use the mpg-based method to determine both city and highway fuel
economy label estimates. Similarly, when the 5-cycle highway fuel
economy is greater than or equal to 0.95 times the mpg-based highway
fuel economy, all vehicle model types covered under the certificate of
conformity in that test group are required to use the vehicle-specific
5-cycle approach. This can be done using analytically derived fuel
economy estimates, when appropriate. This approach is appropriate
because those vehicles with a 5-cycle value above the mpg-based line
that used the mpg-based line would simply be reducing their fuel
economy down to the average level, even though the 5-cycle data
indicated better than average performance was likely for that vehicle
group. Because of the better-than-average performance, we expect that
most manufacturers will want to do complete 5-cycle testing for
vehicles likely to be significantly above the mpg-based line.
    This approach is illustrated in the Figures II-7 and II-8, below.
The black squares in these figures represent situations where the mpg
line does not do a good job (based on the tolerance criteria as shown
by the dashed line) of predicting the 5-cycle fuel economy. Those
vehicles with black squares in the two charts below may not use the
mpg-based approach, but instead must perform additional testing to
achieve better fuel economy estimates. Note that these charts do not
show the entire range of FTP and HFET fuel economy on the x-axis, and
thus do not show all those vehicles ``passing'' or ``failing'' the city
or highway criteria. For the purpose of illustrating this concept it
helps to isolate the FTP range from 20 to 30 mpg and the HFET range
from 30 to 40 mpg.

[GRAPHIC] [TIFF OMITTED] TR27DE06.025

[GRAPHIC] [TIFF OMITTED] TR27DE06.026

    If the 5-cycle city fuel economy falls below the mpg-based city
fuel economy by more than four percent (i.e., below the tolerance
line), but the 5-cycle highway fuel economy does not fall below the
mpg-based highway fuel economy by more than five percent (i.e., above
the tolerance line), all the vehicle configurations represented by the
emission data vehicle are required to use the vehicle-specific 5-cycle
approach for both city and highway fuel economy, since fuel economy
values for all five cycles are important in estimating 5-cycle city
fuel economy. However, if the 5-cycle highway fuel economy is less than
the mpg-based highway fuel economy by more than five percent (i.e.,
below the tolerance line), but the 5-cycle city fuel economy is not
more than four percent lower than the mpg-based city fuel economy
(i.e., above the tolerance line), all the vehicle configurations
represented by the emission data vehicle will use the mpg-based
approach to estimate the city fuel economy label. For the highway label
in

this case, all the vehicle configurations represented by the emission
data vehicle may use an approximate 5-cycle formula. This formula
includes vehicle-specific fuel economy measurements for the FTP, HFET
and US06 tests, but the SC03 and cold FTP test values may be estimated
based on relationships developed from other vehicles. This is
appropriate because the impact of the cold FTP test on highway fuel
economy in the 5-cycle formula is not vehicle-specific, but estimated
(or modeled) based on known relationships. Also the impact of the SC03
test on highway fuel economy is very small, particularly compared to
that for the US06 test.
    The criteria for use of the mpg-based approach in model year 2011
and later (5-cycle city fuel economy above four percent and 5-cycle
highway fuel economy above five percent) are based on the balance of
three factors. First, we designed them to be sufficiently large so that
typical test-to-test variability would not cause a test group to fail
the criteria. This may be a greater concern for the highway fuel
economy comparison, due to the dominance of the US06 fuel economy
(which inherently has greater test-to-test variability than the other
tests) in the 5-cycle formula. Second, we want to minimize the
potential error in the fuel economy label. Label fuel economy values
are rounded to the nearest whole mpg. Thus, we felt it important to
keep the difference between the 5-cycle and mpg-based fuel economy
values within roughly one mpg, if possible. In other words, if the
difference between the two methods is less than 1 mpg, then the two
methods would produce the same label value. If the difference is more
than 1 mpg then we would expect the 5-cycle method to result in a
different label value, and thus it is more important to trigger the
requirement for additional testing. Third, we want to avoid requiring
additional fuel economy testing that will have little to no impact on
the label values.
    The four percent tolerance band for city fuel economy is equivalent
to roughly 0.6-0.7 mpg on average. Due to the contribution of a number
of independent fuel economy measurements in the 5-cycle city formula,
the effect of test to test variability should be much lower than four
percent. Based on the 5-cycle test results of 615 recent model year
vehicles, we estimate that about 96 percent of test groups would fall
above the four percent tolerance line. Thus, we believe that this
criterion adequately satisfies the three factors mentioned above.
    The five percent tolerance band for highway fuel economy is
equivalent to roughly 1.1 mpg on average. Thus, it is slightly higher
than the typical error associated with rounding. However, due to the
dominant contribution of the US06 fuel economy in the 5-cycle highway
formula, and the fact that this test tends to have relatively high
variability, we are concerned that test-to-test variability could be on
the order of 3.0 percent in the 5-cycle highway formula. We estimate
that about 87 percent of test groups would fall above the five percent
tolerance line. Thus, again, we believe that this criterion adequately
satisfies the three factors mentioned above.
    Overall, allowing the continued use of the mpg-based approach in
this way will reduce the number of additional SC03 and cold FTP tests
by about 96 percent and reduce the number of additional US06 tests by
about 87 percent. Moreover, this significant reduction in test burden
is achieved with no significant impact on the fuel economy estimate.
2. Medium-Duty Passenger Vehicle Label Estimates
    As noted in Section I, we are finalizing in this rule a fuel
economy labeling program for Medium-Duty Passenger Vehicles (MDPVs), a
subset of vehicles between 8,500 and 10,000 lbs GVWR. MDPVs were first
defined in the regulation that put in place the ``Tier 2'' emission
standards.\35\ This newly-defined class of vehicles includes SUVs and
passenger vans between 8,500 and 10,000 lbs GVWR, but excludes large
pick-up trucks. The specific regulatory definition was designed to
capture in the Tier 2 vehicle emissions program those vehicles that are
designed predominantly for passenger use.\36\
---------------------------------------------------------------------------

    \35\ See 65 FR 6698 (Feb. 10, 2000).
    \36\ This is the regulatory definition of Medium-Duty Passenger
Vehicle, found in 40 CFR 86.1803-01: Medium-duty passenger vehicle
(MDPV) means any heavy-duty vehicle (as defined in this subpart)
with a gross vehicle weight rating (GVWR) of less than 10,000 pounds
that is designed primarily for the transportation of persons. The
MDPV definition does not include any vehicle which:
    (1) Is an ``incomplete truck'' as defined in this subpart; or
    (2) Has a seating capacity of more than 12 persons; or
    (3) Is designed for more than 9 persons in seating rearward of
the driver's seat; or
    (4) Is equipped with an open cargo area (for example, a pick-up
truck box or bed) of 72.0 inches in interior length or more. A
covered box not readily accessible from the passenger compartment
will be considered an open cargo area for purposes of this
definition.
---------------------------------------------------------------------------

    Under the Energy Policy and Conservation Act (EPCA), EPA is
required to establish regulations that require a manufacturer to attach
a label to each ``automobile'' manufactured in a model year.\37\
``Automobile'' is defined as a vehicle not more than 6,000 lbs GVWR,
and those vehicles between 6,000 and 10,000 lbs GVWR that DOT
determines are appropriate for inclusion in the CAFE program.\38\
``Automobile'' for the purposes of labeling also includes vehicles at
no more than 8,500 lbs GVWR whether or not DOT has included those
vehicles in the CAFE program.\39\ EPA has no authority to require
labels on vehicles that are not automobiles, therefore EPA has no
authority to require labeling of either vehicles above 10,000 lbs GVWR,
or vehicles between 8,500 and 10,000 lbs GVWR that are not included by
DOT in the CAFE program.
---------------------------------------------------------------------------

    \37\ See 49 U.S.C. 32908(b).
    \38\ See 49 U.S.C. 32901(a)(3).
    \39\ See 49 U.S.C. 32908(a).
---------------------------------------------------------------------------

    Since the time of EPA's proposal, DOT has included some vehicles
above 8,500 lbs GVWR and below 10,000 lbs in its CAFE program,
beginning in model year 2011.\40\ Since these vehicles now meet the
definition of automobile, EPA is authorized to include these vehicles
in the labeling program. EPA is now requiring fuel economy labels on
MDPVs (as defined in the CAFE program), beginning with model year 2011.
---------------------------------------------------------------------------

    \40\ See 71 FR 17565 (April 6, 2006).
---------------------------------------------------------------------------

    MDPVs are currently subject to emission standards that apply on the
existing Federal Test Procedure, and many also undergo emission testing
on the current Highway Fuel Economy Test due to requirements in
California. Beginning with the 2011 model year, manufacturers will be
routinely testing MDPVs over the FTP and the HFET tests in order to
comply with the CAFE program. However, MDPVs are not today subject to
all of the additional emission tests we are utilizing for the 5-cycle
method.\41\ Specifically, MDPVs are not subject to the 1996 SFTP
regulations.\42\ The SFTP regulations include the US06 and SC03 test
procedures, both of which are necessary elements of the 5-cycle fuel
economy methodology. These two test cycles represent high speed and
aggressive driving (US06), and impacts of air conditioner operation
(SC03). We do not believe it is appropriate to require SFTP testing for
MDPVs for fuel economy purposes alone, but we are not prepared at this
time to establish SFTP standards

for MDPVs. In the Tier 2 regulations, we acknowledged that MDPVs were
not covered by SFTP requirements, and we specifically noted that SFTP
emission standards would be addressed in a future regulation.\43\ We
believe that the appropriate time to consider 5-cycle fuel economy
testing for MDPVs is during or after development of appropriate SFTP
emission standards for MDPVs. We plan to address SFTP emission
standards for MDPVs in the near future. At that time, we will also
assess the appropriateness of 5-cycle fuel economy testing for MDPVs.
However, we are finalizing a program that requires MDPVs to use the
mpg-based adjustments to calculate fuel economy estimates. The database
of 615 vehicles used to generate the mpg-based adjustments includes
vehicles similar in many respects to existing MDPVs, with similar FTP
and HFET fuel economy as measured today. For example, the database
includes models of the Chevrolet Suburban below 8,500 lbs GVWR, which
are very similar to the versions of the same vehicle that is above
8,500 lbs GVWR and classified as an MDPV. Additionally, because the
mpg-based adjustment is essentially the average relationship between
FTP and HFET fuel economy and 5-cycle fuel economy results, we believe
that the resulting label values for MDPVs will be an adequate
representation. The mpg-based approach does not require testing beyond
what will be required to meet the CAFE program in model year 2011.
Manufacturers will simply take their FTP and HFET test results
(conducted for the CAFE program) and apply them to the mpg-based
equation to determine their fuel economy label values.
---------------------------------------------------------------------------

    \41\ MDPVs are currently required under the Tier 2 program to
meet a carbon monoxide standard on the cold FTP test; compliance
with this standard is being phased in over the 2008 and 2009 model
years.
    \42\ See 61 FR 54852 (Oct. 22, 1996).
    \43\ See 65 FR 6789 (Feb. 10, 2000).
---------------------------------------------------------------------------

3. Analytically Derived Fuel Economy
    When a vehicle is required to generate data from all five test
cycles, there are multiple ways for the manufacturer to accomplish
this. One way would be to perform the three additional tests--the US06,
SC03, and cold FTP tests (the FTP and HFET would be performed under
current and future requirements). The other way is to estimate fuel
economy values over the US06, SC03 and cold FTP tests analytically
(i.e., analytically derived fuel economy, or ADFE) from testing of a
similar vehicle over these three cycles. Under this method,
manufacturers will be allowed to estimate the effect of differences in
inertia test weight, road load horsepower, and N/V ratio (the ratio of
engine revolutions to vehicle speed when the vehicle is in its highest
gear) on fuel economy, and use these estimates to calculate predicted
fuel economy over the three new fuel economy test cycles. A procedure
to estimate the effect of these three vehicle parameters on FTP and
HFET fuel economy has already been developed.\44\ We plan to work with
manufacturers to appropriately analytically derive fuel economy for the
US06, SC03 and cold FTP tests, or otherwise utilize data for these
tests already available from certification vehicles. We will implement
these estimation procedures using agency guidance, as is currently done
for FTP and HFET fuel economy.
---------------------------------------------------------------------------

    \44\ U.S. EPA Memorandum ``Updated Analytically Derived Fuel
Economy (ADFE) Policy for 2005 MY and Later,'' CCD-04-06 (LDVLDT),
March 11, 2004. Available in the public docket for review.
---------------------------------------------------------------------------

III. Revisions to the Fuel Economy Label Format and Content

A. Background

    We proposed to update the design of the fuel economy label to
better convey its information to the public. We took comment on four
alternative label designs. We received overwhelming public support for
revamping the label and numerous constructive comments for enhancing
the final label content. Based on these public comments, we developed
additional alternatives for how information might be presented on the
label. We gauged consumer reaction to these alternatives by conducting
a series of focus groups in five cities across the country. These
groups provided valuable feedback which we used to establish the final
label. The docket to this rule includes the final report entitled
``Fuel Economy Focus Groups--Phase Two Findings'' that contains details
about the focus groups.
    The label format and content we are finalizing today reflects input
from the public comments and focus group research. The modern design of
this label more effectively communicates fuel economy estimates and
related information to the customer. Section I of this preamble
provides a graphic of the new fuel economy label and key considerations
that went into developing its final design. This section presents the
specific elements on the final label.
    We plan to conduct public outreach and education to increase
consumer awareness of the new label's design and content. We believe
that we can increase consumer comprehension by jointly-sponsoring an
outreach campaign with car dealers and other interested stakeholders
that could include explanatory materials, such as a brochure that
dealers could distribute to customers.

B. Label Size and Orientation

    Although we proposed to maintain the label's size at 7 inches by
4.5 inches, we experimented with its orientation. Two of the four
alternative labels proposed were positioned vertically (portrait), and
two horizontally (landscape) as today's label. Public comments highly
supported one of the vertically oriented versions (identified in the
proposed rule as ``Alternative 4.'' \45\ The commenters that provided
reasons for this preference indicated that the new look, along with the
graphically presented comparison information, helped convey the fuel
economy information desired by the customer, discussed further in
Section III.C below.
---------------------------------------------------------------------------

    \45\ Note that the NPRM contained four label alternatives,
printed in the Appendix to the proposed regulations on pages 5510-
5513, labeled Alternative 1, 2, 3, and 4. These same labels were
posted on EPA's Web site, but in a slightly different order and with
different nomenclature (Label A, B, C, and D). In the following
discussion we refer to the labels printed in the NPRM and use that
nomenclature.
---------------------------------------------------------------------------

    Some automakers expressed concerns with the vertical label
orientation. Their primary apprehension was that the new Department of
Transportation--National Highway Traffic Safety Administration safety
rating label, required on price stickers (``Monroney'' label) of all
cars produced on or after September 1, 2007,\46\ competes for space
with the fuel economy label. Some manufacturers had already redesigned
their price stickers to accommodate the safety rating label beside a
horizontally positioned fuel economy label. These companies stated that
because the price sticker contains a great deal of information,
changing the fuel economy label orientation would be difficult from a
graphic design standpoint. One manufacturer commented that it had
already printed stock price stickers containing horizontally oriented
fuel economy labels and would bear an added cost of redesigning and
reprinting the stickers if EPA required the vertical label.
---------------------------------------------------------------------------

    \46\ See 71 FR 53572 (Sept. 12, 2006).
---------------------------------------------------------------------------

    To consider further the above comment, we tested both horizontal
and vertical versions of the label (Figure III-1) with the focus
groups. While the focus groups expressed a slight preference for the
vertical orientation, this preference was not strongly held. Some
participants remarked that the vertical label was easier to read ``top
to bottom''; however, a contrasting observation made in many of the
focus groups was that on the vertical label the text within the gray
area of the fuel pump was more difficult to read. [Insert photo Figure
III-1: Preliminary vertical

and horizontal designs for focus group review.]
BILLING CODE 6560-50-P
[GRAPHIC] [TIFF OMITTED] TR27DE06.027

BILLING CODE 6560-50-C
    Although public comments indicated a preference for the vertical
orientation, the primary reasons given were more relevant to the design
elements (particularly the gray ``watermark'' fuel pump design with
information it its ``window'' and the bar graphic showing comparable
fuel economy) rather than the label orientation itself. Therefore, in
order to address both the consumers' needs and the automakers'
concerns, our final label contains the new design elements supported by
public comments and its appearance is oriented horizontally. The label
size remains unchanged from the current label, at 7'' wide by 4.5''
high, and the final layout incorporates several important changes

to improve legibility and consumers' understanding of the label
information.

C. Fuel Economy of Comparable Vehicles

    We proposed two contrasting depictions comparing a particular
vehicle's fuel economy to that of all other vehicles in its class: a
text statement and a graphic depiction (Figure III-2). On three of the
proposed labels, we specified separate city and highway comparable fuel
economy information on the bottom half of the label in a text
statement, similar to the current label. On one of the vertically
oriented labels (Alternative 4) we proposed a graphical bar scale that
indicated where the vehicle's combined fuel economy would fall compared
to all other vehicles in its class.
[GRAPHIC] [TIFF OMITTED] TR27DE06.028

    Public commenters strongly favored the graphical version, many
noting that it was similar to the Federal Trade Commission's
EnergyGuide ratings placed on new appliances.
    One industry comment suggested that the graphical way of presenting
comparable fuel economy highlighted a weakness in the comparable
vehicle class designations. Automakers expressed concern that ``the
graphic representation may portray a significant volume of sales as
having low fuel economy, even though many consumers would be shopping
in only subgroups of EPA's classes.'' They recommended that EPA retain
its current text portrayal of comparable fuel economy, but if
significant comments were to favor the graphic design, they asked to
work with EPA and through additional focus groups to develop a design
that addresses their competitive concerns. Although their concerns were
directed at the graphic, the underlying issue is EPA's comparable class
designations. A separate discussion of comparable classes is in Section
VI.F.
    We also tested these representations of comparable fuel economy
with the focus groups and they responded positively to the graphic
version of combined fuel economy. Participants indicated that they were
more likely to use this information, since it was much more clearly
displayed in the graphical version. Many participants commented further
that the range of combined fuel economy was more useful than the city/
highway ranges of the verbal text.
    One commenter stated that the within-class graphic did not provide
enough context for consumers because many people do not shop within a
single class, but instead may be simultaneously considering a variety
of types of vehicles (for example, SUVs or minivans). The commenter
suggested an alternate version of this graphic containing a bar scale
that represents the fuel economy range of all vehicles, with the range
of the specific vehicle class embedded in the overall range. We tested
this alternative with the focus groups, along with an enhanced graphic,
similar to the one proposed in the Alternative 4 label. These
alternatives are shown in Figure III-3.

[GRAPHIC] [TIFF OMITTED] TR27DE06.029

    The focus groups slightly preferred Option 1 because of its
simplicity, many participants noting that they already knew which class
of vehicles they would be considering. Others preferring Option 2
mentioned that it could influence some people to reconsider vehicles
with higher fuel economy. Although some participants thought the added
fuel economy range in Option 2 was useful, many thought it was too much
information or were confused by what it represents.
    Because public comment and focus group reaction has been positive,
we are finalizing a comparable fuel economy graphic similar to Option 1
(Figure III-3). This graphic shows the range of fuel economy for the
comparable class of vehicles and indicates where the specific vehicle
falls on that range. The focus groups comprehended it easily at a
glance, an important consideration given how briefly most viewers look
at the labels on dealer lots. We recognize that the added information
provided by revealing the fuel economy range of all vehicles may be
valuable to some, but because of clarity and ease of comprehension, we
are finalizing the simpler within-class graphic. Those desiring more
detailed information about comparable fuel economy can find it on the
Fuel Economy Guide and at http://www.fueleconomy.gov, referenced at the

bottom of the label.

D. Estimated Annual Fuel Cost

    We proposed to elevate the visibility of the estimated annual fuel
cost information by increasing its size and location on the label
(Figure III-4, Option 1). Additionally, we proposed to include further
information on which the estimated annual fuel costs are determined--
specifically the number of miles driven per year and the price of fuel
per gallon. (This information is currently optional on the label, but
manufacturers typically do not include it). Public commenters and focus
group participants responded favorably to these changes.
    One commenter suggested that a single cost estimate would not match
most drivers' experiences, and that a cost range would be more valuable
for those who drove more exclusively under city or highway conditions.
To explore this comment, we developed an option that showed three
separate fuel cost estimates (Figure III-4, Option 2):
    (1) Combined estimate based on a mix of city and highway driving;
    (2) City estimate based on all city driving; and
    (3) Highway estimate based on all highway driving.
    Both options were tested with the focus groups.

[GRAPHIC] [TIFF OMITTED] TR27DE06.030

    The focus groups had mixed reactions to these options, but slightly
preferred Option 1 because it was simpler and provided all of the vital
information. Others thought that the combined estimate would be more
accurate, since they did not drive exclusively in either city or
highway conditions. Alternatively, those that preferred seeing the
added city/highway fuel costs did so because they did drive under one
condition more often than another; others simply preferred having more
information.
    We are finalizing Option 1 based on positive response from both
public commenters and focus groups. While the option to include
separate city and highway annual fuel costs may provide additional
useful information for some consumers, others may disregard it
altogether because of its complexity. Furthermore, there is enough
information provided on the simpler graphic that a person could
determine their own customized fuel cost estimate by modifying one or
more parameters (e.g. mpg, dollars-per-gallon, or miles-per-year).
    As explained in further detail in Section III.I, the estimated
annual fuel cost is determined using a weighted combination of
estimated city and highway fuel economy values. Currently the combined
fuel economy is based on a weighting of 55% city mpg and 45% highway
mpg. We proposed changing the weighting to 43% city mpg and 57% highway
mpg, but as discussed in Section III.I we are not finalizing this as
proposed, choosing instead to retain the 55/45 weighting factors.

E. ``Your mileage will vary'' Statement

    We proposed to include a statement on the label stating, ``Your
actual mileage can vary significantly depending on how you drive and
maintain your vehicle and other factors.'' This statement reinforces to
customers that the mpg values are estimates only and that drivers will
experience different fuel economy depending on many factors. Most
commenters favored some sort of disclaimer statement and provided a
number of suggestions. Some proposed that the statement both highlight
the inexact nature of the estimate and educate consumers on which
factors may lead to improved fuel economy. Others suggested that the
statement distinguish between factors that drivers could and could not
control. We tested three alternative versions with the focus groups: a
slight modification to the proposed version, one having a list of fuel
economy tips, and the other simply pointing to a Web site where one
could find the tips. These are shown in Figure III-5.

[GRAPHIC] [TIFF OMITTED] TR27DE06.031

    The focus group reaction was divided uniformly between the three
options provided. Some liked seeing the more-detailed tips, while
others preferred the Web link, since the list of tips was incomplete.
Some thought that fewer details coupled with a Web link would be
appropriate.
    All factors that impact fuel economy cannot be listed on the fuel
economy label because they are too numerous. Our proposed statement was
designed to capture two of the biggest categories that drivers can
control: Driving style and vehicle maintenance, with a blanket ``and
other factors'' clause added. ``How you drive'' covers such factors
such as speed, acceleration, use of air conditioning, braking, and
driving predominantly in either city or highway conditions. ``How you
maintain your vehicle'' covers factors like tire pressure, oil changes,
tune-ups, and other maintenance. Both of these categories include
factors that the driver can control in most cases.
    The focus groups generally thought that the ``other factors''
clause was unnecessary. To increase the likelihood that consumers will
read and understand the message that fuel economy will vary, we believe
that a simpler statement is preferable. We considered adding the Web
address to the statement in order to reflect the desire within the
focus groups for access to more detailed information. However, in
designing the final label format, we realized that it would be
redundant because it is located directly above the identical Web site
that is provided at the bottom right border of the label. Therefore, we
are finalizing a statement that states, ``Your actual mileage will vary
depending on how you drive and maintain your vehicle,'' to be located
near the Web address at the bottom of the label.

F. Environmental Information Statement

    Historically, EPA has rated fuel economy and emissions from 0-10 on
the Green Vehicle Guide Web site (http://www.epa.gov/greenvehicles/). We

sought comment on allowing companies to voluntarily include EPA air
pollution and/or greenhouse gas ratings on the fuel economy label.
While auto manufacturers supported alerting consumers to these issues,
they did not favor adding emissions ratings to the label, because they
may dilute the fuel economy information. Another comment from the auto
industry was that the emissions factors and weights associated with the
ratings presented in the Green Vehicle Guide are subjective and
debatable. Thus, they recommended that we continue to present
environmental ratings on the web, where there is ample space for
elaboration.
    One environmental group did not support rating a vehicle's
greenhouse gas emissions from 0-10 because the scale was ``too
coarse,'' but recommended that we instead educate consumers on how
their vehicle choice impacts the environment. Two different
environmental groups favored mandating both greenhouse gas and smog
scores on the label. One of these groups disagreed with the auto
manufacturers, stating that there was ample space on the label to
present the scores without interfering with fuel economy information.
The other group further suggested that we compare these scores
numerically and graphically to all vehicles, as in the NPRM, and that
we include an official EPA ``Seal of Approval'' to the most
environmentally benign vehicles. Because some comments suggested
further improvements to our method for calculating these scores, and
because a clear preference for how to present this information did not
emerge from the comments, we are not finalizing provisions for
including this information on the label at this time. We remain open to
suggestions for a voluntary environmental labeling program that could
be implemented in the future.
    To further consider those comments suggesting that we instead
educate consumers on the relation of fuel economy and environmental and
societal issues, we tested the following ``environmental statement''
with the focus groups: ``Buying a vehicle with better fuel economy
helps protect the environment and reduces dependence on oil.'' Focus
groups were strongly divided on this statement. Some asserted that it
was ``preachy'' and ``stating the obvious,'' while others argued that
it was consistent with EPA's mission and, even if obvious, addressed a
concern felt by most of the population.
    We are finalizing a label design that does not incorporate an
environmental statement. While we agree that it is important to make a
connection between a vehicle's fuel efficiency and the environment, we
agree with focus group comments that most consumers already recognize
this relationship. Additionally, since most of the new label space is
utilized by statutorily-required information, a practical concern was
that we would not be able to add this statement without creating a
``fine print'' look. However, both the Fuel Economy Guide and the
http://www.fueleconomy.gov Web site (referenced on the label) include details

about the impact of fuel economy on the environment, for consumers
wishing to explore these issues further.

G. Government Logos and Web Site Link

    We proposed to include prominent EPA and DOE logos on the label and
a prominent reference to ``EPA'' on the label title. These changes
reflect earlier market research indicating that people were unaware of
the fuel economy estimates' origin, and that knowing the government was
the source of this information added to its credibility. Since public
commenters and focus groups responded favorably to this proposal, the
final label design includes the government logos at the bottom and
``EPA Fuel Economy Estimates'' in the title.
    We also proposed to require placement of the jointly-sponsored EPA-
DOE Web site http://www.fueleconomy.gov on the label. Since commenters and

focus group members reacted positively to adding a web link, we are
finalizing this requirement.

H. Temporary Transitional Statement

    We asked commenters if the label should include transitional
language indicating that the estimates are based on new methods. Such a
statement could help customers understand why the fuel economy
estimates are lower, especially when 2007 models having current fuel
economy estimates are on dealer lots with 2008 models having new
estimates. Commenters generally responded positively. Automakers
suggested a brief statement, while another commenter suggested slightly
longer wording. We tested the following transitional statement with the
focus groups: ``These estimates reflect new EPA methods beginning with
2008 models.'' The meaning of this sentence was generally clear to the
groups. A few participants wondered what the ``new EPA methods'' were,
but determined after some discussion that the Web site provided on the
label may give further explanation. We are finalizing this transitional
statement for inclusion on the final fuel economy label.
    We asked the groups how long this statement should be retained, and
responses varied widely, from one year to the duration of an average
consumer's vehicle purchase cycle. We believe that the transitional
statement should be used while both the old and the new label formats
appear simultaneously on vehicles on dealer lots. When all vehicles on
the lot have labels with the new format (estimates based on new
methods), there will be less potential for confusion. By the time 2010
models can be offered for sale (as early as January 2, 2009), all new
vehicles on dealer lots will have the new label format and the
transitional statement will no longer be necessary. Therefore, we are
requiring the transition statement on the labels of all 2008 and 2009
model year vehicles.

I. Combined Fuel Economy Basis

    For calculating the combined fuel economy displayed on the label
(and also factored into the estimated annual fuel cost calculation), we
proposed a weighting of 43% city and 57% highway. Currently this value
is based on a 55% city/45% highway weighting. The 43/57 weighting was
based on the new 5-cycle method and reflects average miles driven (not
time spent) at speeds below and above 45 mph respectively, based on
existing data for on-road driving patterns. This analysis is detailed
in the Technical Support Document. We received comments that the 43/57
split was not intuitive to most drivers and that consumers may think
more in terms of the percent of time they spend driving in city or
highway conditions, rather than in percent of distance traveled. Some
commenters suggested a simple 50/50 split, which is more intuitive to
car buyers; others suggested retaining the 55/45 split since it is
closer to the intuitive 50/50 split.
    The basis for the 43/57 city-highway weighting as used to assess 5-
cycle fuel economy fleetwide is discussed in the Technical Support
Document. The issue for the label is how best to convey the fuel
economy information most relevant to consumers and which city/highway
weighting supports that purpose.
    We agree with the comments that a 43/57 split based on distance is
not intuitive to consumers. We considered the suggested 50/50 split,
since likely most consumers think of ``combined'' fuel economy as an
equal mix of city and highway driving. The 55/45 split was used
historically to determine combined fuel economy since it is consistent
with the statutory requirements for determining fuel economy for CAFE
standards and the Gas Guzzler tax.\47\ Thus, since it will remain the
required weighting for the Gas Guzzler tax that appears on the label
for applicable vehicles, it is most consistent to continue using the
55/45 split for combined fuel economy as well. We do not want to cause
consumer confusion by using different city/highway weightings to
calculate different numbers appearing on the label. Therefore, we are
finalizing that a 55/45 weighting be used to calculate the combined
fuel economy displayed on the label and used to calculate the estimated
annual fuel costs. This decision does not impact the underlying city/
highway split used analytically to determine fleetwide composite 5-
cycle fuel economy, as discussed in the Technical Support Document.
---------------------------------------------------------------------------

    \47\ See 49 U.S.C. 32904(c) and 26 U.S.C. 4064(c)(1).
---------------------------------------------------------------------------

J. Labeling Requirements for Dual Fueled Vehicles

    Flexible-fueled vehicles (FFVs) (also called dual-fueled or bi-
fueled vehicles) are vehicles that can operate either on gasoline or
diesel fuel, or on an alternative fuel such as ethanol or methanol.
Currently, for FFVs, manufacturers may voluntarily include the fuel
economy estimates (and estimated annual fuel costs) for the alternative
fuel on the label. This is part of the EPCA statute which requires that
for dual fueled vehicles, the label must:
    ``(A) indicate the fuel economy of the automobile when operated on
gasoline or diesel fuel;
    (B) clearly identify the automobile as a dual fueled automobile;
    (C) clearly identify the fuels on which the automobile may be
operated; and
    (D) contain a statement informing the consumer that the additional
information required by subsection (c)(2) of this section is published
and distributed by the Secretary of Energy.'' \48\
---------------------------------------------------------------------------

    \48\ See, 49 U.S.C. 32908(c)(3).
---------------------------------------------------------------------------

    The current labeling requirements for dual-fueled vehicles are
consistent with these EPCA requirements. We did not propose changes to
these requirements, and we did not seek comment on the topic. However,
EPA received a late public comment from several environmental and
consumer groups urging EPA to require manufacturers to include for FFVs
the fuel economy and estimated annual fuel costs of both gasoline and
E85 (mixture of 85% ethanol and 15% gasoline).
    Historically, the EPA did not require fuel economy on the label for
ethanol FFVs, because a vast majority of these vehicles operated on
gasoline only, since ethanol was not widely available, and many owners
were unaware they were driving an FFV. However, in recent months there
has been a sharp increase in national interest in alternatives to
fossil-based fuels, flexible-fueled vehicles, and ethanol in
particular. With increased awareness and availability of these
vehicles, the late comment suggested that the label be required to not
only display separate gasoline and E85 fuel economy and annual cost
estimates, but also to provide EPA smog and greenhouse gas

scores and the ratio of ethanol to gasoline (which is not always 85:15)
on the label. These additions would help alert customers that although
the fuel economy of dual fuel models may be lower than gasoline-only
models, they are still reducing environmental impact by using alcohol
fuel.
    Since we did not request comments on this topic, we are not
finalizing requirements today that differ from the current regulations.
However, we agree that it is important to provide consumers with
complete fuel economy information on alternatively fueled vehicles,
particularly in light of the rising sale of flex-fueled vehicles and a
developing E85 fuel infrastructure. We agree that it is important for
consumers to understand that fuel economy on E85 is typically about 20%
to 30% lower than on gasoline, due to the lower energy density of
E85.\49\ Consumers can view the gasoline and E85 estimates of all FFVs
in the Fuel Economy Guide and on the http://www.fueleconomy.gov Web site. We

reiterate that manufacturers may voluntarily include the E85 (or other
alternative fuel) mpg and estimated annual fuel costs on the label
today, and we strongly encourage them to do so. The final label design
includes a placeholder for such information.
---------------------------------------------------------------------------

    \49\ Based on fuel economies of gasoline and E85 reported in the
Model Year 2006 Fuel Economy Guide, p. 18.
---------------------------------------------------------------------------

    We are not finalizing a requirement today, because we believe the
issue (for manufacturers to display E85 fuel economy information on the
label in addition to gasoline) deserves a more carefully considered
approach. The label design we are finalizing was developed based on
extensive public comments and focus group input. None of the options
considered included E85 fuel economy information. Before requiring the
inclusion of E85 fuel economy for FFVs, there are many questions we
would consider for the design and placement of this information, such
as: (1) How to clearly present E85 mpg relative to gasoline; (2) how to
educate consumers that E85 helps reduce greenhouse gases and reduce oil
consumption; (3) how to best convey estimated annual fuel costs of E85
(particularly given the volatility of E85 prices across the country),
and (4) how to graphically depict comparable class fuel economy for E85
in addition to gasoline. In the next year, EPA will evaluate its legal
authority to require manufacturers to include E85 fuel economy on the
label. If we determine that we have statutory authority, we would then
plan to work with interested stakeholders to assess how best to present
E85 fuel economy information on the label. We welcome the input of
stakeholders in this process, and we look forward to suggestions on how
to best convey both the fuel economy and environmental benefit
information on E85 relative to gasoline.

K. Addition of Final Regulatory Specifications for Label Content and
Design

    We proposed ``placeholder'' regulatory text that specifies the
label content and design, knowing that the final label design would
depend on the outcome of both the public comments and the focus group
research. The final regulations contain the details for the format and
content of the label.

IV. Testing Provisions

A. Testing Requirements for Vehicles Currently Exempt From Certain
Emission Tests

    Certain vehicles are currently exempt from some of the emission
tests that we are including in the 5-cycle method.\50\ These vehicles
include diesel vehicles and alternative-fueled vehicles. In order to
update the fuel economy methods for these vehicles, we proposed
additional provisions and are finalizing them in this rulemaking.
---------------------------------------------------------------------------

    \50\ See the applicable regulations at 40 CFR 86.1810(i)(4) and
40 CFR 86.1811-04(g).
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1. Diesel Vehicles
    Diesel fuel vehicles are not currently subject to Cold FTP emission
standards and thus do not have a 20 [deg]Fahrenheit (F) FTP (i.e., Cold
FTP) fuel economy result to use in the 5-cycle formulae. Therefore, we
proposed that beginning with the 2008 model year for certification
diesel vehicles, a Cold FTP be performed for the purpose of collecting
fuel economy data.
    Accordingly, we also proposed and requested comments on winter-
grade diesel fuel specifications for use during the Cold FTP test.
Specifically, we proposed the use of a 1-D (winter-grade)
diesel fuel as specified in ASTM D975-04c ``Standard Specification for
Diesel Fuel Oils,'' \51\ and that complies with 40 CFR Part 80,\52\
where the level of kerosene added shall not exceed 20 percent. We
further proposed the use of a manufacturer-specified diesel fuel, with
EPA approval, in lieu of a conventional diesel fuel under the alternate
test procedure provisions in 40 CFR 86.113-94, where the level of
kerosene added shall not exceed 20 percent. Since we did not receive
any comments regarding the winter-grade diesel fuel specification, we
are finalizing these provisions as proposed.
---------------------------------------------------------------------------

    \51\ ASTM International Specification D975-04C ``Standard
Specification for Diesel Oil Fuels'' (November 1, 2005) describes
the seven grades of diesel fuel oils suitable for various types of
diesel engines. This specification is under the jurisdiction of ASTM
Committee D02 on Petroleum Products and Lubricants and is the direct
responsibility of subcommittee D02.E0 on Burner, Diesel, Non-
Aviation Gas Turbine, and Marine Fuels.
    \52\ 40 CFR Part 80--Control of Air Pollution from New Motor
Vehicles: Heavy-Duty Engines and Vehicle Standards and Highway
Diesel Fuel Sulfur Control Requirements: Final Rule and Regulation
of Fuels and Fuel Additives: Fuel Quality Regulations for Highway
Diesel Fuel Sold in 1993 and Later Calendar Years.
---------------------------------------------------------------------------

    However, we did receive comments regarding requiring the Cold FTP
for diesel vehicles. The auto industry cited the potential for major
laboratory retrofitting, which required additional lead time, and
suggested that EPA not require diesels to perform the Cold FTP until
the 2011 model year. They further suggested that Cold FTP testing for
diesels be optional in the 2008-2010 model years.
    We have evaluated the comments regarding additional lead time for
laboratory retrofitting to perform the Cold FTP test for diesel
vehicles and believe they have merit. To accommodate Cold FTP testing
of diesel vehicles, manufacturers may need to add a heated flame
ionization detection (FID) system, including heated probes, lines and
filters. Some manufacturers may need to further modify their facilities
for site specific designs and configurations, such as additional
insulation to prevent water condensation in the sampling system or
modifying the length of the exhaust collection hoses.
    As a result, we are changing the provisions for requiring Cold FTP
diesel testing from the proposal, as follows. First, we are providing
additional lead time by extending the requirement for Cold FTP diesel
testing from the 2008 model year to the 2011 model year. This will
allow manufacturers additional lead time to address any facility
modifications. Second, we will not require the measurement of
particulate matter (PM) during the Cold FTP diesel test, since PM is
not part of the fuel economy carbon balance calculation, and thus has
no impact on fuel economy. Third, for manufacturers voluntarily using
the 5-cycle method during the 2008-2010 model years, fuel economy over
the Cold FTP may be reported based on carbon monoxide (CO) and carbon
dioxide (CO2) measurements only, excluding the hydrocarbon
(HC). Based on limited existing data showing that HC makes up a
negligible fraction of the total cold fuel economy results (less than
0.1%), the

measure of HC will not be required during the 2008-2010 model years.
This interim provision is another way to address manufacturers' concern
about lead time for diesel cold testing facility upgrades, as measuring
HC at cold temperatures requires the use of a heated FID, which many
manufacturers do not have in existing cold facilities. In the 2011
model year and beyond, manufacturers will be required to conduct and
report the results from the Cold FTP diesel testing, including the CO,
CO2, and HC measurements.
2. Alternative-Fueled Vehicles
    There are two types of alternative-fueled vehicles: (1) Flexible-
fuel vehicles (FFVs; also known as dual-fueled, bi-fueled, or multi-
fueled vehicles) that can operate on gasoline or diesel and/or some
alternative fuel (e.g., ethanol or methanol), and (2) dedicated
alternative fueled vehicles that operate only on the alternative fuel
(e.g., such as compressed natural gas (CNG) vehicles).
    FFVs are subject to the SFTP (which includes the US06 and SC03
tests) and Cold CO emission standards and test requirements, but only
when operating on gasoline. Thus, we proposed that the fuel economy
label values of FFVs when operating on gasoline be determined using the
same mpg-based or 5-cycle approaches applicable to gasoline vehicles
and thus additional testing for US06, SC03 and Cold FTP while operating
on the alternative fuel would not be required. Although the fuel
economy values when operating on an alternative fuel are not required
to be reported on the label, manufacturers may voluntarily include
these values on the label and they are also reported in the annual Fuel
Economy Guide. In addition, the mpg-based and 5-cycle approaches only
use fuel economy values measured in terms of miles per gallon of
gasoline or diesel fuel. Thus, we proposed an approach to specify how
manufacturers of FFVs must determine and report the fuel economy label
values when the vehicle is operated on an alternative fuel. We proposed
that the city and highway fuel economy label values must reflect the
same adjustment factors relative to FTP and HFET fuel economy,
respectively, developed using the applicable mpg-based or 5-cycle
approach for gasoline. Specifically, the city and highway fuel economy
values when the FFV is operated on gasoline would be used to calculate
the mpg-based or 5-cycle approach (whichever applicable). Then, the
city and highway fuel economy values calculated from the mpg-based or
5-cycle approach would be divided by the city and highway fuel economy
during FFV gasoline operation to determine a ratio. This ratio would
then be applied to the city and highway fuel economy values when the
FFV is operated on an alternative fuel. This would allow the
manufacturer to determine a mpg-based or 5-cycle, alternative fuel
equivalent value for the purpose of voluntary labeling and Fuel Economy
Guide reporting purposes.
    For example, assume that the measured FTP and HFET fuel economy is
24 and 32 mpg, respectively, for an FFV operating on gasoline, and 18
mpg and 26 mpg, respectively, for a FFV operating on the alternative
fuel. Using the measured gasoline values and the mpg-based
approach,\53\ we can calculate the city and highway fuel economy, as
shown below:
---------------------------------------------------------------------------

    \53\ Section II contains a derivation of these equations. This
method for determining the fuel economy label values for FFVs can be
used when the city and highway values are determined by either the
mpg-based method or the 5-cycle method, whichever is applicable. In
this example we demonstrate the use of the mpg-based method.
[GRAPHIC] [TIFF OMITTED] TR27DE06.032

    The resulting city and highway label values for the FFV when
operating on gasoline are 19 mpg and 23 mpg, respectively. We divide
these values (19 and 23 mpg) by the measured city and highway fuel
economy values, 24 and 32 mpg, during FFV gasoline operation to
determine the ratios.
[GRAPHIC] [TIFF OMITTED] TR27DE06.033

    For this example, the ratios would be 0.826 (e.g., 19 mpg divided
by 24 mpg) for the city ratio and 0.719 (23 mpg divided by 32 mpg) for
the highway ratio. To calculate the mpg-based city and highway fuel
economy values for an FFV operating on alternative fuel (for voluntary
inclusion on the label or in the Fuel Economy Guide,) multiply the
measured values (18 mpg and 26 mpg) by their respective ratios.
[GRAPHIC] [TIFF OMITTED] TR27DE06.034

    The estimates reported on the label and in the Fuel economy guide
would be 15 mpg (e.g., 18 mpg times 0.826, the city ratio from gasoline
operation) for the city fuel economy and 19 mpg (e.g., 26 mpg times
0.719, the highway ratio from gasoline operation) for the highway fuel
economy. This can also be done using the 5-cycle approach, as
applicable.
    We did not receive any comments on the proposed label methods for
FFVs

and, as such, we are finalizing the provisions as stated in the
proposal.
    Manufacturers of FFVs may optionally use the 5-cycle approach at
their discretion for reporting fuel economy when operating on the
alternative fuel. If this option is used, the manufacturer would be
required to conduct all applicable 5-cycle test procedures on the
alternative fuel and use both the 5-cycle city and highway calculation
methods to determine fuel economy label. In addition, for Cold FTP
testing under the 5-cycle approach, the use of a manufacturer-specified
alternative fuel, with EPA approval, will be used under the alternate
test procedure provisions in 40 CFR 86.113-94. As stated above,
manufacturers will report these values in the annual Fuel Economy Guide
and may voluntarily include these values on the label.
    Dedicated alternative-fueled vehicles are also exempt from the SFTP
and Cold FTP emission standards. As a result, these vehicles will not
have the SFTP and Cold FTP fuel economy data needed to determine 5-
cycle fuel economy values. We proposed that manufacturers of dedicated
alternative-fueled vehicles be able to use the mpg-based approach in
the 2011 model year and beyond, as well as during the 2008-2010 model
years, in order to avoid conducting additional tests for fuel economy
reasons only. Further, since the mpg-based approach uses fuel economy
values measured in terms of miles per gallon of gasoline or diesel
fuel, the fuel economy of dedicated alternative fuel vehicles must be
expressed in terms of its gasoline equivalent prior to using the mpg-
based formula. Currently, all dedicated alternative-fueled vehicles
express fuel economy values in terms of a gasoline equivalent.\54\ For
this case, we proposed that the fuel economy values for a dedicated
alternative vehicle expressed in gasoline equivalents are directly
determined using the mpg-based approach.
---------------------------------------------------------------------------

    \54\ See Sec.  600.113-93.
---------------------------------------------------------------------------

    We did not receive any comments on the proposed provisions for
dedicated alternative-fueled vehicles and, as such, we are finalizing
the provisions as stated above.
    Finally, we proposed that manufacturers of dedicated alternative-
fueled vehicles may optionally use the 5-cycle approach at their
discretion. If this option is used, the manufacturer would be required
to conduct all applicable 5-cycle test procedures on the alternative
fuel, and then convert all the alternative fuel values into gasoline
equivalents prior to use in the 5-cycle formulae for city and highway
label values. Because dedicated alternative fuel vehicles are not
subject to the Cold FTP test procedures today, there is no cold test
fuel specification for alternative fuel (e.g., CNG or E85). Thus, if a
manufacturer wishes to do 5-cycle testing, it would need to request EPA
approval of the cold test fuel under the special test procedure
provisions in 40 CFR 86.113-94.
    We did not receive any comments on the proposed provisions for
dedicated alternative-fueled vehicles to optionally use the 5-cycle
approach and, as such, we are finalizing the provisions as stated in
the proposal.

B. Modifications to Existing Test Procedures

    To ensure that the 5-cycle method is more reflective of real-world
operating conditions, there are a few procedural changes that need to
be made to certain existing emission tests procedures. First, we
proposed procedural changes in the US06 tests, as described below.
Second, we sought comment on the issue of requiring manufacturers to
run the heater and/or defroster during the cold FTP test. Third, we
proposed to codify the existing practice of requiring four-phase FTP
measurements for gasoline-electric hybrid vehicles.
1. Splitting the US06 Test Into City and Highway Segments
    The US06 driving schedule contains elements of both city and
highway driving, yet the exhaust sample is collected in only one
sample, or ``bag.'' In order to more accurately reflect the city
portion of the driving schedule into the city fuel economy estimate,
and the highway portion of the driving schedule into the highway fuel
economy estimate, we proposed a revised test protocol that would
require collecting the exhaust sample into two bags. This has the
benefit of more accurately capturing how a vehicle's fuel economy would
be impacted over the various types of driving reflected in the driving
schedule.
    We undertook a test program to determine the technical feasibility
of splitting the US06 exhaust sample in two bags, and whether it would
impact emissions results for compliance purposes. We evaluated the
effects of conducting a US06 split-phase (i.e., two bag) emissions test
versus the current US06 single-phase (one bag) emission test on ten
vehicles at EPA's National Vehicle and Fuel Emissions Laboratory
(NVFEL) in Ann Arbor. Based on this evaluation, the US06 split-phase
sampling methodology was shown to be feasible for fuel economy purposes
and required only initial software reprogramming for the revised
sampling periods and minimal hardware changes to enable the emissions
analyzers to perform US06 split-phase emission testing. In addition,
creating a US06 split-phase sampling period did not result in any
significant difference in criteria pollutant emissions results. The
full report on this US06 split phase evaluation program is available in
the docket.\55\
---------------------------------------------------------------------------

    \55\ Mitcham, A. & Fernandez, A., ``Feasibility of Revising the
US06 Test Cycle into a Split Phase Sampling Test Procedure'' U.S.
EPA, Office of Transportation & Air Quality, 2005.
---------------------------------------------------------------------------

    We received comments from the auto industry that the costs of
collecting US06 exhaust emissions into two bags are substantial, but
they did not provide any cost data to substantiate this claim. Further,
the auto industry claimed that there will be decreased accuracy and
increased variability if the US06 test is split into two phases, yet
they did not provide additional data or analysis to support this claim.
Finally, the auto industry claimed that significant software changes
and lead time would be required to implement the two-phase bag software
for diesel vehicles due to necessary one-phase PM sample collection
systems for diesels, integrated real-time total hydrocarbon (THC) data
collection for fuel economy calculations, and the alignment with
methane (CH4) bag measurements for compliance with the
emission standard. The auto industry recommended that we allow the use
of alternative methods of determining the US06 city and highway fuel
economy in lieu of conducting a two-bag US06 test. One suggested method
was to use second-by-second data over a one-bag US06 test, either from
modal bench analyzers or via On-Board Diagnostic (OBD) data stream
information, to determine the city portion and highway portion and
develop a two-bag US06 fuel economy calculation. Finally, it was
suggested that we allow some flexibility for future methods that may be
developed to measure or derive the city and highway US06 fuel
economies.
    While we continue to believe the two-bag US06 measurement proposed
is a valid approach that will not lead to significant differences in
emission results, we also believe that the alternative approaches
suggested by the auto industry could yield technically valid results
and thus have merit. As a result of the comments, we have revised the
proposal and are finalizing the requirements below for the two-bag US06
measurement.
    For the 2008 through 2010 model years, those manufacturers choosing
to

use the 5-cycle approach must either conduct the two-bag US06 test or
determine two-bag results from a one-bag test using an alternative
method (as discussed below). For the 2011 model year and beyond, for
all certified test groups, the two-bag US06 must be conducted or data
supplied in two-bag US06 format.
    To determine US06 two-bag fuel economy, manufacturers may use
alternate test methods in lieu of conducting an actual two-bag US06.
Such alternate test methods include: (1) Conducting a one-bag US06 and
using emissions analyzer modal data to determine the appropriate ratio
of city and highway operation; or (2) conducting a one-bag US06 and
using OBD fuel rate (e.g., grams of fuel per second) data to determine
the appropriate ratio of city and highway operation over the one-bag
US06. Additionally, the manufacturers may use other methods based on
good engineering judgment, with EPA review and approval, as long as
these methods achieve equivalent or better, technically valid results
based on manufacturer submitted data. For the case of conducting a one-
bag US06 and using the emissions analyzer modal or OBD fuel rate data,
the ratio of city and highway operation over the one-bag US06 is
applied to the CO, CO2 and HC results in order to determine
the city and highway US06 fuel economy values, constituting a
``virtual'' two-bag US06. However, this option only applies for
determining the city and highway US06 fuel economy and, thus, is not
applicable for determining US06 emissions. The requirements for
conducting a two-bag US06 and the options for alternately measuring or
deriving the two-bag US06 outlined above are applicable to both
gasoline and diesel vehicles.
2. Heater/Defroster Usage During the Cold FTP
    The current Cold FTP conducted at 20 [deg]F includes the option to
use the heater and/or defroster.\56\ While we understand that some
manufacturers today are using the heater and/or the defroster during
the Cold FTP, it is not mandatory and therefore subject to inconsistent
usage across manufacturers and vehicle lines. We expect that, in the
real-world, it would be highly unusual for drivers not to use the
heater/defroster when the temperature is cold, including at 20 [deg]F
experienced during the Cold FTP. In order to more closely reflect real
world operation, and to ensure a level playing field across
manufacturers and vehicle lines when performing this test, we sought
comment on requiring manufacturers to operate the heater and/or
defroster during the Cold FTP.
---------------------------------------------------------------------------

    \56\ See 40 CFR 86.230-94(f).
---------------------------------------------------------------------------

    As discussed in the NPRM, we conducted a test program through the
Southwest Research Institute (SwRI) that measured the impacts of heater
and defroster operation on fuel economy for three vehicles during a 20
[deg]F Cold FTP. We compared the fuel economy results with heater/
defroster operational to the results of the heater/defroster non-
operational on each vehicle. The Cold FTP fuel economy with the heater/
defroster on was significantly lower than that with the heater/
defroster off, ranging from -6.0 percent (~1 mile per gallon lower on a
non-hybrid vehicle) to -17.9 percent (~8 miles per gallon lower on a
hybrid vehicle). We did not observe a significant impact on CO or other
measured emissions as a result of the use of the heater/defroster on
the Cold FTP. The results of this test program indicated that different
vehicles were impacted more than others, indicating that it is
important to capture the impact on fuel economy of heater and defroster
use during cold conditions. The full report of this test program is
contained in the docket.\57\
---------------------------------------------------------------------------

    \57\ Southwest Research Institute (SwRI), ``VOC/PM Cold
Temperature Characterization and Interior Climate Control Emissions/
Fuel Economy Impact; Final Report Volume II.'' Prepared for U.S. EPA
under contract 68-C-05-018, SwRI Project No. 03.11382.04.
---------------------------------------------------------------------------

    The auto industry commented that the heater/defroster requirement
should be deferred until we have a better understanding of real-world
operation of heater/defroster systems. Some manufacturers suggested
that there is a far smaller impact on fuel economy due to defroster/
heater operation than EPA estimates in the proposal based on the SwRI
test program, but they provided no data to support this claim.
    Several state and environmental organizations supported the
requirement to use the heater/defroster on the Cold FTP test and
recommended that we develop a standardized methodology based on
realistic usage patterns. One commenter also cited the level playing
field aspect, noting that manufacturers who choose to use more
realistic test conditions may be penalized relative to those who do
not.
    We believe, as we stated in the proposal, that it is important to
reflect the heater/defroster operation in our fuel economy test
procedures since heater/defroster operation can have an additional
impact on fuel economy,\58\ these accessories are used in the real-
world at cold temperatures including 20 [deg]F, and it is necessary to
maintain a level playing field across manufacturers to prevent gaming
of the test procedure.
---------------------------------------------------------------------------

    \58\ Southwest Research Institute (SwRI), ``VOC/PM Cold
Temperature Chracterization and Interior Climate Control Emissions/
Fuel Economy Impact: Final Report Volume II.'' Prepared for U.S. EPA
under contract 68-C-05-018, SwRI Project No. 03.11382.04.
---------------------------------------------------------------------------

    We support the need for the heater/defroster test procedure to
reflect real world operation. However, we believe that a standardized
test protocol must be implemented as soon as possible so that this
real-world impact is taken into account in the new fuel economy test
methods. There are many approaches for how the heater and defroster
usage could be incorporated into the Cold FTP test procedures,
including specifying appropriate fan speed settings, timing of turning
on the heater/defroster during the test, and accounting for various
vehicle climate control designs. Therefore, we sought comment on the
methods for how heater/defroster usage could be specified in the cold
FTP procedure.
    Specifically, we discussed a concept that started the test with the
airflow directed to the windshield for optimal defrosting, the airflow
source set to outside air (not recirculation), and the air temperature
set to high. Approximately 2 minutes into the test, the fan speed could
be turned to maximum and left there for the duration of the test. This
would mimic typical driver behavior in that we expect many drivers
would not turn the fan to maximum until the engine is producing some
level of heat, which most vehicles will do within a couple minutes of
driving. The second concept involved the automatic climate control
systems set to achieve an inside air temperature of 72[deg]F, and the
fan speed, if independently selectable, would be operated as described
above. The third concept related to vehicles with multiple zones
(either driver and passenger, or front and rear) and required operating
the controls for all zones as described above. Finally, since some
climate control systems might not be compatible with these
instructions, we proposed to allow a manufacturer to request the use of
special test procedures, under 40 CFR 86.1840-01, subject to EPA
approval.
    We received comments from the auto industry that the test protocol
for running the heater/defroster should mimic as closely as possible
how drivers typically operate the heater/defroster system in the real-
world. Specifically, they commented that a driver would not keep the
fan speed at

maximum for 43 minutes, the effective length of the test, and that many
electronic systems automatically bring the fan speed down as the
vehicle warms up, and that some vehicles can not simultaneously be in
defrost mode and have the blower off. They also commented on the
potential impact of this operation on the stringency of existing and
proposed emission standards (e.g., proposed Mobile Source Air Toxics
cold hydrocarbon standards).\59\
---------------------------------------------------------------------------

    \59\ See 60 FR 15804, ``Control of Hazardous Air Pollutants From
Mobile Sources'' (March 29, 2006).
---------------------------------------------------------------------------

    We are finalizing mandatory heater/defroster operation during the
Cold FTP, but with some changes to the test protocol to more closely
reflect real world operation. Further, we are addressing issues of lead
time with respect to applicable model years for mandatory heater/
defroster operation during the Cold FTP.
    We are revising the applicable model years for implementation of
mandatory heater/defroster operation during the Cold FTP. For the 2008
through 2010 model years, only those manufacturers choosing to
optionally use the 5-cycle approach are required to operate the heater/
defroster during the Cold FTP. This will allow manufacturers time to
fully assess any impacts related to the EPA's Mobile Source Air Toxic
(MSAT) cold hydrocarbon proposed standards,\60\ which would also be
determined based on the Cold FTP test. Again, we reiterate that our
heater/defroster testing, run under a worst-case protocol, did not
indicate an impact on emissions. However, we understand that some
manufacturers desire additional lead time for conducting their own
analyses to confirm these results. For the 2011 model year and beyond
when the 5-cycle approach becomes effective, manufacturers are required
to operate the heater/defroster during the Cold FTP.
---------------------------------------------------------------------------

    \60\ Ibid.
---------------------------------------------------------------------------

    The test protocol we are finalizing has been revised from that
outlined in the proposal as follows. At the start of the test, manually
controlled climate control systems will have the airflow will be
directed to the windshield for optimal defrosting, the airflow source
set to outside air (not recirculation), the fan speed set to off or
``low'' and the air temperature set to the hottest setting. At the
second idle of the test (approximately two minutes into the test,
allowing the engine to accumulate some heat) the fan speed will be set
to maximum. At the sixth idle of the test, at approximately 505 seconds
into the test (corresponds with the end of bag 1 and the start of bag 2
of the Cold FTP), the fan speed setting will be reduced to the lowest
possible setting to maintain air flow, and the temperature setting will
remain at the hottest setting. These settings will be held for the
remainder of the test, including the final bag following the 10 minute
soak period. For automatic climate control systems, the manufacturer
can manually override the system and use the provisions specified for
manual systems, or the system selector will be set to heater or
defroster mode and the temperature will be set to 72[deg]F for the
duration of the test. All other aspects of heater/defroster operation
and climate control settings during the Cold FTP discussed in the
proposal will be finalized unchanged. For vehicles with multiple zone
climate control systems (e.g., front and rear temperature/fan controls
and/or separate driver/passenger temperature/fan controls), the same
fan and temperature settings should be set and maintained for all the
zones for both manual and automatic interior climate control systems,
if feasible. If these settings are not feasible, manufacturers may
request and use alternate settings, with prior agency approval, only
for vehicles with multiple zone climate control systems. If a
manufacturer does request alternate settings for multiple zone systems,
at a minimum, the settings for the front passenger zone of the multiple
zone system must follow the protocols set forth above.
    The regulations specify that the manufacturer must use good
engineering judgment and consider potential engine control changes that
may be directly impacted by the temperature setting on the manually
controlled systems (e.g. has direct input to, or can directly affect,
the engine control logic). For example, when the heater or defroster is
engaged a system may employ such strategies as disabling of engine-off
idling features, disabling of cylinder deactivation, or different
engine idling speed. Also, at the 20[deg]F ambient temperature of the
Cold FTP, it is highly unlikely that vehicles will experience any use
of the air conditioning compressor during defroster operation and any
fuel economy differences between heater and defroster operation would
be related to engine control changes (e.g., engine off logic, idle
speed changes, spark advance changes).
    We recognize that there may be unique climate control systems that
are not addressed through these protocols. To address such systems,
manufacturers can request in writing EPA approval of alternative
heater/defroster test protocols/procedures.
3. Hybrid Electric Vehicle Testing Provisions
    The FTP consists of two parts referred to as the ``cold start'' and
the ``hot start'' portion of the test. The ``cold start'' portion is
performed following an eight to twelve hour soak at a stable
temperature of 72[deg]F that stabilizes the vehicle and brings the
engine coolant temperature to a ``cold'' condition. The ``hot start''
portion is performed following prescribed driving sufficient to bring
the vehicle (and engine coolant) up to full operating temperature, and
then a ten minute soak that stabilizes the vehicle. The cold start and
hot start are divided into two periods, or ``phases'': A ``transient''
phase and a ``stabilized'' phase (i.e., the vehicle is warmed up),
which constitute what is known as the Urban Dynamometer Driving
Schedule (UDDS). The emissions for each of the FTP phases are collected
in ``bags,'' terminology that results from the sample bags in which the
exhaust samples are collected. The full four phases of the FTP are
conducted in the following order: Cold start transient phase (bag 1),
cold start stabilized phase (bag 2), hot start transient phase (bag 3),
and hot stabilized phase (bag 4).
    For conventional vehicles, the stabilized phase of the hot start
test (bag 4) is assumed to be identical to the stabilized phase of the
cold start test (bag 2). Thus, the hot stabilized phase (bag 4) is
typically not performed for conventional vehicles and is accounted for
in the emission and fuel economy results mathematically by including
the cold stabilized phase (bag 2) results twice in the calculation.
However, since hybrid-electric vehicles have dual energy sources that
can be operated in synergistic modes, the gasoline or diesel engine is
supplemented by the electric motor and may not be at peak, optimized
operating temperatures during the entire FTP. Based on this, the EPA
and manufacturers recognized that the assumption regarding the
equivalence of the cold and hot stabilized phases, and counting the
cold stabilized phase twice in the calculation, may not be valid for
hybrid vehicles. Consequently, we currently require hybrid-electric
vehicles to conduct all four phases of the FTP.
    For hybrid-electric vehicles, the emissions collection process for
the FTP can be performed in two different ways: (1) ``4-bag procedure--
the emissions are collected in an individual bag (e.g., bag 1, bag 2,
bag 3, and bag 4) for each phase and analyzed, a total composite
emissions number is calculated based on the emissions in all the bags,
and the

emissions numbers for each of the bags and the composite emissions are
reported; or (2) the emissions from the cold start transient phase and
cold start stabilized phase are collected in bag 1 and analyzed, the
emissions from the hot start transient phase and hot start stabilized
phase emissions are collected in bag 2 and analyzed, a composite number
is calculated based on the emissions in both bags, and the emissions
for both bag 1 and bag 2, and composite emissions are reported. The
first collection method, a 4-bag FTP, and the second collection method,
a 2-bag FTP, are similar in that the emissions are collected over the
full four-phases of the FTP. However, the two methods differ in that
for the 2-bag FTP, the bags are combined as follows: bag 1 is a
combination of bag 1 and bag 2 of the 4-bag FTP, and bag 2 is a
combination of bag 3 and bag 4 of the 4-bag FTP.
    Therefore, for the purposes of this rulemaking in relation to
hybrid-electric vehicles, we are concerned about two distinct things:
(1) The number of phases (e.g., four phases for hybrid-electric
vehicles versus three phases for conventional vehicles, as described
above) required to be conducted during the FTP and (2) the number of
bags (e.g. two bags versus 4 bags, as described above) that the
emissions are collected in over the FTP, in particular, for hybrid-
electric vehicles, which we want to require the full four phases for
the FTP.
    We currently require hybrid-electric vehicles to perform the
complete set of four phases of the FTP and referenced the existing,
special test procedure provisions in the regulations (40 CFR 86.1840-
01) as the basis for this. Rather than continue using the special test
procedure provisions, we proposed to develop explicit regulatory
language to require full-four phase testing of hybrid-electric
vehicles. Additionally, the 5-cycle formula for hybrid-electric
vehicles requires the four phases of the FTP as inputs for these
vehicles. Therefore, we also proposed to develop explicit regulatory
language that requires hybrid-electric vehicles to conduct all four
phases of the FTP for both emissions and fuel economy testing. Finally,
we proposed to require that the emissions from the full four phases of
the FTP be collected in individual bags (i.e., four bags; one bag for
each phase) for all tests using the FTP, including the cold temperature
FTP, for those vehicles defined as hybrid-electric vehicles. We also
requested comment on the proposal, and on whether use of the phrase
``hybrid electric vehicle'' is sufficient to describe and identify
vehicles for which the four-bag FTP would be required.
    We received the following comments regarding requiring the hybrid
electric vehicle test procedures. First, the auto industry commented
that 40 CFR 86.1811-04(n) of our regulations, which aligns with
California, already requires the full four phases of the FTP for
hybrid-electric vehicles for emissions testing, and therefore suggested
we should retain section 86.1811-04(n) as-is without further codifying
language requiring the full four phase FTP. Second, the comments
suggested that we also define the four-phase, two-bag FTP and four-
phase, four-bag FTP in part 600 of our regulations so that it is only
applicable to fuel economy measurement, not for emissions measurement,
which is contained in part 86 of our regulations. Third, the comments
supported our proposal to extend the full four-phase FTP testing for
hybrid vehicles to the Cold FTP. Finally, the comments cited that
requiring four bags would force facility modifications with significant
costs and lead time issues and identified the benefits of the four-
phase, two-bag approach, including improved accuracy and alignment with
California. To address this, the comments recommended that we add 5-
cycle fuel economy equations for both two-bag and four-bag testing with
appropriate bag fuel consumption weighting by theoretical distance
traveled to ensure consistent label adjustments between two- and four-
bag data. Finally, we did not receive any comments on whether the use
of the phrase ``hybrid electric vehicle'' is sufficient to describe and
identify vehicles for which the four-bag FTP would be required.
    As a result of these comments, we have revised the proposal and are
finalizing the requirements for hybrid electric vehicle test procedures
as follows. First, for requiring the full, four-phase FTP testing for
emissions, we agree that 40 CFR 86.1811-04(n) does properly reference
the California procedures which require the full four phase FTP. In
addition, part 600 refers back to procedures in part 86, including 40
CFR 86.1811-04(n) which references the California procedure for four-
phase FTP testing. Therefore, it is not necessary to develop further
language to require the full four phase FTP.
    Second, we proposed to extend the requirement for full, four phase
FTP testing of hybrid vehicles to the Cold FTP. Upon further analysis
of this provision, we are not finalizing this requirement. As discussed
in Chapter III of the Final Technical Support Document, vehicles may
not be fully warmed up during bag 2 of the Cold FTP. Thus, fuel economy
over a bag 4 of the Cold FTP would likely be higher than that over bag
2. Thus, vehicles tested over a 4-bag Cold FTP would likely have higher
fuel economy per the 5-cycle formulae than those tested over a three
bag test. This would result in inconsistent fuel economy estimates for
conventional and hybrid vehicles. Therefore, we will continue the
current practice of only requiring a three-bag Cold FTP for both
conventional and hybrid vehicles.
    Third, we understand that some manufacturers may require some new
software and additional test equipment to implement a four-phase, 4-bag
test. In addition, since our test procedures are aligned with
California requiring full four phase FTP testing for hybrid-electric
vehicles, this essentially is an issue of how to divide and analyze the
emissions results. While we are finalizing a requirement for four-phase
FTP results, manufacturers may choose to collect the sample either in
four bags or two bags, as discussed above. Accordingly, we are
finalizing today an option for a 5-cycle formula that allows for four-
phase, 2-bag FTP inputs for hybrid-electric vehicles. Our analysis of
this option in the Technical Support Document shows that there is no
significant difference in fuel economy results from using a 2-bag
versus 4-bag equation.
    Finally, since we did not receive any comments on whether the use
of the phrase ``hybrid electric vehicle'' is sufficient to describe and
identify vehicles for which the four-bag FTP would be required, we
believe this terminology is sufficient and will use ``hybrid electric
vehicle'' in reference to the four-phase, four-bag FTP.

V. Projected Cost Impacts

    The majority of the costs of this rule are due to an increase in
the manufacturer test burden. While manufacturers conduct tests today
for emissions compliance and fuel economy reporting, they test a more
limited set of vehicles than will be necessary for the fuel economy
labeling calculations in model years 2011 and beyond. There are also
startup costs to implement the new fuel economy reporting requirements
beginning during the transition period from model year 2008 through
2010.
    The final rule requires calculation of fuel economy values based on
the 5-cycle formulae beginning with model year 2011 for some vehicle
test groups. As discussed in detail elsewhere in this preamble, for
model years 2008 through 2010, manufacturers may use the mpg-based
calculation for the five-cycle fuel

economy values or they may conduct voluntary testing. For model years
2011 and beyond, if the five-cycle city and highway fuel economy values
for an emission data vehicle group are below 96 percent and 95 percent
of the mpg-based regression line, respectively, then all the vehicle
configurations represented by the emission data vehicle (e.g., all
vehicles within the vehicle test group) would use the 5-cycle approach.
Vehicles within a test group falling below the city fuel economy band
would be required to conduct US06, SC03, and Cold FTP tests; those
falling below the 5 percent tolerance band for highway fuel economy
values but not below the city tolerance band would be required to
conduct US06 tests (the effects of cold temperature and air
conditioning would be modeled). In addition, we expect that some of
these vehicles falling below the tolerance band may be eligible to
estimate fuel economy for a given test through the application of
analytically derived fuel economy values. Some data are currently
available for vehicles that have conducted all 5 tests; based on these
data, EPA has estimated the number of vehicles for which additional
testing would be required because they fall below the 4 and 5 percent
tolerance bands, as discussed further in Section II.
    EPA received no comments on the overall methodology of its cost
analysis or the general cost assumptions used in that analysis.
However, we received comments on a number of specific proposal issues
having cost implications, including changes to various test procedures.
These issues are specified in Section IV and the Response to Comments
document. The impacts of the resolution of these issues on the final
cost analysis are summarized here and are discussed in more detail in
the Technical Support Document.
    As in the cost study for the proposed rule, we are presenting low
and high estimates of the economic impact for two time frames: (1)
Model years 2008 to 2010, and (2) model year 2011 and thereafter. The
low and high estimates of testing burden scenarios provide boundaries
on the potential testing costs and informational startup costs.

A. Incorporation of New Test Cycles Into Fuel Economy Label
Calculations

1. Testing Burden for 2008 Through 2010 Model Years
    We are finalizing as proposed our estimate that no additional tests
will be required during model year (MY) 2008 through MY 2010.
Manufacturers may simply apply the mpg-based adjustments to the same
FTP and HFET test results that they otherwise would conduct for the
fuel economy labeling program today (see Section II). While
manufacturers have the option of conducting and reporting full 5-cycle
test results, such tests are not required by this final rule, and we
have not included this testing in our cost estimates. Manufacturers
that voluntarily choose to conduct full 5-cycle testing would incur
some additional testing costs, which we have not included in our cost
estimates, since we do not have any means of predicting which
manufacturers would choose this option, or for which vehicle models, or
the amount of additional testing that would be performed.
2. Testing Burden for 2011 and Later Model Years
    To derive low and high estimates for the number of additional tests
required for our proposal, we used EPA data on the number of FTP/HFET,
US06, SC03, and Cold FTP tests. Based on MY 2004 data\61\, 1,250 fuel
economy vehicles were tested with the FTP and highway fuel economy
tests.\62\ Data show that 330 SFTP (US06 and SC03) tests were conducted
and 220 Cold FTP tests. Consequently, if all fuel economy vehicles were
required to undergo full 5-cycle tests, approximately 920 additional
SFTP tests and 1,030 Cold FTP tests would be required. EPA estimated,
based on an analysis of our 423 vehicle dataset, that 8 percent of the
test groups will fall outside a band approximately less than or equal
to 96 percent of the regression for the city test and 23 percent
outside a band approximately less than or equal to 95 percent of the
highway regression. Taking the 2004 numbers above as a baseline, 92
percent of the additional SC03 and Cold FTP tests otherwise required
would be avoided for city fuel economy; 77 percent of the additional
US06 tests would be avoided. Thus, for example, the initial estimate of
increased testing burden for SC03 would be 8 percent of the difference
between 1250 and 330. The low and high estimates under these
assumptions are generated by differing estimates of the effect of
another feature that will be available for MY 2011 and after--and
expanded use of ADFE as an alternative to conducting vehicle tests. The
low and high burden estimates assumes that 20 percent and 0 percent of
the additional tests would thereby be avoided, respectively.\63\ Based
on this analysis in our proposal, we estimated that potential increases
in yearly testing could range as follows: 169-212 additional US06
tests, 59-74 additional SC03 tests, and 66-82 additional Cold FTP
tests.
---------------------------------------------------------------------------

    \61\ Model year 2004 certification data was the latest complete
model year of data available at the time of the proposal. The
certification data for model year 2005 is not significantly
different.
    \62\ The figure is approximate because the city FTP test may be
used and recorded primarily as a fuel economy test, an emissions
test, or both.
    \63\ Based on EPA's current guidance to auto manufacturers on
the use of ADFE, up to 20% of FTP/HFET tests are allowed to be
calculated through ADFEs.
---------------------------------------------------------------------------

    This approach is retained in the final cost analysis, with one
adjustment. The percent falling outside the tolerance band for the city
test and for the highway test should only count the vehicles that are
below the tolerance band in both cases, that is, only those vehicles
with fuel economy lower than 4 and 5 percent below the regression
lines, respectively. With this correction, 4 percent of the test groups
would trigger additional testing as falling below the city fuel economy
regression tolerance and 13 percent below the highway regression
tolerance. With the ADFE assumptions unchanged, the corrected
additional test estimates range as follows: 96-120 additional US06
tests; 29-37 additional SC03 tests, and 33-41 Cold FTP tests.
    Based on manufacturer comments, we have further revised the
estimated test burden as a result of the four issues discussed in the
following sections.
a. Fuel Economy Labeling for Medium-Duty Passenger Vehicles
    As discussed in Section I, MDPVs will be included in the labeling
program beginning with model year 2011. This change is based on NHTSA's
expansion of the CAFE program to include MDPVs beginning the same model
year. As discussed in Section I, we are finalizing fuel economy test
methods for MDPVs that will not require additional testing beyond that
which the CAFE program will require beginning in model year 2011 (i.e.,
the FTP and HFET tests). Therefore, we are projecting no additional
costs in this final rule to extend labeling to MDPVs.
b. Cold FTP Diesel Testing
    EPA proposed to require Cold FTP testing for light-duty diesel
vehicles beginning with the 2008 model year. As discussed in Section
IV, Cold FTP diesel testing is now optional until model year 2011,
except for those manufacturers that voluntarily choose to do 5-cycle
testing. Auto manufacturers commented that the proposed cost analysis
neglected to account for Cold FTP diesel testing costs during MY 2008-
MY 2010. The test burdens, including capital

costs, were addressed in the proposal in terms of the number of tests
estimated for MY 2011 and after. The preamble noted that eight city/
highway test pairs were conducted for the five light-duty diesel
vehicles certified in MY 2006.
    Estimating the number of light-duty diesel vehicles certified in MY
2011 and beyond is difficult at this point, but several manufacturers
have announced plans to expand or introduce diesel products in this
time frame. As a result, for the final rule cost analysis we have
doubled the number of certified light-duty diesel test groups in MY
2011 from five to ten. Accordingly, we have increased the estimated
Cold FTP test volume from our proposed range of 66-82 tests and the
corrected range of 33-41 tests to a range of 41-49 tests for the final
rule. For the final rule, both low and high estimates for testing costs
increase approximately $20,000 per year reflecting the increased number
of tests under the unchanged testing cost assumptions of the proposal
(Cold FTP facility upgrades are considered separately below).
Additionally, the additional testing requirement is reflected in an
increase in the corrected total capital costs (unamortized) for Cold
FTP facilities of $770,000-$1,373,000 to a $957,000-$1,640,000
(unamortized).
    In addition, commenters raised a number of technical issues
regarding laboratory configurations and the difficulty of establishing
cold test facility retrofits to accommodate diesel testing without a
transition period. Extending the beginning of diesel cold testing
requirement to 2011 is intended to address some of these concerns,
particularly the lead time needed to implement laboratory
modifications. To more fully account for the cost of these laboratory
upgrades, we have revised the estimate by increasing capital costs by
$55,000 for each of ten manufacturers to account for these upgrades.
c. Two-Bag US06 Measurements
    The proposal included the costs of the requirement for two-bag US06
measurements as startup costs involving information system programming
and validation tests, but not new facility costs. We are retaining
these estimates for the final rule.
    As discussed in Section IV, we received comments on the costs of
collecting US06 exhaust emissions in two bags, particularly in view of
software changes and the lead time needed to implement two-bag
software. In response, EPA will accept alternative methods of
calculating two-bag data. These alternatives are available for those
manufacturers choosing to use the 5-cycle approach in the 2008 through
2010 model years, as well as manufacturers required to perform 5-cycle
testing in model years 2011 and beyond. Our evaluation indicated that
the new provisions provide ample lead time to be implemented.
Therefore, accommodating two-bag US06 measurements would not
significantly impact the cost analysis presented in our proposal.
d. Four-Phase FTP for Gasoline-Electric Hybrid Vehicles
    The proposal included no additional costs for the four-phase FTP
requirement for hybrid-electric vehicles. As discussed in Section IV,
we received comments on costs of the proposed four-phase FTP in terms
of lead time and installation of new hardware, software, and test
equipment. In response to these comments, four-phase FTP testing will
be required, but may be conducted as either a 2-bag or 4-bag
measurement as suggested by the auto industry, as discussed in Section
IV. Consequently, we foresee no additional cost impacts.
3. Cost Analysis of the Testing Burden
a. Capital Costs
    The proposal estimated a capital cost of $4 million for a facility
able to perform 750 US06 tests a year, $9 million for an environmental
facility able to conduct 300 to 428 SC03 tests per year, and $10
million for an environmental facility able to conduct 300 to 428 Cold
FTP tests per year. These costs were applied on a per-test basis to the
increased tests required by the proposal, amortized at 7% and
annualized over ten years. The resulting capital cost was $524,000 to
$866,000 per year. Correcting the estimated number of new tests,
applying the same facility costs to the increased estimate for Cold
diesel testing, and adding the facility upgrades for Cold diesel, as
discussed above, this capital cost has been adjusted to a low/high
range of $375,000 to $560,000.
b. Labor and Operations and Maintenance (O&M) Costs
    The proposal included costs of $1,860 to $2,441 for running each of
the tests, allocated between labor and O&M based on prior Information
Collection Requests. Adjusting for the corrected and additional testing
as discussed above, we have changed our cost estimates from a proposed
range of $606,000-$757,000 to a range of $343,000-$424,000 for the
final rule.
c. Startup Costs
    Startup costs are treated like capital costs, annualized over ten
years and discounted at 7% beginning with model year 2008. The proposal
included $3,472,000 in total information system costs, including
reprogramming to report the new data, label design changes, plus
$28,000 to $196,000 for information systems for the US06 split phase
sample system. Finally, $195,000 to $651,000 was provided for
validation testing of the US06 split phase sampling. Discounted and
annualized, this came to $526,000 to $615,000 per year, industry-wide.
    For the final rule, we have increased our range of estimated
startup costs to $663,000-$752,000 to account for the additional
information systems needed to manage the increased complexity of the
fuel economy labeling reporting system. The auto industry commented
that existing database management systems would need to be modified to
accommodate the changes in fuel economy labeling calculations. EPA
proposed to apply the mpg-line label calculations (i.e., ``derived 5-
cycle'') at the vehicle test level, meaning the FTP or HFET results
from a test vehicle would undergo the derived 5-cycle calculations to
determine a fuel economy label value. The final rule requires applying
the derived 5-cycle equation at the model-type rather than test level;
however, this approach is not available for the vehicle-specific 5-
cycle label calculation option and MY 2011 requirements. Therefore, the
cost analysis has been updated to account for this increased
information system burden.
    Manufacturers will incur a one-time cost to upgrade their fuel
economy data and reporting systems to account for the new fuel economy
calculation procedures. Based on a projection of EPA's information
development contract costs, we have increased the industry information
startup costs (unamortized) by $933,450. This increases the annualized
and discounted startup costs to a low/high range of $659,000 to
$748,000 for the industry as a whole.

B. Revised Label Format and New Information Included

    This cost item was included in the startup information portion of
the cost analysis in the proposal. No adjustments have been made in the
final analysis.

C. Reporting of Fuel Economy Data for SC03, US06, and Cold FTP Tests

    As proposed, we do not expect capital or operating costs to
increase due to

submission of additional information associated with additional tests.
However, we do expect additional startup costs for information system
programming. The startup burden has been modified as discussed above.

D. Impact on Confirmatory Testing

    As proposed, the final rule does not include an increase in the
number of vehicles targeted for confirmatory testing. We are not
revising our proposed estimation of manufacturer confirmatory testing
under the criteria of failed or high emission levels, unexpectedly high
fuel economy, fuel economy leader within class, and fuel economy near
the Gas Guzzler tax threshold.

E. Fees

    The proposed rule did not include an increase in the fees to cover
any increase in costs of issuing certificates of conformity under the
new label rule. Instead, EPA will monitor its compliance testing and
associated costs and, if necessary, in the future adjust the fees to
include any new costs. We have retained this approach in the final
rule.

F. Summary of Final Cost Estimate

    As discussed above and summarized in the table below, aggregate
annual costs for MY 2008 through MY 2010 are estimated to range from
$663,000-$752,000, compared with the proposed range of $526,000-
$615,000. For MY 2011 and beyond, aggregated annual costs are estimated
to range from $1,377,000-$1,732,000 compared with the proposed range of
$1,655,000-$2,238,000.

                                  Table 5-1--Aggregate Annual Costs to Industry
----------------------------------------------------------------------------------------------------------------
                                                               MY 2008 through MY 2010      MY 2011 and after
                        Cost Element                         ---------------------------------------------------
                                                                Minimum      Maximum      Minimum      Maximum
----------------------------------------------------------------------------------------------------------------
Test Volume (Labor, O&M)....................................           $0           $0     $343,000     $424,000
Facilities (Capital, Annualized)............................            0            0      375,000      560,000
Startup (Capital, Annualized)...............................      663,000      752,000      659,000      748,000
                                                             ---------------------------------------------------
    Total...................................................      663,000      752,000    1,381,000    1,732,000
----------------------------------------------------------------------------------------------------------------

VI. Implementation and Other Provisions

A. Revisions to Classes of Comparable Vehicles

    The EPCA requires that the label include the range of fuel economy
of comparable vehicles of all manufacturers.\64\ EPA's comparable class
structure provides a basis for comparing a vehicle's fuel economy to
that of other vehicles in its class. We proposed to add separate
classes for SUVs and minivans, which were previously included in the
Special Purpose Vehicle category. We also proposed to modify the
definition of ``small pickup trucks'' by increasing the weight limit
from 4,500 pounds GVWR to 6,000 pounds GVWR. All comments on these
proposals were favorable. Auto manufacturers suggested minor
clarifications to the definition of minivan in order to distinguish it
further from SUVs. We agree with these suggestions and are finalizing
changes accordingly.
---------------------------------------------------------------------------

    \64\ See 49 U.S.C. 32908(b)(1)(C).
---------------------------------------------------------------------------

    So-called ``crossover'' vehicles are those that meet the definition
of more than one vehicle class, and thus are difficult to categorize.
EPA currently uses discretion to assign these vehicles to a class on a
case-by-case basis. For example, we attempt to determine which class
assignment makes sense from a consumer perspective (e.g., is it more
likely to be considered by consumers looking for a minivan or for an
SUV) and what marketing segment is being targeted by the manufacturer.
We did not propose to change how we are addressing the recent
proliferation of ``crossover'' vehicles, but we requested comments on
whether we should create a separate ``crossover'' class. Some public
comments supported the creation of this class, but did not suggest how
to define it. Auto companies were opposed to it, citing the
difficulties in creating a meaningful class definition. Lacking such a
definition that would clearly distinguish between a ``crossover''
vehicle and other vehicle classes, we are not creating a separate class
for crossover vehicles. It should also be noted that the EPA-defined
vehicle classes are used only to provide consumer information about
fuel economy and serve no other regulatory purpose.
    In portraying the range of fuel economy for comparable vehicles on
the label, several commenters noted that the comparable class structure
does not adequately provide consumers with meaningful fuel economy
comparisons, and that class distinctions have been blurring in recent
years. Commenters noted that many consumers shop across classes. These
commenters did not suggest any specific revisions to the class
structure to address these concerns; rather, their suggestions relate
to the presentation of the comparable class information on the label,
which is addressed in Section III. Additionally, manufacturers
expressed concern that the wide fuel economy ranges of some classes are
not necessarily representative of vehicles that consumers would
normally compare (the example they cite is the midsize class, which
contains the Toyota Prius and the Rolls Royce Phantom). Auto
manufactures further noted that the highest sales vehicles are
typically near the midpoint of the range, and that vehicles at either
end of the range (low and high fuel economy) are typically vehicles
with low sales volume or ``niche'' vehicles. They suggest that
consumers usually shop within subsets of the defined vehicle classes,
and not across the entire class. To address these concerns,
manufacturers recommended against using a graphical representation of
the comparable class fuel economy, and that EPA should continue to use
the text that is used today. However, they did not suggest any specific
changes to the class structure to address these concerns.
    We believe that with the changes we are finalizing today, the
comparable class structure generally represents the distinctions
between vehicle types offered in the fleet today. Absent suggestions
during the public comment period for new comparable vehicle
classifications, we are finalizing the comparable class structure
largely as proposed, with minor changes as discussed above. We welcome
interested parties to continue working with EPA in the future on how to
ensure that the comparable classes are kept current with the dynamic
vehicle fleet. If it becomes necessary in the future to further modify
the comparable class

structure, EPA would do so through a rulemaking.

B. Fuel Economy Ranges for Comparable Fuel Economy Graphic

    Along with the label's new graphic of comparable fuel economy
(Figure III.3), we proposed both how EPA would inform manufacturers of
the within-class fuel economy ranges for the label, and how they are to
present this information on the label if range data is not available in
time for printing (which can occur for models introduced early in the
year). For example, between August and September of each year, EPA
typically issues guidance to the manufacturers specifying the fuel
economy ranges for the comparable classes to be used on labels. Since
we did not know the final design of the comparable fuel economy element
at the time of the proposal, we suggested regulatory text nearly
identical to the existing language, which requires the term ``N/A''
(for ``Not Applicable'') to replace actual range values when data is
not yet available. However, since we are finalizing a graphical
presentation of comparable fuel economy instead of regulatory text, it
is necessary to use a different method to illustrate this information
when the range is not yet available. Without the upper and lower range
bounds, it is impossible to indicate where the vehicle's actual
combined fuel economy falls on the range bar. Therefore, in cases when
range data for the current model year is not available in time for
printing the label, manufacturers must use the ranges of the previous
model year. The vehicle's combined fuel economy will appear on the
range bar relative to where it falls within the previous model year's
range.
    Model year 2008 vehicles introduced to the public before EPA can
determine the 2008 fuel economy ranges must be considered further,
because the previous model year range data is based on the 2007 methods
for determining fuel economy, and is thus not comparable to the new
data. Therefore, until EPA issues guidance on model year 2008
comparable class ranges, manufacturers must include the 2007 range data
adjusted to account for the new methods. Upon issuance of this rule, we
will provide these ``2007-adjusted'' ranges to manufacturers via
guidance letter as soon as possible.

C. Temporary Option To Add ``Old Method'' City and Highway Estimates on
Early Introduction Model Year Vehicle Labels

    As discussed previously, all model year 2008 vehicles are required
to calculate the city and highway fuel economy label estimates using
the new methods being finalized today. Some manufacturers indicated
that they may introduce model year 2008 vehicles as early as January 2,
2007. Consumers will then be comparing vehicles having fuel economy
estimates based on the new methods to a large volume of model year 2007
vehicles having estimates based on the old methods. To address this, we
are finalizing a temporary option allowing manufacturers to add
additional information in fine print to model year 2008 vehicle labels
indicating what the fuel economy estimates would have been using the
old method. In other words, all model year 2008 vehicles are still
required to estimate the city and highway fuel economy estimates using
the new methods, but manufacturers may optionally add--in fine print
only--information indicating what the estimates would have been under
the previous methods. This option is available only until June 1, 2007,
when a more significant number of 2008 models should be available for
sale, and, thus, there will be few model year 2007 vehicles on dealer
lots with which to compare. This option is available for labels with
either the old or new design.\65\
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    \65\ As discussed in Section III, the new fuel economy label
design becomes mandatory on September 1, 2007, before which
manufacturers may optionally use it.
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D. Consideration of Fuel Consumption vs. Fuel Economy as a Metric

    EPCA defines fuel economy 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* * *''
\66\ Thus, EPA's fuel economy labeling program has historically
expressed fuel economy in miles per gallon (mpg). We requested comments
on how a gallons-per-mile fuel consumption metric could be used and
presented publicly, such as in the Fuel Economy Guide. A few
manufacturers suggested that it may be more meaningful to express fuel
efficiency in terms of consumption (gallons per 100 miles) than in
terms of economy (miles per gallon), because consumption directly
measures the amount of fuel used, a metric related to cost that
consumers may consider when filling up.
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    \66\ See 49 U.S.C. 32901(a)(10).
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    This final rule maintains the requirement that the label must
express the estimates in terms of fuel economy, instead of fuel
consumption. Since historically we have expressed fuel efficiency in
miles per gallon, it is a metric that Americans understand. Our concern
is that without a long-term, comprehensive public awareness campaign,
any changes to the metric could confuse the public. Some commenters
mentioned their interest in pursuing research and public education on
the fuel consumption metric, and we look forward to learning more in
the future from those stakeholders exploring the issue.
    However, the labels currently provide an easy way to compare the
fuel consumption of different vehicles. The estimated annual fuel cost
information on the label is based on the fuel consumption metric: it is
the dollar equivalent of the number of gallons consumed over 15,000
miles. Thus we believe that including the estimated annual fuel cost on
the label is a valuable metric for consumers, because it relates
directly to fuel consumption. We are also locating the estimated annual
fuel cost information more prominently on the new label to raise public
awareness.

E. Web-Based Driver-Specific Fuel Economy Calculator

    In the proposed rule, we suggested implementing a web calculator in
which consumers could input their own customized information in order
to estimate more accurately their expected in-use fuel economy. User-
specific information could include such factors as number of miles
driven, mix of city and highway driving, air conditioner usage, average
speed driven, ambient temperature, per gallon price of fuel, and
others. We received several positive comments that a web calculator
would be a useful tool, and could provide users with valuable insight
on the effects of these factors on their fuel economy. Another
commenter urged EPA to ensure that the tool would provide accurate
results. We plan to consider further how to best design and implement a
calculator tool, and we may seek additional input from interested
stakeholders.

F. Fuel Basis for Estimated Annual Fuel Costs

    To determine the estimated annual fuel cost, we currently require
that manufactures use the same fuels that they require or recommend to
customers. In the proposal we did not intend to change this, but we
inadvertently omitted the text, ``or recommended,'' from the
parenthetical statement in the regulatory text at 600.307-08(a)(3)(iv),
regarding the fuel type used to determine the estimated annual fuel
cost on the label. Therefore, we are adding the words, ``or

recommended,'' to the regulations, which means that manufactures must
use the fuel that they require or recommend to customers as a basis for
the estimated annual fuel cost.

G. Electronic Distribution of Dealer-Supplied Fuel Economy Booklet

    We proposed adding language to the regulations that allows dealers
to fulfill their requirement to provide customers with copies of the
Fuel Economy Guide booklet by using an on-site computer.\67\ This
method has been used on a trial basis in recent years. One commenter
opposed this idea, citing that people are disinclined to use computers,
and that the success of this method has been neither studied nor
proven. However, the National Auto Dealer Association commented that
this proposal should be finalized, because it is a more efficient,
effective way of providing customers with this information. We agree
that there are people who are disinclined to use computers, but we
expect dealers who opt to provide the guide electronically to also
provide assistance as needed to customers who want to access and/or
print portions of the Fuel Economy Guide using the dealership's
computer. Regulations that provide dealers with the option to provide
the Fuel Economy Guide in this way do not relieve dealerships of the
responsibility to make the Guide ``available to prospective buyers.''
\68\ We are finalizing this requirement as proposed.
---------------------------------------------------------------------------

    \67\ See 49 U.S.C. 32908(c)(3).
    \68\ See 49 U.S.C. 32908 (c)(3).
---------------------------------------------------------------------------

VII. Relevant Statutes and Regulations

A. Energy Policy and Conservation Act

    The Energy Policy and Conservation Act of 1975 (EPCA) established
two primary fuel economy requirements: (1) Fuel economy information,
designed for public use, in the form of fuel economy labels posted on
window stickers of all new motor vehicles, and the publication of an
annual booklet of fuel economy information to be made available free to
the public by car dealers; and (2) calculation of a manufacturer's
average fuel economy and compliance with a standard (later, this
compliance program became known as the Corporate Average Fuel Economy
(CAFE) program).\69\ The responsibilities for these requirements were
split between EPA, DOT and the Department of Energy (DOE). EPA is
responsible for establishing the test methods and calculation
procedures for determining the fuel economy estimates to be posted on
the window stickers and in the annual booklet (the Fuel Economy Guide),
and for determining a manufacturer's corporate average fuel
economy.\70\ DOT is responsible for administering the CAFE compliance
program, including establishing standards for non-passenger automobiles
and determining if manufacturers are complying with the applicable CAFE
standards, and assessing any penalties as needed.\71\ DOE is
responsible for publishing and distributing the annual fuel economy
information booklet.\72\
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    \69\ See Pub. L. 94-163.
    \70\ See 49 U.S.C. 32904, 32908.
    \71\ See 49 U.S.C. 32904.
    \72\ See 49 U.S.C. 32908(c)(3).
---------------------------------------------------------------------------

    EPA published regulations implementing portions of the EPCA statute
in 1976. These regulations are codified at 40 CFR part 600. The
provisions in this regulation, effective with the 1977 model year,
established test methods and procedures to calculate fuel economy
values for labeling and CAFE purposes that used the Federal Test
Procedure (FTP or ``city'' test) and the Highway Fuel Economy Test
(HFET or ``highway'' test) data as the basis for the calculations. At
that time, the fundamental process for determining fuel economy was the
same for labeling as for CAFE, except that the CAFE calculations
combined the city and highway fuel economy into a single number.\73\
---------------------------------------------------------------------------

    \73\ See 41 FR 38685 (Sept. 10, 1976).
---------------------------------------------------------------------------

    Under EPCA, EPA's fuel economy labeling regulations require
manufacturers to label each ``automobile'' they produce. EPCA defines
``automobile'' in 49 U.S.C. 32901(a)(3) as:

    * * * a 4-wheeled vehicle * * * rated at--
    (A) Not more than 6,000 pounds gross vehicle weight; or
    (B) More than 6,000, but less than 10,000 pounds gross vehicle
weight, if the Secretary decides by regulation that--
    (i) An average fuel economy standard * * * for the vehicle is
feasible; and
    (ii) An average fuel economy * * * for the vehicle will result
in significant energy conservation or the vehicle is substantially
used for the same purposes as a vehicle rated at not more than 6,000
pounds gross vehicle weight.

Further, section 32902 authorizes DOT to set CAFE standards for
``automobiles,'' and section 32908 authorizes EPA to set labeling
requirements for ``automobiles.'' Specifically, section 32908 states
that, for the purpose of section 32908, `` `automobile' includes an
automobile rated at not more than 8,500 pounds gross vehicle weight
regardless of whether [DOT] has applied this chapter to the automobile
under section 32901(a)(3)(B).'' The effect of this is to essentially
expand EPA's labeling authority to vehicles between 6,000 and 8,500
pounds GVWR, without the need for any finding by DOT to bring such
vehicles into the definition of automobile under section
32901(a)(3)(B). Therefore, based on the definition of ``automobile'' in
EPCA, EPA's labeling regulations are required to cover (1) all vehicles
below 8,500 lbs GVWR, and (2) those vehicles between 8,500 and 10,000
lbs GVWR that DOT has determined by regulation should be subject to
CAFE standards under EPCA. EPA has no authority under EPCA to require
fuel economy labeling for vehicles above 10,000 lbs GVWR, or for
vehicles between 8,500 and 10,000 lbs GVWR where DOT has not made the
requisite regulatory determination to apply the CAFE standards. Those
vehicles do not meet the definition of ``automobile,'' and EPA's
authority to require fuel economy labeling is limited to
``automobiles.''
    The Department of Transportation, through NHTSA, has recently
determined that certain vehicles between 8,500 and 10,000 GVWR will be
considered automobiles and subject to CAFE standards starting with
model year 2011 (see 71 FR 17565 (April 6, 2006)). Based on this
determination EPA is amending its labeling regulations in this final
rule to include these vehicles. See the discussion regarding the
adoption of fuel economy labeling regulations for medium-duty passenger
vehicles in Section I.C.2.
    EPCA requires manufacturers of automobiles to attach a fuel economy
label to a prominent place on each automobile manufactured in a model
year and also requires the dealers to maintain the label on the
automobile.\74\ EPCA specifies minimum requirements for the information
to be included on the fuel economy label.\75\ This final rule retains
these items, as required:
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    \74\ See 49 U.S.C. 32908(b)(1).
    \75\ See 49 U.S.C. 32908(b)(2)(A) through (F).
---------------------------------------------------------------------------

    a. The fuel economy of the automobile.
    b. The estimated annual fuel cost of operating the automobile.
    c. The range of fuel economy of comparable automobiles of all
manufacturers.
    d. 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.
    e. 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 (26 U.S.C. 4064).

    f. Other information required or authorized by the Administrator
that is related to the information required [within items a. through
d.].
    EPCA also defines ``fuel economy'' 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 EPA.\76\ Thus, this final
rule retains the requirement to report fuel economy as miles-per-
gallon.
---------------------------------------------------------------------------

    \76\ See 49 U.S.C. 32901(a)(10).
---------------------------------------------------------------------------

    EPCA also requires EPA to prepare a fuel economy booklet containing
information that is ``simple and readily understandable.'' \77\ This
booklet is more 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.'' \78\ This final rule makes
minor changes to these regulations by allowing manufacturers and
dealers to make the Fuel Economy Guide available electronically to
customers as an option.
---------------------------------------------------------------------------

    \77\ See 49 U.S.C. 32908(c).
    \78\ Id.
---------------------------------------------------------------------------

B. Energy Policy Act of 2005

    Section 774 of the Energy Policy Act of 2005 directs EPA to
``update or revise the adjustment factors in sections 600.209 85 and
600.209 95, of the Code of Federal Regulations, CFR Part 600 (1995)
Fuel Economy Regulations for 1977 and Later Model Year Automobiles to
take into consideration higher speed limits, faster acceleration rates,
variations in temperature, use of air conditioning, shorter city test
cycle lengths, current reference fuels, and the use of other fuel
depleting features.'' \79\
---------------------------------------------------------------------------

    \79\ See Pub. L. 109-58.
---------------------------------------------------------------------------

    In this final rule, the 5-cycle approach revises the test methods
and procedures for calculating fuel economy, including updating and
revising the adjustment factors, by establishing a new method to
calculate fuel economy estimates that uses fuel economy results from
additional test procedures combined with a changed adjustment factor.
The mpg-based approach uses the same test methods as the current fuel
economy program (i.e., the FTP and HFET tests), but changes the
adjustment factors applied to those test results. These options satisfy
EPA and the EPAct provisions as follows.
    First, the 5-cycle method directly includes the effects of higher
speed limits, faster acceleration rates, variations in temperature, and
use of air conditioning by including fuel economy measured during tests
that incorporate these features. The mpg-based approach also takes
these factors into consideration, but less directly, as it incorporates
the effects of these factors by basing the adjustment factor on an
analysis of data developed from the 5-cycle method. Under the new
regulations, the mpg-based approach is an interim option to establish
an appropriate period of lead time for manufacturers. We also allow its
continued use only where the average effects reflected under the mpg-
based adjustments (of higher speed/acceleration, air conditioning, and
cold temperature) on a specific vehicle configuration is representative
of those measured under actual 5-cycle testing.
    Second, we interpret the statute's reference to ``shorter city test
cycle lengths'' to mean shorter than the current FTP cycle used to
determine city fuel economy. We have addressed that concern by
including updated factors for ``cold starts'' and ``hot starts'' (where
the engine is not warmed up or has been parked for a brief amount of
time and then restarted) in the equation for determining city fuel
economy. This simulates shorter city test cycle lengths where a
vehicle's engine is more frequently shut down and restarted than in the