment factor is derived in the same manner as an individual model's mpg value for CAFE compliance is adjusted for use on the label. Using this adjustment, EPA determined that the fuel economy midpoint values from 2012-2016 will be as shown in Table D.1.

Table D.1—Label Breakpoint Values for MY2012-2016

2012

2013

2014

2015

2016

Using

this approach, the fuel economy ratings for model year 2012, based on 2011 fuel consumption data and with a break point adjustment reflecting the average fuel economy projected to be achieved for model year 2012, would be assigned on the basis of the fuel economy integer values as shown in Table D-2.

French, R. Memorandum to Docket No. EPA-HQ-OAR-2009-0865, “Adjusting Combined City/Highway CAFE Fleet Values to Determine Equivalent 5-Cycle Label Values.” May 18, 2011.

Table D.2—MY2012 Rating Scale for Fuel Economy

Fuel economy rating

Fuel economy

(Combined city/highway 5-cycle MPG or MPGe value)

38+

31-37

27-30

23-26

19-21

17-18

15-16

13-14

0-12

The agencies then had to consider how to structure the rating scale for GHG emissions, since it is combined for the final labels with the rating scale for fuel economy. Given the close relationship between fuel economy and greenhouse gases, the rating scales will be defined to give the same rating on each of these factors for gasoline vehicles, since gasoline-fueled vehicles constitute the great majority of the vehicles sold. Thus, the GHG rating scale will be determined by converting the fuel economy rating thresholds into gasoline equivalent GHG rating thresholds using a constant conversion factor of 8887 grams of tailpipe carbon dioxide emissions per gallon of consumed gasoline.

Accordingly, by definition, for vehicles that operate on gasoline only, the fuel economy score will equal the greenhouse gas score, and that combined score will be displayed on the label using one slider bar and one indicator for the combined score.

Because vehicles that operate on fuels other than gasoline will not necessarily have the same fuel economy and GHG scores, those vehicles will have their GHG rating determined by comparing their 5-cycle combined tailpipe CO

emission rate against the GHG ranges applicable for the model year to determine if their GHG score is different from their fuel economy score. If it is different, the GHG score must be indicated on the same slider bar as the fuel economy score; however, the GHG score will use a pointer below the slider bar and the fuel economy score will use a pointer above the slider bar. Using this approach, the GHG ratings for model year 2012, based on 2011 data with a break point adjustment reflecting model year 2012, would be assigned as shown in Table D-3.

This reflects the direct relationship between CO, emissions and fuel consumption for gasoline, and the fact that the mpg values in the Table are derived from fuel consumption values which in turn are derived from CO, emissions values. Note that the GHG thresholds correspond to the MPG value that will round to the integer values shown in the table. For example, the GHG threshold corresponding to the fuel economy thresholds between a 1 and 2 is calculated as 8887 g CO

/gallon divided by 12.5 miles/gallon, or 711 g/mile.

For gasoline vehicles whose values are close to the threshold, the tables may occasionally reflect different scores on each of these factors. For purposes of the fuel economy and greenhouse gas rating for gasoline vehicles, the fuel economy thresholds will be controlling and only one rating will be displayed. Under this approach, vehicles with the same combined MPG value, which is prominently displayed on the label, will always have the same rating as other vehicle with the same value. Different ratings formed on the basis of rounding would not be helpful to consumer comprehension.

Table D.3—MY2012 Rating Scale for Greenhouse Gases

Greenhouse gas rating

Tailpipe GHG rating (combined city/highway

5-cycle CO

g/mile)

0-236

237-290

291-334

335-394

395-412

413-479

480-538

539-612

613-710

711+

The methodology for determining the fuel economy and GHG rating scales defined above is based on a simple statistical approach that should be applicable to a changing fleet of vehicles over time. The agencies believe that this is a straightforward and robust methodology for rating vehicle fuel economy and tailpipe GHG emissions that will result in a flatter distribution of vehicle ratings across the entire fleet. We intend to update the scoring thresholds in the future to reflect the prevailing CAFE and GHG standards and the evolution of the vehicle fleet. Any updates to the rating scale will be included in the annual label manufacturer guidance document or in the regulations via rulemaking.

E. Upstream GHGs

In the proposal, the agencies recognized that upstream GHG emissions are associated with the production and distribution of all automotive fuels used by motor vehicles, that certain emerging automotive fuels might have very different upstream and tailpipe GHG characteristics depending on how those fuels are produced, that providing accurate upstream GHG emissions values for individual consumers can be a complex challenge, and that whether, and if so how, to account for these upstream GHG emissions was an important decision.

We proposed to limit the label to tailpipe-only GHG emissions, while providing more detailed information on upstream GHG emissions on a Web site. For details on the Web site content and accessibility, please refer to Section III.I. In addition, the agencies requested comment on alternative options for the label that, in addition to presenting tailpipe emissions, refer to or identify in some manner the upstream GHG emissions associated with fuel production and distribution. One such alternative would continue to base the label's GHG emissions value on tailpipe emissions values only but would supplement the numerical value with a symbol or asterisk and explanatory text such as “the only CO

emissions are from electricity generation” (for EVs), “does not include CO

from electricity generation” (for PHEVs), or “the CO

emissions listed here are from gasoline combustion only and do not reflect the use of renewable biofuels” (for ethanol flexible fuel vehicles).

A second alternative for the label would be to, provide a tailpipe-only GHG emissions value and also to provide a numerical value for upstream GHG emissions associated with production and distribution of the fuel(s) used by the vehicle. While recognizing the arguments for this approach, the agencies identified many challenges associated with developing a single numerical value for upstream GHG emissions. For electricity, for example, challenges include significant regional variability in electricity feedstocks and GHG emissions, potential changes in feedstocks and GHG emissions over time, and potential differences in GHG emissions between daytime and nighttime charging depending on the energy source used. The agencies asked for comments on how they could best address these complexities on a consumer label.

The agencies received a large number of comments on this topic, almost all of which focused primarily on the upstream GHG emissions issues associated with the electricity used in EVs and PHEVs.

Automotive associations, electric vehicle associations, electric utility companies, and nearly all automakers who commented on this topic supported the proposal to include only tailpipe GHG emissions on the label and provide more detailed information on upstream GHG emissions on a Web site. Automakers typically stated that labels have always reflected vehicle performance only and have not addressed upstream petroleum emissions, that they have no control over upstream emissions, and that including electricity upstream GHG emissions on the label could discourage future sales of EVs and PHEVs. EV and PHEV advocacy organizations generally supported the proposal as well, also citing that past label designs focused exclusively on vehicle performance and arguing that regional differences in electricity feedstocks make it impossible to provide a single upstream GHG emissions value for EVs and PHEVs that would be meaningful to consumers. One environmental group supported the proposal, but argued for a more prominent display of the text indicating that the values are tailpipe-only.

Nearly all environmental groups, academics, a Federal lab, and non-electricity fuel advocacy groups who commented on this topic opposed the proposal and endorsed the concept of including upstream GHG emissions on the label. The primary argument was that providing tailpipe-only GHG emissions would be confusing and/or misleading, as some consumers might infer that operating a vehicle on grid electricity has no greenhouse gas emissions impacts, and that this could lead to adverse consumer purchase decisions if “zero emissions” was an overriding selling point for a consumer.

A second argument from many of these commenters, as well as from one automaker, was that the primary purpose of the label should be to provide relevant consumer information, and that a label is not an appropriate way to promote an individual technology, which they argued this approach would do for electric vehicles if upstream emissions were not included on the label. California Air Resources Board (ARB) stated that upstream emissions would need to be reflected on the label in order to adopt the national label in California. ARB later indicated that, in the interest of a unified national label, this requirement could be met through a label statement about additional emissions and reference to a Web site where upstream values could be obtained.

However, only a few commenters endorsed a specific methodology for determining upstream GHG emissions values. One joint environmental group comment supported a universal upstream GHG emissions factor for all vehicle operation off of the electric grid, similar to the approach currently used by the ARB. Another environmental group suggested that the label CO

value for both EVs and PHEVs be an asterisk instead of a numerical value, and the asterisk would be coupled with label text directing the consumer to the Web site for customized, regional-based upstream GHG emissions values.

The agencies are requiring a label which, as was proposed, will be limited to tailpipe-only GHG emissions but will have more prominent text to better emphasize the tailpipe-only metric. EVs will include the clarifying statement, “Does not include emissions from producing electricity.” Vehicles fueled without grid electricity will include the statement, “Producing and distributing fuel also create emissions; learn more at fueleconomy.gov.” For PHEVs, the text “& electricity” will be added after the word “fuel.” Detailed information (including regional-specific values, when appropriate) regarding upstream emissions for fuels will be provided on a Web site. For details on the Web site

content and accessibility, please refer to Section III.I.

The agencies considered the merits of arguments both for and against inclusion of upstream emissions information on the label itself but ultimately concluded that retaining a tailpipe-only approach is more appropriate for this consumer-oriented label. While the agencies acknowledge, as discussed above, that substantial GHG emissions can be created during the upstream production and distribution of various automotive fuels, our reasoning for adopting a tailpipe-only approach starts with the fact that the label's fundamental purpose is to present information about the vehicle itself, rather than on a broader system. Emissions from the tailpipe fall under the automaker's control; they are a result of the product that the manufacturer produces.

The agencies agree that information on a vehicle's upstream emissions may be useful for consumers, even if it is not central to the purpose of the label. We also concluded that including upstream GHG emissions on a Web site instead of the label is a more appropriate way to communicate information regarding upstream emissions to consumers. Because of the substantial variation in emissions associated with electricity production from region to region, a label that presented a single national average of upstream emissions could be more likely to confuse consumers rather than help them, particularly if consumers are aware that their regional electricity generation mix is different from the national average, and could thereby detract from the label's purpose. Due to different electricity generation fuels and technologies, this level of variation is significant: from one region to another, the highest-to-lowest upstream average GHG emission ratios are roughly 3-to-1.

If examined from a utility-by-utility perspective, the ratio is even greater, at 75-to-1.

For a national label to present a single national average would be misleading and inaccurate given such a wide range. The agencies are aware of arguments that variation is also present in the gasoline prices used to calculate fuels costs and/or savings on the label, but the typical range in regional gasoline prices is much narrower (approximately 1.25-to-1)

than the range in upstream GHG emissions, and therefore adopting a single average value for national gasoline prices seems more appropriate.

Pechan & Associates, Inc., “The Emissions & Generation Resource Integrated Database for 2010 (eGRID2010 version 1.0) year 2007 Summary Tables,” prepared for the U.S. Environmental Protection Agency, Washington, DC, March 2011.

M. J. Bradley & Associates. (2010). Benchmarking Air Emissions of the 100 Largest Electric Power Producers in the United States.

. See EIA's Retail Gasoline Prices

http://www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/mogas_home_page.html

where, as of May 16, 2011, the highest city gasoline price, of the 10 cities represented, was $4.40 in Chicago, Illinois, and the lowest was $3.70 in Denver, Colorado. This represents a high-to-low range of 19%.

Even if the agencies were to conclude that including upstream GHG emissions on the label were appropriate, given our concerns that a national-average upstream value might not be helpful, we do not believe that it would be practical for the label to present regional-specific upstream data for every vehicle sold. Under that scenario, automakers would not only need to reflect regional differences in power generation fuel mixes but would also need to consider how state regulations could affect emissions from electricity generation in the future; that is, a label that adequately reflects expected GHG emissions over the vehicle's useful life would need to project future changes in electric utility emission rates on a regional-specific basis, which would be challenging to accomplish in a meaningful way. Further, producing individualized labels would be difficult and would introduce additional complexity and costs for manufacturers, which the agencies did not account for in our proposal.

However, the agencies believe that it is important and beneficial to provide information on upstream GHG emissions to consumers for certain advanced technology vehicles and are in the process of developing a Web site in order to make such information available. We believe that providing such data on a Web site has advantages over presenting upstream information on the label. A Web site allows consumers to access regionally specific data on electricity upstream emissions and allows the agencies to present further information on methodologies as needed. The information can also be updated more quickly as new data becomes available. Further, presenting the information online, rather than on the label, allows the label to present more comprehensive information in a clearer, simpler manner, which we believe will benefit consumers.

The agencies recognize that biofuels, such as the E85 that FFVs use, will play an important role in reducing the nation's dependence on foreign oil, thereby increasing domestic energy security. While the majority of comments on upstream emissions pertained to emissions from electricity production, the agencies also recognize that biofuels have unique GHG emission characteristics. When considered on a lifecycle basis (including both tailpipe and upstream emissions), the net GHG emission impact of individual biofuels can vary significantly from both petroleum-based fuels and from one biofuel to another. EPA's Renewable Fuel Standard program, as modified by EISA, examined these differences in lifecycle emissions in detail.

For example, EPA found that with respect to aggregate lifecycle emissions including non-tailpipe GHG emissions (such as feedstock growth, transportation, fuel production, and land use), lifecycle GHG emissions in 2022 for ethanol from corn, using certain advanced production technologies, are about 20 percent less than gasoline from oil.

http://www.epa.gov/otaq/renewablefuels/420f10006.htm

The agencies recognize that in the case of biofuels, “upstream emissions” include not only GHG emissions, but also any biological sequestration that takes place. For purposes of this discussion, the term “upstream emissions,” when considered in the case of biofuels, should be construed to encompass both GHG emissions and sequestration.

The agencies note that to the extent future policy decisions involve upstream emissions, the agencies will need to consider not only upstream emissions from electricity production, but also the unique emission characteristics associated with biofuels.

Finally, the agencies agree with one commenter's suggestion to indicate more clearly that the GHG emission values presented on the label represent tailpipe-only emissions. In response, the agencies are adopting a label with more prominent “tailpipe only” text as well as a statement that information on upstream emissions can be found at the Web site.

We have made this decision on the treatment of upstream emissions for the fuel economy label for the reasons explained in this preamble. This conclusion does not necessarily reflect any decisions that will be made regarding upstream emissions in future greenhouse gas and fuel economy rulemakings. In addition, the agencies will continue to consider this issue over time.

In summary, the agencies are requiring a label with a tailpipe-only GHG emissions rating as well as more clear and prominent text that the rating includes only tailpipe GHG emissions

and that the consumer can go to the Web site for information on upstream GHG emissions.

F. Smog Rating

In addition to fuel economy and greenhouse gas information, EISA also requires that new vehicles be labeled with information reflecting a vehicle's performance in terms of “other emissions,” using a rating system that would make it easy for consumers to compare the other emissions of automobiles at the point of purchase.

The agencies proposed that “other emissions” include those tailpipe emissions, other than CO

, for which vehicles are required to meet current emission standards. These emissions include criteria emissions regulated under EPA's National Ambient Air Quality Standards and air toxics and include the following smog-forming and other air pollutants:

49 U.S.C. 32908(g)(1)(A).

• NMOG—non-methane organic gases;

• NO

—oxides of nitrogen;

• PM—particulate matter;

• CO—carbon monoxide; and

• HCHO—formaldehyde.

The agencies proposed and requested comment on a one-to-ten rating for “other emissions” in which each rating is associated with a bin from the Federal Tier 2 emissions standards,

or the comparable California emissions standard,

based on the fact that it was impossible to provide a single aggregated rating reflecting an absolute scale, and that separate absolute rating scales would have been unduly cumbersome to present on the label.

40 CFR part 86, subpart S.

The California Low-Emission Vehicle Regulations for Passenger Cars, Light-Duty Trucks and Medium-Duty Vehicles, Title 13, California Code of Regulations (last amended March 29, 2010).

The majority of comments received were supportive of the proposed option, indicating that it was a reasonable approach to distilling complex information and was consistent with the approach used on the EPA Green Vehicle Guide Web site and the California Environmental Performance Label. Several commenters advocated changing the name on the label from “other air pollutants” to the term “smog,” which they felt was more meaningful for the general public and would be even more directly consistent with the California Environmental Performance Label. Finally, a few comments suggested that “other air pollutants” should be disaggregated and displayed separately for each air pollutant.

The agencies are requiring, as proposed and as supported by most comments, a label that displays a relative one-to-ten rating based on Federal vehicle emission standards or comparable California emissions standards. We are also requiring the suggested name change, as consumers are already familiar with the connection between vehicle emissions and smog, whereas “other air pollutants” is not currently as meaningful. This will have the added benefit of promoting label harmonization by better aligning with the California Environmental Performance Label “Smog Score” that has been in existence for many years.

Despite the fact that the EPCA and EISA language could be interpreted to allow multiple “other emissions” rating scales on the label, the agencies were not persuaded that having disaggregated pollutant information on the label would benefit consumers. Based on our consumer research,

it appears that consumers do not currently want more specificity when it comes to these air pollutants and, in fact, could not make meaningful distinctions among these pollutants. In addition, we do not believe that there is sufficient space on the label to incorporate emissions information on the five pollutants addressed through this rating scale without cluttering the label and risking information overload. However, to address some consumers' interest in more information, consumers will be able to access more detailed information on the specific smog-forming pollutants that are covered collectively on the label on

fueleconomy.gov.

Environmental Protection Agency Fuel Economy Label: Phase 1 Focus Groups, EPA420-R-10-903, August 2010, p. 28.

The agencies acknowledge that this rating will multiply the number of distinct labels relative to current labeling because of the interaction between model types and test groups. Current labels are based only on model types and present only fuel economy information. However, emissions are based on test groups, and there may be multiple test groups within a given model type. For example, a manufacturer with two otherwise identical vehicles within a model type, where one is certified to EPA emission standards and the other to more stringent California standards, would only need one label today for all the vehicles in that model type. This final rule would require that—despite identical fuel economy results—the different vehicles have different smog ratings and thus different label information. Any incremental costs associated with this increase in distinct labels have been addressed; as discussed in Section VI.A., the agencies received comment from auto makers on the startup costs of the new labels, including estimates of the IT needs to address new label requirements, and incorporated their comments into the cost estimates.

The Smog Rating System for model year 2013 vehicles is shown in Table F-1. The proposal discussed ratings based on current emission standards; however, if those standards were to change in the future, the ratings would no longer have a basis on which to be assigned. Therefore, we clarify here that we intend to update the scoring thresholds in the future to reflect the prevailing Federal and California emissions standards. Any updates to the Smog Rating will be included in the annual label manufacturer guidance document or in the regulations via rulemaking.

Table F-1—Rating System for “Other Emissions”

Smog

rating

EPA Tier 2 emissions standard

California Air

Resources Board

LEV II emissions

standard

Bin 1

ZEV

N/A

PZEV

Bin 2

SULEV II

Bin 3

N/A

Bin 4

ULEV II

Bin 5

LEV II

Bin 6

LEV II opt 1

Bin 7

N/A

Bin 8

SULEV II large trucks

N/A

ULEV & LEV II large trucks

G. Fuel Costs and Savings

As described in Section II.A, EPCA requires that labels shall contain “the estimated annual fuel cost of operating the automobile.” In addition EPCA states that the labels shall contain other information required or authorized by the EPA Administrator that is related to the required information,

such as the annual fuel cost. EPA proposed to include annual fuel cost on all labels, and proposed a five year fuel cost or savings compared to the average vehicle value on label 1, but indicated that any label required could include the five year cost or savings value.

49 U.S.C. 32908(b).

1. Annual Fuel Cost

Focus groups conducted prior to the proposal provided mixed feedback on the value of annual fuel cost. When asked, participants were skeptical of the

use of estimated annual fuel cost, even when asked to consider whether it could be a useful comparative metric across other vehicles of the same model year. This skepticism arose from the recognition that the value was based on assumptions of fuel prices and annual miles driven, which many felt would not be personally applicable to their own driving patterns. Nevertheless, participants consistently employed the annual fuel cost (along with MPG) when asked to compare the efficiency of conventional vehicles with that of advanced technology vehicles, like PHEVs and EVs, with their less familiar set of energy metrics.

Focus group participants involved in the previous update to the fuel economy label were clearly interested in the annual fuel cost figure.

Recognizing the EPCA statutory requirement to display the estimated annual fuel cost, EPA requested comment on whether it is a useful comparative tool across technologies and, if so, how to best communicate on the label that it is valid for this purpose. EPA also sought comment on whether there might be an additional or alternative way to display fuel cost information that might be more useful or have a greater impact on consumers.

Environmental Protection Agency Fuel Economy Label: Phase 3 Focus Groups, EPA420-R-10-905, August 2010, p.37.

71 FR 5466, February 1, 2006.

Comments on annual fuel cost generally acknowledged the statutory requirement under EPCA and agreed that it provides a useful comparison metric. Several commenters indicated that it was the most important metric on the current fuel economy label, after MPG. The majority of those who commented on it agreed that annual fuel cost should be retained. Several commenters suggested that the $2.80 per gallon cost figure shown on the example labels be made more realistic. Comments on electric operation indicated that 15,000 miles per year is not attainable for an EV unless it were to recharge more than once a day, and suggested cents per mile as a useful metric; they did acknowledge, however, that the annual cost could be used as a comparative tool. One comment regarding PHEVs noted that annual fuel cost will vary significantly depending on the relative use of gasoline and electricity.

EPA is requiring the retention of annual fuel cost and its underlying assumptions on the label. This satisfies the EPCA requirement and provides continuity with the historical approach to annual fuel cost, which is used by some consumers as a comparative tool. EPA agrees that, as vehicle technologies diverge and it becomes increasingly challenging to find comparative metrics, fuel cost is a useful point of comparison. Consumers may compare the annual fuel cost of various vehicles and consider that cost to be part of the “price” of the vehicle. Because of the importance of annual fuel cost, the required label will make that cost quite prominent and conspicuous. EPA will continue its practice of issuing annual guidance updating the mileage and fuel cost assumptions, in consultation with the U.S. Department of Energy's Energy Information Administration.

Sample labels in the package use projections for the second and third quarter of 2012, based on the EIA Short Term Energy Outlook, May 2011.

2. Five Year Fuel Savings or Sending Compared to the Average Vehicle

EPA also proposed and requested comment on another approach to presenting fuel cost information: Focusing on the savings attainable by purchasing a vehicle that is relatively more fuel efficient or the spending incurred when purchasing a vehicle that is relatively less fuel efficient. This approach was specifically recommended by the expert panel discussed in Section I.D, which noted that savings is a more powerful message than annual cost.

Although savings and spending calculations would necessarily also rely on assumptions, EPA believes that the value of the information to consumers is significant enough to overcome these drawbacks.

Environmental Protection Agency Fuel Economy Label: Expert Panel Report, EPA420-R-10-908, August 2010.

In the proposal, EPA explored a number of methods for calculating savings and spending, and proposed a method that calculated the difference in fuel costs of a vehicle over five years compared to the projected median new vehicle for that model year. EPA proposed that some vehicles would show a savings, while others would show consumers spending more for fuel over five years compared to the reference vehicle; these values would increase in magnitude the further the vehicle is from the average vehicle in terms of fuel consumption. The proposed approach appropriately reflects the fact that fuel cost savings become larger as the fuel efficiency of a vehicle improves, and conversely that fuel costs increase as fuel efficiency decreases compared to the reference vehicle.

As with the fuel economy and greenhouse gas rating system and comparable class information, EPA proposed to provide annual guidance indicating the reference against which the fuel cost savings would be measured, as well as the prices for all fuels.

EPA proposed to compare each labeled vehicle to a median vehicle, but to use “average” on the label as a more accessible term than “median.” EPA anticipated updating the reference vehicle MPG value as the fleet fuel efficiency changes in response to regulations and market forces. Finally, EPA proposed to round the relative fuel cost or savings values used on the label to the nearest one hundred dollars, to avoid implying more precision than is warranted and for ease of recall. Vehicles that are within fifty dollars of the reference vehicle fuel cost would be designated as saving zero dollars.

We proposed that the reference five-year fuel cost be calculated by applying the gasoline fuel price to the average miles driven over the first five years of the reference vehicle's life, assuming a particular fuel economy. The fuel economy value for the reference vehicle would be based on the projected fuel economy value of the median vehicle model type for sale the previous model year, not sales-weighted, and adjusted based on projections regarding the upcoming model year. The appropriate values would be provided in guidance.

EPA sought comment on this and alternative approaches to conveying fuel cost and savings information. EPA also sought comment on whether there is a potential for consumer confusion caused by two different dollar figures: the estimated annual fuel cost of operating the vehicle and the five-year relative fuel savings/spending value compared to a reference vehicle.

Many individual consumers, consumer advocacy groups, and environmental advocacy groups expressed strong support for a five year save or spend value compared to the average vehicle. These commenters stated that clearly communicated operating costs or savings based on fuel efficiency would be a useful comparison metric, and that the five year save or spend value is a more powerful metric than annual fuel cost. They suggested that, for those consumers considering advanced technology vehicles with a higher sticker price but also a higher fuel economy than conventional vehicles, the five year save or spend value would be a valuable piece of information that would allow them to weigh the impact of fuel savings over time against the up-front vehicle purchase price.

Several industry organizations commented that a fuel cost or savings value should be limited to a within class comparison. Automotive manufacturers were primarily opposed to including the five year save or spend value on the label, suggesting that the statutorily-

required annual cost is sufficient and the additional five year information would be confusing. Many of these commenters noted that the reference vehicle could be ambiguous or confusing, and some raised a concern that the median vehicle and the average vehicle are not the same. Some commenters said that five year save or spend value was incomplete because it does not account for the time value of money nor include up-front vehicle costs. A few commenters suggested that the agencies use five-year fuel costs (annual fuel cost multiplied by five years) rather than a comparison to the average vehicle costs; other commenters suggested that a relative five year save or spend value should be calculated based on a reference vehicle in the same class. Several commenters noted that the value of a dollar and the cost of fuel will undoubtedly vary during the five year period.

EPA believes that the utility of the five year save or spend value compared to the average vehicle outweighs the concerns expressed by commenters. Although the literature is mixed, many studies have indicated that consumers may significantly undervalue (or overvalue) potential fuel savings when deciding which vehicle to purchase.

One reason may be that consumers have difficulty accurately estimating fuel costs and savings over time.

Another reason may be that unless relevant information is provided, those costs or savings, even if significant, may not be sufficiently salient to consumers at the time of purchase. The five-year fuel savings or spending value clearly demonstrates the total comparative fuel costs and savings over a timeframe that many vehicles are owned. Including it on the label will help consumers to more easily weigh the long-term payback benefits of purchasing a more fuel efficient vehicle or a vehicle that operates on a less expensive fuel.

Greene, David L. “How Consumers Value Fuel Economy: A Literature Review,” EPA Report EPA-420-R-10-008, March 2010, p.vi-ix.

For evidence that consumers may make mistakes estimating the fuel savings associated with higher fuel economy, see: Turrentine, Thomas S. and Kurani, Kenneth S. “Car buyers and fuel economy?” Energy Policy 35:1213-1223 (2007) and Larrick, R.P. and J.B. Soll, “The MPG illusion,” Science 320:1593-1594 (2008). For a more complete discussion of reasons consumers may undervalue future fuel savings, see 75 F.R. 25510-25513; and Helfand, Gloria, and Wolverton, Ann, “Evaluating the Consumer Response to Fuel Economy: A Review of the Literature, ” U.S. Environmental Protection Agency, National Center for Environmental Economics Working Paper 09-04 (2009), p.23-30, available at

http://yosemite.epa.gov/EE/epa/eed.nsf/WPNumber/2009-04?OpenDocument

(last accessed 3/18/11).

In response to a concern that the median vehicle and the average vehicle are not the same, EPA is requiring a simple change to the proposed algorithm for estimating the reference vehicle for fuel costs over five years. For consistency, EPA will use the same reference point that is used to define the break between a rating of 5 and a rating of 6 on the fuel economy and greenhouse gas scale (see Section III.D). This addresses the concerns expressed in comment, as the term “average” now is represented by the label MPG value that corresponds with the projected achieved CAFE level for the fleet on a sales-weighted basis for that same model year. That is, the vehicles indicated on the label as “you save” in fuel costs over five years will have a fuel economy that is better than the projected average level for the fleet for that model year, while those indicating “you spend” will be below the projected average. The five-year average cost will be calculated for this average vehicle, using the same annual mileage and gasoline fuel cost assumptions used for the annual cost estimate, multiplied by five years. As proposed, this reference five-year cost value representing the average vehicle will be published in EPA guidance, along with the upcoming projected fuel costs and annual mileage assumptions.

While EPA agrees that some consumers may not fully understand the reference point for the five year save or spend value, EPA nevertheless believes that showing relative costs or savings has significant value in helping consumers understand that fuel efficiency can substantially affect the relative operating costs among vehicles. In particular, EPA believes that communicating to consumers a vehicle's fuel costs relative to the costs of the average new model offered for sale, and over a timeframe commensurate with vehicle ownership, will highlight the importance of future fuel costs and allow them to be more readily factored into the buying decision. To clarify the average vehicle reference point, the “Compared to the average vehicle” text is being increased in prominence. In addition, explanatory text is being added to the label which says “The average new vehicle gets X MPG and costs $Y to fuel over 5 years.” The agencies believe that this additional text should aid consumer understanding about the reference point.

EPA considered using five-year fuel cost (annual fuel cost multiplied by five-years) instead of the comparative five year save or spend value. However, as discussed above, EPA concluded that showing the relative costs or savings has additional merit that is not immediately gleaned from a five-year cost value. EPA and the Department of Energy provide similar information online for appliances as part of their Energy Star program.

In addition, since annual fuel cost is also on the label, consumers can easily use the information on the label to calculate their own five-year fuel costs, if desired.

For example see “Savings Calculator” at:

http://www.energystar.gov/index.cfm?fuseaction=find_a_product.showProductGroup&pgw_code=CW

(last accessed 3/17/11). This spreadsheet allows users to estimate the potential savings from using Energy Star-qualified clothes washers instead of conventional clothes washers.

EPA also considered using economic projections of future dollar values and fuel costs to calculate the five year save or spend value, but concluded that doing so would make the calculations unnecessarily confusing to the consumer while providing limited additional value. Many people in the public think in terms of simple calculations or payback periods when considering long-term costs or savings. As EPA learned from the focus groups, consumers are skeptical of any calculations involving fuel costs, because the price of fuel fluctuates greatly, and personal driving habits also vary. Adding additional complexities to the calculation would probably further confuse consumers and thus contribute to their skepticism. Our hope is that consumers will recognize that this value is most useful for comparison purposes, and not as an exact measure of actual fuel costs.

EPA does not agree with comments suggesting that the five year save or spend value should be based on a within class comparison, because EPA's research demonstrated that most shoppers search for vehicles that fall into more than one class. In addition, having multiple reference vehicles—one for each class—would create unnecessary confusion for the consumer. Therefore, the relative five year save or spend value will be compared to one reference vehicle, as described above.

EPA acknowledges that there is some potential for confusion created by having both annual fuel costs and the relative five year save or spend values on the label. It believes, however, that for many consumers, the two figures may prove complementary: Consumers are able both to see absolute cost on an annual basis and to learn how much they will save or spend compared to the average vehicle over a relevant period. To reduce the risk of confusion, the label will display the five year save or spend value and the annual fuel cost in distinct locations on the label, with

prominent differentiating text (see Figure I-1).

H. Range and Charge Time

1. Range

Vehicle cruising range—the calculated distance that a vehicle can travel given its fuel economy and fuel tank capacity—has not historically been provided on the fuel economy label. However, in the focus groups conducted for this rulemaking, it became clear that many people were interested in this piece of information, but only for advanced technology vehicles, with which there is little familiarity. Accordingly, EPA proposed that vehicle range be included on the label for vehicles that use electricity, proposed that it not be included on labels for vehicles that operate on liquid fuels, and sought comment on whether range should be included on labels for vehicles that operate on non-petroleum fuels other than electricity.

EPA did not receive a large number of comments on range. Of the comments that were received, nearly all supported including range for some or all alternative fuel vehicles. Several commenters supported the inclusion of range for all alternative fuel vehicles, with the goal of harmonizing with the Federal Trade Commission

so that its separate label would no longer be necessary. One commenter opposed the inclusion of range on an already “crowded” label, but did state that if range were included on EV and PHEV labels, then it should also be included on CNG labels.

The Federal Trade Commission requires a label that displays cruising range for all alternative fuel vehicles and vehicles capable of utilizing alternative fuels. See 16 CFR part 309, Subpart C.

EPA is requiring the inclusion of range on all non-petroleum and advanced technology vehicle labels,

e.g.,

for CNG, EV, PHEV, and hydrogen FCV vehicles. As supported by commenters, EPA continues to believe that range is an important piece of information for potential purchasers of these vehicles, since they typically cannot travel as far on a refueling as can a conventional gasoline vehicle, and the refueling infrastructure for non-liquid fuels is currently limited. EPA also agrees with several commenters that including range on the new fuel economy and environment label may set the stage for possible future action by the Federal Trade Commission to withdraw its separate cruising range label for alternative fuel vehicles. In response to some commenters' concern about the ability to generate meaningful range estimates for PHEV labels, EPA recognizes that the real-world variability in PHEV range values, particularly in the all-electric or battery assist mode, will be much higher than with conventional vehicles. Nevertheless, a laboratory-based repeatable test gives a basis for comparison, despite real-world variability, and the final label requires an all electric range value for all PHEVs. EPA's market research suggests that many consumers want an objective comparative metric for range that they can use to determine whether an advanced technology vehicle might be right for them.

Environmental Protection Agency Fuel Economy Label: Phase 2 Focus Groups, EPA420-R-10-904, August 2010.

EPA is also finalizing an option for vehicle manufacturers to voluntarily include E85 range information on the labels for ethanol flexible fuel vehicles. The potential benefit to a manufacturer is that, should it take advantage of this option, the Federal Trade Commission might decide that a separate driving range label is no longer required. The final regulations provide templates that illustrate how labels with this optional information should appear, and any company choosing to provide driving range information must display that information according to the regulations. EPA encourages manufacturers to provide this optional E85 driving range information, particularly in cases where refueling opportunities may be limited and/or the driving range is substantially less than what consumers are used to experiencing with typical conventional fuel vehicles.

2. Battery Charging Information

Battery charging information was included on two of the three EV and PHEV label designs in the proposed rule. As noted in the proposal, EPA believes that the amount of time it takes to charge an EV or PHEV battery is important to consumers. This was widely supported by the focus groups, where participants often expressed a strong interest in seeing battery charging information on the EV and PHEV labels. EPA proposed that the label include battery charging time using a standard wall outlet supplying 120 volts, with an option for the manufacturer to alternatively specify a 240 volt charge time if the higher voltage is recommended or required by the manufacturer.

A majority of commenters on the subject, including automotive manufacturers and consumer groups, supported including charge time information on the label. Some of these commenters suggested that charge time should be based on 240V, as this would be consistent with the recommendation in the owner's manual and would reflect the manner in which EVs and PHEVs are likely to be typically charged. Several comments suggested that a range of charge times should be provided, given the possible use of different voltage levels. A minority of commenters, largely comprised of electric vehicle manufactures and advocacy organizations, suggested that charging information should not be on the label, largely because of concerns of oversimplification of the range of possible charge times given charging conditions, as well as label overcrowding. These commenters suggested that the charging information could be provided on EPA's Web site instead.

EPA is requiring charging time information on the label of EVs and PHEVs, with one key difference from the proposal. The final regulations require that manufacturers display charging time based on the use of a dedicated 240 volt charging system, with the option of displaying charging time based on the use of a standard 120 volt wall outlet. It is our belief that the owners of these vehicles will, in a significant majority of cases, install dedicated 240 volt outlets to use for charging their vehicles.

Doing so will dramatically decrease the amount of time it takes to charge the battery, thus minimizing one of the perceived limitations of vehicles that use electricity and maximizing the utility and availability of the vehicle. However, to address the possibility that not all EV/PHEV owners will install dedicated 240 volt outlets, a manufacturer may instead report the 120 volt charging time on the label if, for example, their vehicle is not capable of receiving 240 volts, or if the manufacturer believes that their buyers will typically use 120 volt and will prefer that information instead.

U.S. Environmental Protection Agency, U.S. Department of Transportation, California Air Resources Board Interim Joint Technical Assessment Report: Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards for Model Years 2017-2025. Chapter 4. September 2010.

I. Web Site and QR Code

EPA proposed and requested comment on adding a new, prominent URL on the label that would direct consumers to a detailed, interactive consumer Web site. EPA also proposed including a QR Code® that could be scanned by a device such as a smartphone and reach the same Web site.

All those who commented on the topic supported the development of a comprehensive Web site, indicating that it is crucial to achieving a simpler label while also providing consumers with access to detailed information. Commenters also liked the idea of having a Web site that can more accurately reflect their likely personal experience with a vehicle. The majority of comments received also supported the inclusion of the QR Code® on the label. EPA evaluated other two-dimensional bar codes suggested by commenters and found that the advantages of the QR Code® significantly outweighed the potential advantages of other options. The QR Code® is free to use, in the public domain, does not require entering into a business relationship with private industry, and perhaps most significantly, is described in an ISO standard which is incorporated by reference in the final regulations. The ISO standard allows the agencies to clearly and completely describe in regulatory language the process for generating a QR Code®, a necessity of the structure of our program.

EPA is moving forward with developing new Web site content on the existing fueleconomy.gov site. New content will be available prior to the date that labels are required to appear on vehicles (MY 2013), and will further explain the label's content, metrics, and methodologies. In addition to the label-specific information, consumers can use fueleconomy.gov's tools to compare and personalize fuel economy and environmental values across vehicles. New content on this Web site will include an enhanced emissions calculator that will allow consumers to determine an EV's or PHEV's potential upstream greenhouse gas emissions, based on the vehicle's efficiency and regional electricity emissions rates. This functionality will give consumers more accurate, regional-specific upstream emissions information than is possible on a static, national label. The Web calculator may also allow consumers to estimate the upstream GHG emissions associated with the operation of gasoline, diesel, and CNG vehicles using national averages.

In order to address consumers' growing interest in having information accessible via smartphones, EPA is including a QR Code® on the new label.

When a smartphone user scans the QR Code® on the label, information on that particular vehicle from the EPA Web site will be displayed on the handheld device. Though several commenters suggested linking to the auto manufacturers' vehicle-specific Web sites from the QR Code®, EPA determined that linking to a government Web site was the best way to provide consumers with “just the facts.” The content will be similar to what will be available on the label Web site, but geared to a smartphone platform. The user can then take advantage of many of the Web site's tools and vehicle comparisons from his/her phone while shopping at a dealership.

QR (or “quick response”) Codes are simply two-dimensional bar codes used to store information. In this case the information is a Web site URL. The term QR Code® is a registered trademark of Denso Wave Incorporated, which owns the patent rights to the QR Code. However, the patent right is not exercised, allowing the specification of the QR Code® to be disclosed and open for widespread use. For more information, see

http://www.denso-wave.com/en/adcd/index.html.

J. Color

All of the proposed labels utilized color to draw attention and highlight information for consumers. However, each of the two proposed label options used color in different ways. The color on Label 1 was assigned based on the letter grade rating of the vehicle, using color as a comparison tool, whereas the color on Label 2 was determined by the vehicle technology and fuel type, using color as a vehicle identifier.

NHTSA and EPA received comments from a wide variety of organizations supporting the use of color on the label. These commenters noted that color draws attention and results in a more influential label than black and white, and that the incremental cost of achieving color would be worthwhile. These comments especially supported using colors to differentiate important information for the consumer, such as vehicle ratings or five-year fuel costs. On the other hand, automobile manufacturers were concerned about the use of color on the label, especially any label design that would require color printing at the point of vehicle assembly or port of entry. In addition, they expressed concern that colors in the labels might fade, that they might be difficult to see through tinted windows, that the increased complexity of these labels would lead to compliance concerns, and that some colors might deter consumers from considering some vehicles. The manufactures were specifically concerned with the “warning” connotation that the colors red, orange, and yellow convey.

Currently, several manufacturers use color on their Monroney labels; however, most of those manufactures utilize a standard, preprinted color background (for example, a company logo in color) for all vehicles and then print with black ink on top of the preprinted background. The proposed labels would require either printing the entire label in color, or managing several preprinted color backgrounds and printing with black ink on top of the preprinted and collated backgrounds. Either of these methods would increase the amount of lead time required by manufacturers and would add cost and complexity to the printing process. These concerns ultimately led the agencies to simplify the color scheme on the final label.

The final label will use one color, blue, for all vehicles to highlight important aspects of the label. The agencies chose not to use red as the primary color on the label due to the perceived “warning” message that it can convey. Conversely, we decided not to use green on all of the labels because we did not want to imply that all vehicles are green (

i.e.

clean) vehicles. The agencies were also advised that the color blue does not fade to a different color (green for example, can fade into yellow). The label has been designed to facilitate printing with black ink on a preprinted background. In addition, the color on the label satisfies the requirements of California to have “at least one color ink * * * in addition to black.”

As discussed in Section III.L.2, this allows for harmonization of labels, which was a key request the agencies received from the automakers.

California Air Pollution Control Laws, Health and Safety Code, Division 26, Part 5, Chapter 2, Section 43200.1 (b)(2)(D).

K. Lead Time

The agencies proposed that the new label take effect for the 2012 model year, in anticipation of advanced technology vehicles entering the market that would require labels which addressed their particular attributes. For those advanced technology vehicles expected to enter the market in model year 2011, EPA indicated that we would work with individual manufacturers to develop interim labels that would be consistent with the proposal on a case by case basis, using our current authority. The proposed timing would also coincide with the recent joint rulemaking by EPA and NHTSA that established harmonized Federal GHG emissions and CAFE standards for new cars, sport utility vehicles, minivans, and pickup trucks for model years 2012 through 2016.

We also proposed to provide 30 days of lead-time for automobile manufacturers and importers to update the label template and upgrade printing

capabilities in order to implement these new requirements in the 2012 model year. This timing, given rule finalization in December 2010, was projected to capture the majority of the 2012 model year.

See 75 FR 25324, May 7, 2010.

Automakers commented that they would need significantly more lead-time to adopt a revised label, explaining that the implementation process was much more complex than buying off-the shelf colors printers. Specifically, these commenters referenced (1) a detailed process of integrating multiple Information Technology systems in order to properly assign the new label elements to the correct vehicle, (2) redesign of the vehicle Monroney label if the footprint for the fuel economy and environment label changed from that of the current fuel economy label, and (3) the need to print new label stock or acquire and integrate new printers in order to launch a new label. Automakers typically expected that implementing these procedures would take on the order of six to ten months, although comments suggested lead-times from a low end of 19 weeks to a high end of the model year following the one year anniversary of the final rule. Several automotive commenters suggested making the new label requirements effective with the 2013 model year, assuming that sufficient lead-time was also allotted.

Some commenters supported the proposal to implement the new label at the start of a model year, noting that this would dovetail with the changeover in manufacturing processes. Implementing the label at the beginning of the model year would thus allow for a change in the labeling procedure when the production line was idle, minimizing costs and the chances of mislabeling. Doing so would also minimize public confusion that could arise from two different label designs appearing on two vehicles of the same model and model year. However, not all those who commented on lead-time felt that a change at the start of a model year was important, given their particular manufacturing procedures, and requested the flexibility for voluntary early adoption, which could prevent having duplicate systems in place.

The detailed description of the required procedural steps persuaded EPA and NHTSA that additional lead-time is necessary for automakers to properly implement the revised label without undue burden and error. NHTSA and EPA also agree that, for many manufacturers, switching at the start of the model year would be the least burdensome and most logical approach. Finally, the rulemaking is being completed several months beyond when originally planned, which would capture only a portion of the 2012 model year. An EPA analysis of the timeframe of vehicle certifications over the past several years, using confidential information submitted by automotive manufacturers, revealed that fewer than 20% of the total labels for the model year are typically issued by the end of May, 40% by the end of June, and 60-70% by mid-August. We do not think it would enhance public understanding for a new label to be required on less than half of the vehicle models in that model year.

Thus, the agencies are requiring that the revised label be applied to all model year 2013 and later vehicles. The rule will be effective 30 days after publication, and manufacturers may optionally adopt the label for the remaining portion of the 2012 model year after that date. This approach provides the manufacturers with the most flexibility and several extra months of lead-time prior to the start of the 2013 model year, while providing consistency across the entire 2013 model year to minimize public confusion. We acknowledge that this lead-time, while significantly longer than that proposed, is less than that requested by certain commenters. However, the final label designs address many of the considerations that manufacturers raised as necessitating additional lead-time. Specifically, the minimum footprint of the current fuel economy label has been retained, thus eliminating the need for redesign of the Monroney label layout. In addition, the labels have been designed to eliminate the need for color printers on the line and, for the most part, to use a single pre-printed card stock, thus removing the lead-time steps that would have been needed to integrate either color printers or multiple card stocks in continuous use. We therefore believe that it will be possible for manufacturers to make the necessary changes in their labeling processes in the lead-time allotted.

L. Harmonization With Other Labels

As noted previously, Executive Order 13563, section 3, specifically draws attention to the importance of avoiding redundant, inconsistent, or overlapping requirements, and directs agencies to take steps to reduce “costs by simplifying and harmonizing rules.”

1. Federal Trade Commission

The Federal Trade Commission (FTC) currently requires that alternative fuel vehicles display a label that reports the driving range of the vehicle.

The dedicated alternative fuel vehicle label displays the estimated city and highway driving ranges on the alternative fuel, and the label for dual fuel vehicles (

e.g.,

flexible fuel vehicles, or FFVs) displays the estimated city and highway driving ranges on both fuels.

Alternative fuels (especially non-petroleum alternative fuels) may have lower energy densities, thus resulting in potentially reduced driving ranges relative to conventional fuels, and it is important for consumers to be able to understand this when considering the purchase of an alternative fuel vehicle. Among the vehicles currently labeled by EPA, the FTC label applies to vehicles that operate on electricity, ethanol, compressed natural gas, hydrogen, or on combinations of these fuels and conventional gasoline or diesel fuel (

e.g.

, FFVs and PHEVs).

16 CFR Part 309.

Note that while EPA does not currently require any comparative fuel information on FFV labels, EPA regulations have allowed manufacturers to optionally include the ethanol MPG and annual cost values since 2007. See 40 CFR 600.307-08.

EPA did not specifically propose to harmonize with the FTC regulations such that a single label would satisfy the multiple and sometimes overlapping EPA, DOT, and FTC requirements. However, EPA did recognize in the proposal that there could be an opportunity for such harmonization that would depend on whether or not the FTC ultimately could conclude that the EPA/DOT label could satisfy their statutory re

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