[Federal Register: September 23, 2010 (Volume 75, Number 184)]
[Proposed Rules]
[Page 58077-58202]
[DOCID:fr23se10-19]

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Part III

Environmental Protection Agency

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40 CFR Parts 85, 86 and 600

Department of Transportation

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National Highway Traffic Safety Administration

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49 CFR Part 575

Revisions and Additions to Motor Vehicle Fuel Economy Label; Proposed
Rule

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 85, 86 and 600

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 575

[EPA-HQ-OAR-2009-0865; FR-9197-3; NHTSA-2010-0087]
RIN 2060-AQ09; RIN 2127-AK73

Revisions and Additions to Motor Vehicle Fuel Economy Label

AGENCY: Environmental Protection Agency (EPA) and National Highway
Traffic Safety Administration (NHTSA), Department of Transportation.

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA) and the National
Highway Traffic Safety Administration (NHTSA) are conducting a joint
rulemaking to redesign and add information to the current fuel economy
label that is posted on the window sticker of all new cars and light-
duty trucks sold in the U.S. The redesigned label will provide new
information to American consumers about the fuel economy and
consumption, fuel costs, and environmental impacts associated with
purchasing new vehicles beginning with model year 2012 cars and trucks.
This action will also develop new labels for certain advanced
technology vehicles, which are poised to enter the U.S. market, in
particular plug-in hybrid electric vehicles and electric vehicles.
    NHTSA and EPA are proposing these changes because the Energy
Independence and Security Act (EISA) of 2007 imposes several new
labeling requirements, because the agencies believe that the current
labels can be improved to help consumers make more informed vehicle
purchase decisions, and because the time is right to develop new labels
for advanced technology vehicles that are being commercialized. This
proposal is also consistent with the recent joint rulemaking by EPA and
NHTSA that established harmonized federal greenhouse gas (GHG)
emissions and corporate average fuel economy (CAFE) standards for new
cars, sport utility vehicles, minivans, and pickup trucks for model
years 2012-2016.

DATES: Comments: Comments must be received on or before November 22,
2010. Under the Paperwork Reduction Act, comments on the information
collection provisions must be received by the Office of Management and
Budget (OMB) on or before October 25, 2010. See the SUPPLEMENTARY
INFORMATION section on ``Public Participation'' for more information
about written comments.
    Hearings: NHTSA and EPA will jointly hold two public hearings; one
in Chicago on October 14, 2010, and one in Los Angeles on October 21,
2010, with both daytime and evening sessions at each location. EPA and
NHTSA will announce the specific hearing locations and times of day in
a separate Federal Register announcement. See the SUPPLEMENTARY
INFORMATION section on ``Public Participation'' for more information
about the public hearings.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2009-0865 and/or NHTSA-2010-0087, by one of the following methods:
 http://www.regulations.gov: Follow the on-line instructions
for submitting comments.
 E-mail<EMAIL_ADDRESS> Fax: EPA:<PHONE_NUMBER>; NHTSA:<PHONE_NUMBER>.
 Mail:
    [cir] EPA: Environmental Protection Agency, EPA Docket Center (EPA/
DC), Air and Radiation Docket, Mail Code 2822T, 1200 Pennsylvania
Avenue, NW., Washington, DC 20460, Attention Docket ID No. EPA-HQ-OAR-
2009-0865.
    [cir] NHTSA: Docket Management Facility, M-30, U.S. Department of
Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New
Jersey Avenue, SE., Washington, DC 20590.
    [cir] In addition, please mail a copy of your comments on the
information collection provisions to the Office of Information and
Regulatory Affairs, Office of Management and Budget (OMB), Attn: Desk
Officer for EPA, 725 17th St., NW., Washington, DC 20503.
 Hand Delivery:
    [cir] EPA: Docket Center, (EPA/DC) EPA West, Room B102, 1301
Constitution Ave., NW., Washington, DC, Attention Docket ID No. EPA-HQ-
OAR-2009-0865. Such deliveries are only accepted during the Docket's
normal hours of operation, and special arrangements should be made for
deliveries of boxed information.
    [cir] NHTSA: West Building, Ground Floor, Rm. W12-140, 1200 New
Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m.
Eastern Time, Monday through Friday, except Federal Holidays.

    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2009-0865 and/or NHTSA-2010-0087. See the SUPPLEMENTARY INFORMATION
section on ``Public Participation'' for more information about
submitting written comments.
    Public Hearing: NHTSA and EPA will jointly hold two public
hearings; one in Chicago on October 14, 2010, and one in Los Angeles on
October 21, 2010, with both daytime and evening sessions at each
location. EPA and NHTSA will announce the specific hearing locations
and times of day in a separate Federal Register announcement. See the
SUPPLEMENTARY INFORMATION section on ``Public Participation'' for more
information about the public hearings.
    Docket: All documents in the dockets are listed in the http://
www.regulations.gov index. Although listed in the index, some
information is not publicly available, e.g., confidential business
information (CBI) or other information whose disclosure is restricted
by statute. Certain other material, such as copyrighted material, will
be publicly available in hard copy in EPA's docket, and electronically
in NHTSA's online docket. Publicly available docket materials are
available either electronically in http://www.regulations.gov or in
hard copy at the following locations: EPA: EPA Docket Center, EPA/DC,
EPA West, Room 3334, 1301 Constitution Ave., NW., Washington, DC. The
Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through
Friday, excluding legal holidays. The telephone number for the Public
Reading Room is<PHONE_NUMBER>. NHTSA: Docket Management Facility, M-
30, U.S. Department of Transportation, West Building, Ground Floor, Rm.
W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590. The Docket
Management Facility is open between 9 a.m. and 5 p.m. Eastern Time,
Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: EPA: Lucie Audette, Office of
Transportation and Air Quality, Assessment and Standards Division,
Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor MI
48105; telephone number:<PHONE_NUMBER>; fax number:<PHONE_NUMBER>; e-mail
address<EMAIL_ADDRESS>or Assessment and Standards Division
Hotline; telephone number<PHONE_NUMBER>; e-mail address
<EMAIL_ADDRESS>NHTSA: Gregory Powell, National Highway Traffic Safety
Administration, 1200 New Jersey Avenue, SE., Washington, DC 20590.
Telephone:<PHONE_NUMBER>; Fax:<PHONE_NUMBER>; e-mail address:
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

A. Does this action apply to me?

    This action affects companies that manufacture or sell new light-
duty vehicles, light-duty trucks, and medium-duty passenger vehicles,
as defined under EPA's CAA regulations,\1 2\ and passenger automobiles
(passenger cars) and non-passenger automobiles (light trucks) as
defined under NHTSA's CAFE regulations.\3\ Regulated categories and
entities include:
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    \1\ ``Light-duty vehicle,'' ``light-duty truck,'' and ``medium-
duty passenger vehicle'' are defined in 40 CFR 86.1803-01.
    \2\ Generally, the term ``light-duty vehicle'' means a passenger
car, the term ``light-duty truck'' means a pick-up truck, sport-
utility vehicle, or minivan of up to 8,500 lbs gross vehicle weight
rating, and ``medium-duty passenger vehicle'' means a sport-utility
vehicle or passenger van from 8,500 to 10,000 lbs gross vehicle
weight rating. Medium-duty passenger vehicles do not include pick-up
trucks.
    \3\ ``Passenger car'' and ``light truck'' are defined in 49 CFR
part 523.

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                                                        Examples of
           Category              NAICS Codes\A\    potentially regulated
                                                         entities
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Industry......................            336111  Motor vehicle
                                                   manufacturers.
                                          336112
Industry......................            811112  Commercial Importers
                                                   of Vehicles and
                                                   Vehicle Components.
                                          811198
                                          423110
Industry......................            336211  Stretch limousine
                                                   manufacturers and
                                                   hearse manufacturers.
Industry......................            441110  Automobile dealers.
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\A\ North American Industry Classification System (NAICS).

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

B. Public Participation

    NHTSA and EPA request comment on all aspects of this joint proposed
rule. This section describes how you can participate in this process.

How do I prepare and submit comments?

    In this joint proposal, there are many issues common to both EPA's
and NHTSA's proposals. For the convenience of all parties, comments
submitted to the EPA docket (whether hard copy or electronic) will be
considered comments submitted to both EPA and the NHTSA docket, and
vice versa. Therefore, the public only needs to submit one set of
comments to either one of the two agency dockets that will be reviewed
by both agencies. Comments that are submitted for consideration by only
one agency should be identified as such, and comments that are
submitted for consideration by both agencies should be identified as
such. Absent such identification, each agency will exercise its best
judgment to determine whether a comment is submitted on its proposal.
    Further instructions for submitting comments to either the EPA or
NHTSA docket are described below.
    EPA: Direct your comments to Docket ID No EPA-HQ-OAR-2009-0865.
EPA's policy is that all comments received will be included in the
public docket without change and may be made available online at http:/
/www.regulations.gov, including any personal information provided,
unless the comment includes information claimed to be Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. Do not submit information that you consider to
be CBI or otherwise protected through http://www.regulations.gov or e-
mail. The http://www.regulations.gov Web site is an ``anonymous
access'' system, which means EPA will not know your identity or contact
information unless you provide it in the body of your comment. If you
send an e-mail comment directly to EPA without going through http://
www.regulations.gov your e-mail address will be automatically captured
and included as part of the comment that is placed in the public docket
and made available on the Internet. If you submit an electronic
comment, EPA recommends that you include your name and other contact
information in the body of your comment and with any disk or CD-ROM you
submit. If EPA cannot read your comment due to technical difficulties
and cannot contact you for clarification, EPA may not be able to
consider your comment. Electronic files should avoid the use of special
characters, any form of encryption, and be free of any defects or
viruses. For additional information about EPA's public docket visit the
EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm.
    NHTSA: Your comments must be written and in English. To ensure that
your comments are correctly filed in the docket, please include the
Docket Number NHTSA-2010-0087 in your comments. Your comments must not
be more than 15 pages long.\4\ NHTSA established this limit to
encourage you to write your primary comments in a concise fashion.
However, you may attach necessary additional documents to your
comments. There is no limit on the length of the attachments. If you
are submitting comments electronically as a PDF (Adobe) file, we ask
that the documents submitted be scanned using the Optical Character
Recognition (OCR) process, thus allowing the agency to search and copy
certain portions of your submissions.\5\ Please note that pursuant to
the Data Quality Act, in order for the substantive data to be relied
upon and used by the agencies, it must meet the information quality
standards set forth in the OMB and Department of Transportation (DOT)
Data Quality Act guidelines. Accordingly, we encourage you to consult
the guidelines in preparing your comments. OMB's guidelines may be
accessed at http://www.whitehouse.gov/omb/fedreg_reproducible (last
accessed June 2, 2010), and DOT's guidelines may be accessed at http://
regs.dot.gov (last accessed June 22, 2010).
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    \4\ 49 CFR 553.21.
    \5\ Optical character recognition (OCR) is the process of
converting an image of text, such as a scanned paper document or
electronic fax file, into computer-editable text.
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Tips for Preparing Your Comments
    When submitting comments, please remember to:
     Identify the rulemaking by docket numbers and other
identifying information (subject heading, Federal Register date and
page number).
     Follow directions--The agencies may ask you to respond to
specific questions or organize comments by referencing a Code of
Federal

Regulations (CFR) part or section number.
     Explain why you agree or disagree, suggest alternatives,
and substitute language for your requested changes.
     Describe any assumptions and provide any technical
information and/or data that you used.
     If you estimate potential costs or burdens, explain how
you arrived at your estimate in sufficient detail to allow for it to be
reproduced.
     Provide specific examples to illustrate your concerns and
suggest alternatives.
     Explain your views as clearly as possible, avoiding the
use of profanity or personal threats.
    Make sure to submit your comments by the comment period deadline
identified in the DATES section above.

How do I submit confidential business information?

    Any confidential business information (CBI) submitted to one of the
agencies will also be available to the other agency.\6\ However, as
with all public comments, any CBI information only needs to be
submitted to either one of the agencies' dockets, and it will be
available to the other. Following are specific instructions for
submitting CBI to either agency.
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    \6\ This statement constitutes notice to commenters pursuant to
40 CFR 2.209(c) that EPA will share confidential information
received with NHTSA unless commenters specify that they wish to
submit their CBI only to EPA and not to both agencies.
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    EPA: Do not submit CBI to EPA through http://www.regulations.gov or
e-mail. Clearly mark the part or all of the information that you claim
to be CBI. For CBI information in a disk or CD ROM that you mail to
EPA, mark the outside of the disk or CD ROM as CBI and then identify
electronically within the disk or CD ROM the specific information that
is claimed as CBI. In addition to one complete version of the comment
that includes information claimed as CBI, a copy of the comment that
does not contain the information claimed as CBI must be submitted for
inclusion in the public docket. Information so marked will not be
disclosed except in accordance with procedures set forth in 40 CFR part
2. In addition, you should submit a copy from which you have deleted
the claimed confidential business information to the Docket by one of
the methods set forth above.
    NHTSA: If you wish to submit any information under a claim of
confidentiality, you should submit three copies of your complete
submission, including the information you claim to be confidential
business information, to the Chief Counsel, NHTSA, at the address given
above under FOR FURTHER INFORMATION CONTACT. When you send a comment
containing confidential business information, you should include a
cover letter setting forth the information specified in our
confidential business information regulation.\7\ In addition, you
should submit a copy from which you have deleted the claimed
confidential business information to the Docket by one of the methods
set forth above.
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    \7\ 49 CFR part 512.
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Will the agencies consider late comments?

    NHTSA and EPA will consider all comments received before the close
of business on the comment closing date indicated above under DATES. To
the extent practicable, we will also consider comments received after
that date. If interested persons believe that any new information the
agency places in the docket affects their comments, they may submit
comments after the closing date concerning how the agency should
consider that information for the final rule. However, the agencies'
ability to consider any such late comments in this rulemaking will be
limited due to the time frame for issuing a final rule.
    If a comment is received too late for us to practicably consider it
in developing a final rule, we will consider that comment as an
informal suggestion for future rulemaking action.

How can I read the comments submitted by other people?

    You may read the materials placed in the docket for this document
(e.g., the comments submitted in response to this document by other
interested persons) at any time by going to http://www.regulations.gov.
Follow the online instructions for accessing the dockets. You may also
read the materials at the EPA Docket Center or NHTSA Docket Management
Facility by going to the street addresses given above under ADDRESSES.
How do I participate in the public hearings?
    NHTSA and EPA will jointly hold two public hearings; one in Chicago
on October 14, 2010, and one in Los Angeles on October 21, 2010, with
both daytime and evening sessions at each location. EPA and NHTSA will
announce the specific hearing locations and times of day in a separate
Federal Register announcement.
    If you would like to present testimony at the public hearings, we
ask that you notify the EPA and NHTSA contact persons listed under FOR
FURTHER INFORMATION CONTACT at least ten days before the hearing. Once
EPA and NHTSA learn how many people have registered to speak at the
public hearing, we will allocate an appropriate amount of time to each
participant, allowing time for lunch and necessary breaks throughout
the day. For planning purposes, each speaker should anticipate speaking
for approximately ten minutes, although we may need to adjust the time
for each speaker if there is a large turnout. We suggest that you bring
copies of your statement or other material for the EPA and NHTSA panels
and the audience. It would also be helpful if you send us a copy of
your statement or other materials before the hearing. To accommodate as
many speakers as possible, we prefer that speakers not use
technological aids (e.g., audio-visuals, computer slideshows). However,
if you plan to do so, you must notify the contact persons in the FOR
FURTHER INFORMATION CONTACT section above. You also must make
arrangements to provide your presentation or any other aids to NHTSA
and EPA in advance of the hearing in order to facilitate set-up. In
addition, we will reserve a block of time for anyone else in the
audience who wants to give testimony.
    The hearing will be held at a site accessible to individuals with
disabilities. Individuals who require accommodations such as sign
language interpreters should contact the persons listed under FOR
FURTHER INFORMATION CONTACT section above no later than ten days before
the date of the hearing.
    NHTSA and EPA will conduct the hearing informally, and technical
rules of evidence will not apply. We will arrange for a written
transcript of the hearing and keep the official record of the hearing
open for 30 days to allow you to submit supplementary information. You
may make arrangements for copies of the transcript directly with the
court reporter.

Table of Contents

I. Overview of Joint EPA/NHTSA Proposal on New Vehicle Labels
    A. Summary of and Rationale for Proposed Label Changes
    B. A Comprehensive Research Program Informed the Development of
Proposed Labels
    C. When Would The Proposed Label Changes Take Effect?
    D. What Are The Estimated Costs and Benefits of the Proposed
Label Changes?
    E. Relationship of This Proposal to Other Federal and State
Programs
    F. History of Federal Fuel Economy Label Requirements

    G. Statutory Provisions and Legal Authority
    1. Energy Policy and Conservation Act (EPCA)
    2. Energy Independence and Security Act (EISA)
II. Proposed Revisions to the Fuel Economy Label Content (Metrics
and Rating Systems)
    A. Conventional Gasoline, Diesel and Hybrid Vehicles
    1. Fuel Economy Performance
    2. Fuel Consumption
    3. Greenhouse Gas Performance
    4. Fuel Economy and Greenhouse Gas Rating Systems
    5. Other Emissions Performance and Rating System
    6. Overall Energy and Environmental Rating
    7. Indicating Highest Fuel Economy/Lowest Greenhouse Vehicles
    8. SmartWay Logo
    9. Annual Fuel Cost
    10. Relative Fuel Savings or Cost
    11. Range of Fuel Economy of Comparable Vehicles
    12. Other Label Text
    13. Gas Guzzler Tax Information
    B. Advanced Technology Vehicle Labels
    1. Introduction
    2. EPA Statutory Requirements
    3. Principles Underlying the Co-Proposed Advanced Technology
Vehicle Labels
    4. Key Advanced Technology Vehicle Label Issues
    C. Labels for Other Vehicle/Fuel Technologies
    1. Flexible Fuel Vehicles
    2. Compressed Natural Gas Vehicles
    3. Dual Fuel Natural Gas & Gasoline Vehicles
    4. Diesel Fueled Vehicles
III. Proposed Revisions to Fuel Economy Label Appearance
    A. Proposed Label Designs
    1. Label 1
    2. Label 2
    B. Alternative Label Design (Label 3)
IV. Agency Research On Fuel Economy Labeling
    A. Methods of Research
    1. Literature Review
    2. Focus Groups
    3. Internet Survey
    4. Expert Panel
    B. Key Research Questions and Findings
    1. Effective Metrics and Rating Systems for Existing and New
Label Information
    2. Effective Metrics and Ratings Systems for Advanced Technology
Vehicles
    3. Effective Metrics to Enable Vehicle Comparison
    4. Effective Whole Label Designs
    5. Tools beyond the Label
V. Implementation of the New Label
    A. Timing
    B. Labels for 2011 model year advanced technology vehicles
    C. Implementation of Label Content
VI. Additional Related EPA Proposals
    A. Electric and Plug-In Hybrid Electric Vehicle Test Procedures
    1. Electric Vehicles
    2. Plug-in Hybrid Electric Vehicles
    B. Utility Factors
    1. Utility Factor Background
    2. General Application of Utility Factors
    3. Calculating combined values using Cycle Specific Utility
Factors
    4. Low Powered Vehicles.
    C. Comparable Class Categories
    D. Using Smartphone QR Codes[supreg] to Link to Fuel Economy
Information
    E. Fuel Economy Information in the context of the ``Monroney''
Sticker
    F. Miscellaneous Amendments and Corrections
VII. Projected Impacts Of The Proposed Requirements
    A. Costs Associated with this Rule
    1. Operations and Maintenance Costs and Labor Hours
    2. Facility Costs
    3. Startup Costs
    4. Cost Summary
    B. Impact of Proposing One Label to Meet EPCA/EISA
    C. Benefits of Label Changes
    D. Summary
VIII. Agencies' Statutory Authority and Executive Order Reviews
    A. Relationship of EPA's Proposed Requirements With Other
Statutes and Regulations
    1. Automobile Disclosure Act
    2. Internal Revenue Code
    3. Clean Air Act
    4. Federal Trade Commission Guide Concerning Fuel Economy
Advertising for New Vehicles
    5. California Environmental Performance Label
    B. Statutory and Executive Order Reviews
    1. Executive Order 12866: Regulatory Planning and Review and DOT
Regulatory Policies and Procedures (NHTSA only)
    2. Paperwork Reduction Act
    3. Regulatory Flexibility Act
    4. Unfunded Mandates Reform Act
    5. Executive Order 13132: Federalism
    6. Executive Order 13175: Consultation and Coordination With
Indian Tribal Governments
    7. Executive Order 13045: Protection of Children from
Environmental Health and Safety Risks
    8. Executive Order 13211: Actions That Significantly Affect
Energy Supply, Distribution or Use
    9. National Technology Transfer Advancement Act
    10. Executive Order 12898: Federal Actions to Address
Environmental Justice in Minority Populations and Low-Income
Populations.

List of Acronyms and Abbreviations

A/C Air Conditioning
AC Alternating Current
AIDA Automobile Information Disclosure Act
BTU British Thermal Units
CAA Clean Air Act
CAFE Corporate Average Fuel Economy
CARB California Air Resources Board
CBI Confidential Business Information
CD Charge Depleting
CFR Code of Federal Regulations
CH4 Methane
CNG Compressed Natural Gas
CO Carbon Monoxide
CO2 Carbon Dioxide
CREE Carbon-related Exhaust Emissions
CS Charge Sustaining
DOE Department of Energy
DOT Department of Transportation
E85 A mixture of 85% ethanol and 15% gasoline
EISA Energy Independence and Security Act of 2007
EO Executive Order
EPA Environmental Protection Agency
EPCA Energy Policy and Conservation Act
EREV Extended Range Electric Vehicle
EV Electric Vehicle
FCV Fuel Cell Vehicle
FE Fuel Economy
FFV Flexible Fuel Vehicle
FTC Federal Trade Commission
FTP Federal Test Procedure
GHG Greenhouse Gas
GVWR Gross Vehicle Weight Rating
HCHO Formaldehyde
HEV Hybrid Electric Vehicle
HFC Hydrofluorocarbon
HFET Highway Fuel Economy Test
ICI Independent Commercial Importer
IT Information Technology
ICR Information Collection Request
LEV II Low Emitting Vehicle II
LEV II opt 1 Low Emitting Vehicle II, option 1
MDPV Medium Duty Passenger Vehicle
MPG Miles per Gallon
MPGe Miles per Gallon equivalent
MY Model Year
N2O Nitrous Oxide
NAICS North American Industry Classification System
NEC Net Energy Change
NHTSA National Highway Traffic Safety Administration
NMOG Non-methane Organic Gases
NOX Oxides of Nitrogen
NPRM Notice of Proposed Rulemaking
NTTAA National Technology Transfer and Advancement Act of 1995
O&M Operations and Maintenance
OCR Optical Character Recognition
OMB Office of Management and Budget
PEF Petroleum Equivalency Factor
PHEV Plug-in Hybrid Electric Vehicle
PM Particulate Matter
PZEV Partial Zero-Emissions Vehicle
RCDA Actual Charge Depleting Range
RESS Rechargeable Energy Storage System
RFA Regulatory Flexibility Act
SAE Society of Automotive Engineers
SAFETEA-LU Safe, Accountable, Flexible, Efficient Transportation Equity
Act: A Legacy for Users
SBA Small Business Administration

SFTP Supplemental Federal Test Procedure
SOC State-of-Charge
SULEV II Super Ultra Low Emission Vehicles II
SUV Sport Utility Vehicle
UDDS Urban Dynamometer Driving Schedule
UF Utility Factor
ULEV II Ultra Low Emission Vehicles II
UMRA Unfunded Mandates Reform Act
ZEV Zero Emission Vehicle

I. Overview of Joint EPA/NHTSA Proposal on New Vehicle Labels

A. Summary of and Rationale for Proposed Label Changes

    This joint action by the Environmental Protection Agency (EPA) and
the National Highway Traffic Safety Administration (NHTSA) proposes
what will likely be the most significant overhaul of the federal
government's fuel economy label or ``sticker'' since its inception over
30 years ago.
    The current fuel economy label required on all new passenger cars,
light-duty trucks, and medium-duty passenger vehicles contains the
following core information, as required by statute:
     City and highway fuel economy values in miles per gallon.
     Comparison of the vehicle's combined city/highway fuel
economy to a range of comparable vehicles.
     Estimated fuel cost to operate the vehicle for one year.
    This joint proposal is designed to update the current label in
order to increase the usefulness of the label in helping consumers
choose more efficient and environmentally friendly vehicles that would
also meet new requirements added by Congress. This proposal also
includes new label designs for electric vehicles (EVs) and plug-in
hybrid electric vehicles (PHEVs), two advanced vehicle technologies
that are beginning to enter the market.
    EPA and NHTSA are co-proposing two label designs for public comment
without a single primary proposal, although the final rule will adopt
only one label design. Both label designs meet statutory requirements
and rely on the same underlying data; they differ in how the data is
used and presented on the label. One is a more traditional label design
that retains the current label's focus on fuel economy values and
annual fuel cost projections, with a general label layout more similar
to the current label. The second label design contains all appropriate
information but prominently features a letter grade to communicate the
overall fuel economy and greenhouse gas emissions--along with projected
5-year fuel cost or savings associated with a particular vehicle when
compared to an average vehicle. The agencies are also seeking comment
on an alternative third label design that follows a more traditional
format but presents some information differently. All labels expand
upon the content found on the current label and include the following
information for conventional vehicles (advanced technology vehicle
labels contain additional information tailored to the individual
technology):
     City and highway fuel economy values in miles per gallon.
     Combined city/highway fuel consumption in gallons per 100
miles.
     Tailpipe carbon dioxide (CO2) emissions in
grams per mile.
     Annual fuel cost in dollars per year.
     A slider bar comparing the combined fuel economy to all
other vehicles.
     A slider bar comparing the CO2 emissions to all
other vehicles.
     A slider bar comparing non-CO2 (``other'' or
``smog-related'') emissions to all other vehicles.
     A symbol that can be read by a `Smartphone' for additional
consumer information (also known as a QR Code[reg]).
     A reference to a Federal government Web site for
additional information.

Despite the fact that the co-proposed labels are based on the same
underlying data, they are significantly different in terms of
presentation and prominence. The agencies encourage public feedback on
the central question of which label design would be more useful and
help consumers select more energy efficient and environmentally
friendly vehicles that meet their needs, or whether the agencies should
consider alternative designs.
    NHTSA and EPA are proposing these changes because the Energy
Independence and Security Act (EISA) of 2007 mandates several new
labeling requirements intended to help consumers make more informed
vehicle purchase decisions, and because this is an appropriate time to
develop new labels for advanced technology vehicles (Battery Electric
or EVs and Plug-In Hybrid Vehicles or PHEVs) that are being
commercialized. The agencies believe that a joint label meeting our
separate statutory requirements and our shared consumer information
objectives makes far more sense for both consumers and manufacturers
than separate labels. As a joint rulemaking, this proposal is also
consistent with the recent joint rulemaking by EPA and NHTSA that
established harmonized federal greenhouse gas (GHG) emissions and
corporate average fuel economy (CAFE) standards for new cars, sport
utility vehicles, minivans, and pickup trucks for model years 2012-
2016.\8\
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    \8\ 75 FR 25324, May 7, 2010.
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    The agencies believe these new labeling requirements for
automobiles are important in light of a growing national interest in
both fuel economy and climate change. Historically, consumers have
generally paid the most attention to fuel economy when fuel prices
increase sharply over a short period of time, such as in 2008, but the
agencies believe that this phenomenon has changed and consumers will
continue in the future to pay more attention to fuel economy. Based on
projections from the U.S. Energy Information Administration that future
gasoline prices will increase over coming decades due to global
economic growth and oil demand, we believe that it is likely that
consumer interest in and use of the fuel economy label will grow over
time.\9\ In addition, given the increased awareness of consumers
regarding climate change and air pollution, more comprehensive
information on the emissions performance of vehicles, as required by
EISA, could help consumers make more informed decisions on how a
vehicle they buy may impact the environment.
---------------------------------------------------------------------------

    \9\ Annual Energy Outlook 2010, Department of Energy, Energy
Information Administration, DOE/EIA-0383 (2010), May 11, 2010,
available at http://www.eia.doe.gov/oiaf/aeo/index.html.
---------------------------------------------------------------------------

    It is also important for the agencies to define labeling
requirements for advanced vehicle technologies that are nearing
commercialization. The existing label has long provided city and
highway fuel economy in terms of miles per gallon (MPG) values, which
the agencies believe are well recognized and understood by consumers,
and which are widely used as metrics for comparing the efficiency of
one vehicle to another. Since the late 1970s when the fuel economy
label was first established by EPA as required under the Energy Policy
Conservation Act (EPCA) of 1975, over 99 percent of the automobiles
sold have been conventional, internal-combustion engine vehicles that
run on petroleum-based fuels (or a liquid fuel blend dominated by
petroleum). When manufacturers produced different advanced technology
vehicles, such as compressed natural gas vehicles, EPA has generally
addressed the need for labels on a case-by-case basis.

    Over the next several model years, however, the agencies expect to
see increasing numbers of EVs and PHEVs entering the marketplace. This
proposal includes changes to the label to address some of the specific
issues raised by the use of grid electricity as a fuel for EVs and
PHEVs. These vehicles will be required to display labels containing the
same kind of information as conventional vehicles, but some of that
information may be better conveyed in different ways, and consumers may
be interested in different information for these vehicles. For example,
evaluating the performance of a vehicle that uses grid electricity as
some or all of its fuel, or the cost of operating such a vehicle,
presents unique challenges for making an informed comparison between
different EVs and PHEVs, and between advanced technology vehicles and
their conventional vehicle counterparts including gasoline and diesel
fueled vehicles and hybrid gasoline electric vehicles (HEVs).
    The co-proposed label designs present two approaches for addressing
the complex challenges associated with labels for these advanced
technology vehicles, and the agencies encourage the public to comment
on a wide range of possible solutions. The agencies recognize that this
is only the first generation of EV and PHEV labels, and we expect to
refine them over time as we have done with conventional vehicle labels.
Additionally, the agencies recognize that other advanced technology
vehicles, such as fuel cell vehicles (FCVs), may enter the marketplace
in the near future as well, but for purposes of this first effort we
have chosen to focus on EVs and PHEVs. Specific label requirements for
other advanced technology vehicles will be developed at a later time as
those vehicles enter the market.
    This joint proposal is designed to satisfy each agency's statutory
responsibilities in a manner that maximizes usefulness for the
consumer, while avoiding unnecessary burden on the manufacturers who
prepare the vehicle labels. Since 1977, EPA has required auto
manufacturers to label all new automobiles,\10\ pursuant to EPCA.\11\
As amended, EPCA requires that labels shall contain the following
information:
---------------------------------------------------------------------------

    \10\ An ``automobile'' is defined for these purposes as a ``4-
wheeled vehicle that is propelled by fuel, or by alternative fuel,
manufactured primarily for use on public streets, roads, and
highways'' and ``rated at not more than 8,500 pounds gross vehicle
weight.'' See 49 U.S.C. 32901(a)(3) and 32908(a)(1).
    \11\ Public Law 94-163.
---------------------------------------------------------------------------

    (1) The fuel economy of the automobile;
    (2) The estimated annual fuel cost of operating the automobile;
    (3) The range of fuel economy of comparable vehicles of all
manufacturers;
    (4) A statement that a booklet is available from the dealer to
assist in making a comparison of fuel economy of other automobiles
manufactured by all manufacturers in that model year;
    (5) The amount of the automobile fuel efficiency tax (``gas guzzler
tax'') imposed on the sale of the automobile under section 4064 of the
Internal Revenue Code of 1986 (26 U.S.C. 4064); and
    (6) Other information required or authorized by the EPA
Administrator that is related to the information required by (1)
through (4) above.\12\
---------------------------------------------------------------------------

    \12\ 49 U.S.C. 32908(b).
---------------------------------------------------------------------------

    In the Energy Independence and Security Act of 2007 (EISA),\13\
Congress required that NHTSA, in consultation with EPA and the
Department of Energy (DOE), establish regulations to implement several
new labeling requirements for new automobiles.\14\ NHTSA must develop a
program that requires manufacturers to label new automobiles with
information reflecting an automobile's performance with respect to fuel
economy and greenhouse gas and other emissions over the useful life of
the automobile based on criteria provided by EPA.\15\ NHTSA must also
develop a rating system that makes it easy for consumers to compare the
fuel economy and greenhouse gas and other emissions of automobiles at
the point of purchase, including designations of automobiles with the
lowest GHG emissions over the useful life of the vehicles, and the
highest fuel economy.\16\
---------------------------------------------------------------------------

    \13\ Public Law 110-140.
    \14\ EISA Sec. 108, codified at 49 U.S.C. 32908(g).
    \15\ 49 U.S.C. 32908(g)(1)(a)(i).
    \16\ 49 U.S.C. 32908(g)(1)(a)(ii).
---------------------------------------------------------------------------

    Thus, either the basic label for automobiles needs to be expanded
to include additional information on performance in terms of fuel
economy, greenhouse gas and other emissions, or a new label needs to be
required. NHTSA and EPA believe that a joint rulemaking to combine all
of these elements into a single revised fuel economy label is the most
appropriate way to meet the goals described above, rather than placing
the information in two separate labels with duplicative and overlapping
information, which could cause consumer confusion and impose
unnecessary burden on the manufacturers.\17\
---------------------------------------------------------------------------

    \17\ The agencies also raised the issue of the upcoming labeling
requirements in the recent joint rulemaking for MYs 2012-2016 CAFE
and GHG standards for light-duty vehicles, 75 FR 25324 (May 7,
2010).
---------------------------------------------------------------------------

    Finally, given the goals described above and the need to provide
additional information on the label, the agencies believe that the
overall vehicle label design format and content should be reevaluated
and could be improved. Simply including the additional information
required under EISA for both conventional and advanced technology
vehicles necessitates a review of the overall label design.
    As described above, the agencies view the purpose of the label as
providing information that will be most useful for consumers in making
informed decisions regarding the energy efficiency and emissions
impacts of the vehicles they purchase. Providing information on energy,
environmental performance, and cost can educate consumers in various
ways. These metrics have the potential to help people who value this
kind of information to make a more informed choice among different
vehicles. It also has the potential to inform people who currently
place less or even no value on this kind of information, but who may
decide it is more important to them at some point in the future. NHTSA
and EPA are mindful that this is a complicated issue and that there is
no readily ascertainable metric to determine whether we have achieved
this somewhat subjective and qualitative purpose. Therefore, EPA and
NHTSA are co-proposing two options, and also taking comment on another
alternative, that highlight a number of relevant issues on which we
seek public comment. The agencies will consider all public comments and
publish a final rule in the near future.

B. A Comprehensive Research Program Informed the Development of
Proposed Labels

    Since today's proposal includes adding important new elements to
the existing label as well as creating new labels for advanced
technology vehicles, EPA and NHTSA embarked on a comprehensive and
innovative research program beginning in the fall of 2009. The research
helped inform the development of the new labels being proposed and
included three phases of consumer focus groups, a review of available
literature, and a day-long consultation with an expert panel of
individuals who have introduced new products or have spearheaded
national educational campaigns.
    For the focus groups, the agencies decided to use a three-phase
approach

in order to accommodate the sheer amount of information intended to be
covered in the groups, as well as to use each phase to inform the next
phase to help evolve the overall label design in regard to both content
and appearance. Focus groups were held beginning in late February
through May 2010 in four cities: Charlotte, Houston, Chicago, and
Seattle. Overall, 32 focus groups were convened with a total of 256
participants. We asked the focus groups about the following issues:
     How they use the current fuel economy label,
     What feedback they could give us on potential new
information and metrics for the label for conventional and advanced
technology vehicles (EVs and PHEVs), and
     What feedback they could give us, after reviewing draft
labels, on designs and the level of information that makes sense, as
well as overall preference for displaying information.
    The insights received from the focus groups were key for the
agencies with regard to individual metrics that consumers wanted to see
on labels and also with regard to effective label designs. Overall,
focus groups indicated \18\ that redesigned labels must:
---------------------------------------------------------------------------

    \18\ Environmental Protection Agency Fuel Economy Label: Phase 1
Focus Groups, EPA420-R-10-903, August 2010; Environmental Protection
Agency Fuel Economy Label: Phase 2 Focus Groups, EPA420-R-10-904,
August 2010 ; and Environmental Protection Agency Fuel Economy
Label: Phase 3 Focus Groups, EPA420-R-10-905, August 2010.
---------------------------------------------------------------------------

     Create an immediate first impression for consumers.
     Be easy to read and understand quickly.
     Clearly identify vehicle technology (conventional, EV,
PHEV).
     Utilize color.
     Chunk information to allow people to deal with ``more
information.''
     Be consistent in content and design across technologies.
     Allow for comparison across technologies.
     Make it easy to identify the most fuel efficient and
environmentally friendly vehicles.
    Following the focus group research, we assembled an expert panel
for a one day consultation and asked them to give us feedback on the
draft label designs the focus groups had helped create and to also
assist us in identifying opportunities and strategies to provide more
and better information to consumers so that they can more easily assess
the costs, emissions, and energy efficiency of different vehicles. The
experts came from a variety of fields in advertising and product
development, and were chosen because they have led successful national
efforts to introduce new products or have spearheaded national
educational campaigns. After viewing the draft labels, the expert panel
offered the agencies the following insights and guidance \19\ that were
key in developing one of the co-proposed label designs, including:
---------------------------------------------------------------------------

    \19\ Environmental Protection Agency Fuel Economy Label: Expert
Panel Report, EPA420-R-10-908, August 2010.
---------------------------------------------------------------------------

     Keep it simple; we yearn for simplicity (fewer, bigger,
better).
     Consumers don't act on details.
     Remember the reality of very short label viewing time--
roll ratings and metrics up into a single score.
     Use cost savings information- a very strong consumer
motivator.
     Develop a Web site that would be launched in conjunction
with the new label. This consumer-focused, user friendly Web site would
provide more specific information on the label including additional
information on the letter grade, along with access to the tools,
applications, and social media.
    Beyond these two core research elements, the agencies also
undertook a comprehensive literature review \20\ and drafted and had
peer reviewed an internet survey. The agencies intend to administer the
survey concurrently with the release of this proposal, and the results
will be made publicly available in the dockets for this proposal prior
to issuing a final rule with the new label requirements.
---------------------------------------------------------------------------

    \20\ Environmental Protection Agency Fuel Economy Label:
Literature Review, EPA420-R-10-906, August 2010.
---------------------------------------------------------------------------

    The agencies also met with a number of stakeholders, including
environmental organizations, auto manufacturers, and dealers, to gather
their input on what the label should and should not contain, as well as
to ascertain particular concerns.\21\ Comments received on labeling
issues in the context of the joint rulemaking on fuel economy and GHG
standards,\22\ as well as for the 2006 fuel economy labeling rule,\23\
have also been considered.
---------------------------------------------------------------------------

    \21\ Pursuant to DOT Order 2100.2, NHTSA will place a memorandum
recording those meetings it attended, and attach documents submitted
by stakeholders, as appropriate, when the information received
formed a basis for this proposal, and the information can be made
public, in the docket for this rulemaking.
    \22\ Available at Docket No. NHTSA-2009-0059 and EPA-HQ-OAR-
2009-0472.
    \23\ Available at Docket No. EPA-HQ-OAR-2005-0169.
---------------------------------------------------------------------------

C. When would the proposed label changes take effect?

    The agencies propose that the final label changes will take effect
for model year (MY) 2012 vehicles, consistent with the recent joint
rulemaking by EPA and NHTSA that established harmonized federal GHG
emissions and CAFE standards for new cars, sport utility vehicles,
minivans, and pickup trucks for model years 2012 through 2016.\24\ For
those advanced technology vehicles that will be introduced to the
market prior to MY2012, EPA will work with individual manufacturers on
a case-by-case basis to develop interim labels under EPA's current
regulations that can be used prior to MY2012 and that are consistent
with the proposed labels for advanced technology vehicles.
---------------------------------------------------------------------------

    \24\ 75 FR 25324, May 7, 2010.
---------------------------------------------------------------------------

D. What are the estimated costs and benefits of the proposed label
changes?

    The primary costs associated with this proposed rule come from
revisions to the fuel economy label and new testing requirements. As
discussed in Section VII of this preamble, we estimate that the costs
of this rule are likely to be in the range of $649,000--$2.8 million
per year. This rule is not economically significant under Executive
Order 12866 or any DOT or EPA policies and procedures because it does
not exceed $100 million or meet other related standards.
    The primary benefits associated with this proposed rule come from
any improvements in consumer decision-making that may lead to reduced
vehicle and fuel costs for them. There may be additional effects on
criteria pollutants and greenhouse gas emissions. At this time, EPA and
NHTSA do not believe it is feasible to fully develop a complete
benefits analysis of the potential benefits.
    EPA and NHTSA request comment on the assessment of the benefits and
costs presented in Section VII below.

E. Relationship of This Proposal to Other Federal and State Programs

    This proposal involves the addition of new information and design
changes to conventional vehicle labels and the creation of specific
labels for certain advanced vehicle technologies, but will not impact
other important elements of the Federal government's fuel economy and
GHG emissions regulatory programs. For example, this proposal will not
affect the fuel economy compliance values used in NHTSA's CAFE program,
or the GHG emissions compliance values used in EPA's GHG emissions
control program. Nor will this proposal affect the methodology by which
EPA generates the consumer fuel economy values used on the vehicle
labels and provided at http://

www.fueleconomy.gov. The result of the additional information,
including environmental information, appearing on the label will
necessitate that additional information also be displayed on this Web
site in the future. Finally, this proposal does not affect the test
procedures that are used by EPA and manufacturers to generate the
Federal government's vehicle fuel economy and GHG emissions database.
    This proposal also does not affect the vehicle labels required by
the California Air Resources Board which indicate relative ratings for
``Smog'' and ``Global Warming,'' in fulfillment of that state's
statutory requirements. The agencies are aware that the California
labels provide information that is effectively duplicative with some of
the information on the labels that will result from this rulemaking
effort, although using different underlying rating methodologies and
presentational approaches. It is the hope of both NHTSA and EPA that
the Federal label can meet the CARB requirements and, thus, preclude
the need for a separate set of labels. However, it is ultimately up to
California to determine how to implement its statute and, thus, beyond
the purview of this rulemaking to make any such determination.

F. History of Federal Fuel Economy Label Requirements

    The fuel economy label has evolved several times since it was first
required by Congress in the 1970s, both in response to new statutory
requirements and to changing policy objectives. There have been
important changes in the past to make the label more technically
accurate and understandable to consumers. The changes being proposed
are consistent with past efforts by EPA to make the fuel economy label
more consumer friendly and effective over time. This section provides a
brief historical summary of the development of the fuel economy label.
    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
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). The
responsibilities for these requirements were split between EPA, the
Department of Transportation (DOT) \25\ and the Department of Energy
(DOE). EPA is responsible for establishing the test methods and
procedures both for determining the fuel economy estimates that are
displayed on the labels and in the annual booklet, and for the
calculation of a manufacturer's corporate average fuel economy. DOT,
and by delegation, NHTSA, is responsible for administering the CAFE
compliance program, which includes establishing standards, determining
compliance, and assessing any penalties as needed. DOE is responsible
for publishing and distributing the annual fuel economy information
booklet.
---------------------------------------------------------------------------

    \25\ The CAFE-related responsibilities of the Secretary of
Transportation are delegated to the NHTSA Administrator at 49 CFR
1.50.
---------------------------------------------------------------------------

    EPA published regulations implementing portions of the EPCA statute
in 1976.\26\ The provisions in this regulation, effective with the 1977
model year, established the first fuel economy label along with the
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 values into a single number for manufacturers' compliance
purposes.\27\
---------------------------------------------------------------------------

    \26\ 41 FR 38685, promulgated at 40 CFR part 600.
    \27\ EPCA requires that manufacturers simply comply with
passenger car and light truck CAFE standards, it does not require
separate city and highway standards for each type of automobile.
Thus, EPA calculates the average fuel economy for a manufacturer by
weighting and combining the results of each automobile on the
separate city and highway cycles. See 49 U.S.C. 32904(c).
---------------------------------------------------------------------------

    After a few years of public exposure to the fuel economy estimates
on the labels of new vehicles, it soon became apparent that drivers
were disappointed by not often achieving these estimates on the road
and expected them to be as accurate as possible. In 1978, Congress
recognized the concern about differences between EPA-estimated fuel
economy values and actual consumer experience and mandated a study
under section 404 of the National Energy Conservation Policy Act of
1978.\28\ In February 1980, a set of hearings were conducted by the
U.S. House of Representatives Subcommittee on Environment, Energy, and
National Resources. One of the recommendations in the subsequent report
by the Subcommittee was that ``EPA devise a new MPG system for labeling
new cars and for the Gas Mileage Guide that provides fuel economy
values, or a range of values, that most drivers can reasonably expect
to experience.'' \29\
---------------------------------------------------------------------------

    \28\ Public Law 95-619, Title IV, 404, November 9, 1978.
    \29\ House Committee on Government Operations, ``Automobile Fuel
Economy: EPA's Performance,'' Report 96-948, May 13, 1980.
---------------------------------------------------------------------------

    EPA commenced a rulemaking process in 1980 to revise its fuel
economy labeling procedures, and analyzed a vast amount of in-use fuel
economy data as part of that rulemaking.\30\ In 1984, EPA published new
fuel economy labeling procedures that were applicable to 1985 and later
model year vehicles.\31\ The decision was made to retain the FTP and
highway test procedures, primarily because those procedures were also
used for other purposes, including emissions certification and CAFE
determination. Based on the in-use fuel economy data, however, it was
evident that the final fuel economy values put on the labels needed to
be adjusted downward in order to reflect more accurately consumers'
average fuel economy experience. The final rule, therefore, included
downward adjustment factors for both the city and highway label fuel
economy estimates. The city values (based on the raw FTP test data)
were adjusted downward by 10 percent and the highway values (likewise
based on the raw highway test data) were adjusted downward by 22
percent.\32\
---------------------------------------------------------------------------

    \30\ ``Passenger Car Fuel Economy: EPA and Road,'' U.S.
Environmental Protection Agency, Report no. EPA 460/3-80-010,
September 1980, and ``Technical Support Report for Rulemaking
Action: Light Duty Vehicle Fuel Economy Labeling,'' U.S.
Environmental Protection Agency, Report no. EPA/AA/CTAB/FE-81-6,
October 1980.
    \31\ 49 FR 13845, April 6, 1984, and 49 FR 48149, December 10,
1984.
    \32\ 49 FR 13845, April 6, 1984.
---------------------------------------------------------------------------

    In the early 2000s, EPA again began investigating the accuracy of
the fuel economy label estimates, and concluded that driving behavior
(e.g., higher average speed and acceleration) and other factors (such
as the use of ethanol as a gasoline blending agent) had changed
significantly since the correction factors were implemented in 1985,
leading again to a widening gap between real-world fuel economy and the
label estimates that consumers saw when shopping for new vehicles.
During the development of vehicle emissions regulations in the late
1990s, EPA had already conclusively found that the city and highway
tests did not adequately represent real-world driving, and in December
of 2006 EPA finalized new

test methods for calculating the fuel economy label values.\33\
---------------------------------------------------------------------------

    \33\ 71 FR 77872, December 27, 2006.
---------------------------------------------------------------------------

    The 2006 final rule made three important changes. First, EPA's new
methods brought the miles per gallon estimates closer to consumers'
actual fuel economy by including factors such as high speeds, quicker
accelerations, air conditioning use, and driving in cold temperatures.
These revised fuel economy estimates also reflect other conditions that
influence fuel economy, like road grade, wind, tire pressure, load, and
the effects of different fuel properties. The new estimates took effect
with model year 2008 vehicles. Second, EPA now requires fuel economy
labels on certain heavier vehicles up to 10,000 pounds gross vehicle
weight, such as larger SUVs and vans. Manufacturers will be required to
post fuel economy labels on these vehicles beginning with the 2011
model year. Third, to convey fuel economy information to the public
more effectively, EPA updated the design and content of the label. The
rule required that new labels be placed on vehicles manufactured after
September 1, 2007. The fuel economy for each vehicle model continues to
be presented to consumers on the label as city and highway MPG
estimates.

G. Statutory Provisions and Legal Authority

1. Energy Policy and Conservation Act (EPCA)
    Under EPCA, EPA is responsible for developing the fuel economy
labels that are posted on all new light duty cars and trucks sold in
the U.S. and beginning in MY 2011 all new medium duty trucks as well.
Medium-duty passenger vehicles are a subset of vehicles between 8,500
and 10,000 pounds gross vehicle weight that includes large sport
utility vehicles and vans, but not pickup trucks. EPCA requires the
manufacturers of automobiles to attach the fuel economy label in a
prominent place on each automobile manufactured in a model year and
also requires auto dealerships to maintain the label on the
automobile.\34\
---------------------------------------------------------------------------

    \34\ 49 U.S.C. 32908(b)(1).
---------------------------------------------------------------------------

    EPCA specifies the information that is minimally required on every
fuel economy label.\35\ As stated above, labels must include:
---------------------------------------------------------------------------

    \35\ 49 U.S.C. 32908(b)(2)(A) through (F).
---------------------------------------------------------------------------

     The fuel economy of the automobile,
     The estimated annual fuel cost of operating the
automobile.
     The range of fuel economy of comparable automobiles of all
manufacturers,
     A statement that a booklet is available from the dealer to
assist in making a comparison of fuel economy of other automobiles
manufactured by all manufacturers in that model year,
     The amount of the automobile fuel efficiency tax imposed
on the sale of the automobile under section 4064 of the Internal
Revenue Code of 1986; \36\ and
---------------------------------------------------------------------------

    \36\ 26 U.S.C. 4064.
---------------------------------------------------------------------------

     Other information required or authorized by the
Administrator that is related to the information required [within the
first four items].
    Under the provision for ``other information'' EPA has previously
required the statements ``your actual mileage will vary depending on
how you drive and maintain your vehicle,'' and cost estimates ``based
on 15,000 miles at $2.80 per gallon'' be placed on vehicle labels.
    There are additional labeling requirements found in EPCA for
``dedicated'' automobiles and ``dual fueled'' automobiles. A dedicated
automobile is an automobile that operates only on an alternative
fuel.\37\ Dedicated automobile labels must also display the information
noted above.
---------------------------------------------------------------------------

    \37\ 49 U.S.C. 32901(a)(1) defines ``alternative fuel'' as
including--(A) methanol; (B) denatured ethanol; (C) other alcohols;
(D) except as provided in subsection (b) of this section, a mixture
containing at least 85 percent of methanol, denatured ethanol, and
other alcohols by volume with gasoline or other fuels; (E) natural
gas; (F) liquefied petroleum gas; (G) hydrogen; (H) coal derived
liquid fuels; (I) fuels (except alcohol) derived from biological
materials; (J) electricity (including electricity from solar
energy); and (K) any other fuel the Secretary of Transportation
prescribes by regulation that is not substantially petroleum and
that would yield substantial energy security and environmental
benefits.''
---------------------------------------------------------------------------

    A dual fueled vehicle is a vehicle which is ``capable of operating
on alternative fuel or a mixture of biodiesel and diesel fuel, and on
gasoline or diesel fuel'' for the minimum driving range (defined by the
DOT).\38\ Dual fueled vehicle labels must:
---------------------------------------------------------------------------

    \38\ 49 U.S.C. 32901(a)(9), (c).
---------------------------------------------------------------------------

     Indicate the fuel economy of the automobile when operated
on gasoline or diesel fuel.
     Clearly identify the automobile as a dual fueled
automobile.
     Clearly identify the fuels on which the automobile may be
operated; and
     Contain a statement informing the consumer that the
additional information required by subsection (c)(2) [the information
booklet] is published and distributed by the Secretary of Energy.\39\
---------------------------------------------------------------------------

    \39\ 49 U.S.C. 32908(b)(3).
---------------------------------------------------------------------------

    EPCA defines ``fuel economy'' for purposes of these vehicles as
``the average number of miles traveled by an automobile for each gallon
of gasoline (or equivalent amount of other fuel) used, as determined by
the Administrator [of the EPA] under section 32904(c) [of this
title].'' \40\
---------------------------------------------------------------------------

    \40\ 49 U.S.C. 32901(a)(11).
---------------------------------------------------------------------------

    Additionally, EPA is required under EPCA to prepare a fuel economy
booklet containing information that is ``simple and readily
understandable.'' \41\ The booklet is commonly known as the annual
``Fuel Economy Guide.'' EPCA further instructs DOE to publish and
distribute the booklet. EPA is required to ``prescribe regulations
requiring dealers to make the booklet available to prospective
buyers.'' \42\ While the booklet continues to be available in paper
form, in 2006, EPA finalized regulations allowing manufacturers and
dealers to make the Fuel Economy Guide available electronically to
customers as an option.\43\
---------------------------------------------------------------------------

    \41\ 49 U.S.C. 32908(c).
    \42\ Id.
    \43\ 71 FR 77915, Dec. 27, 2006.
---------------------------------------------------------------------------

2. Energy Independence and Security Act (EISA)
    The 2007 passage of the Energy Independence and Security Act (EISA)
amended EPCA by introducing additional new vehicle labeling
requirements, to be implemented by the National Highway Traffic Safety
Administration (NHTSA).\44\ While EPA retained responsibility for
establishing test methods and calculation procedures for determining
the fuel economy estimates of automobiles for the purpose of posting
fuel economy information on labels and in an annual Fuel Economy Guide,
NHTSA gained responsibility for requiring automobiles to be labeled
with additional performance metrics and rating systems to help
consumers compare vehicles to one another more easily at the point of
purchase.
---------------------------------------------------------------------------

    \44\ Public Law 110-140.
---------------------------------------------------------------------------

    Specifically, and for purposes of this rulemaking, subsection ``(g)
Consumer Information'' was added to 49 U.S.C. 32908. Subsection (g), in
relevant part, directed the Secretary of Transportation (by delegation,
the NHTSA Administrator) to ``develop and implement by rule a program
to require manufacturers--to label new automobiles sold in the United
States with information reflecting an automobile's performance on the
basis of criteria that the [EPA] Administrator shall develop, not later
than 18 months after the date of the of the Ten-in-Ten Fuel Economy
Act, to reflect fuel economy and greenhouse gas and other emissions
over the useful life of the

automobile: a rating system that would make it easy for consumers to
compare the fuel economy and greenhouse gas and other emissions of
automobiles at the point of purchase, including a designation of
automobiles-- with the lowest greenhouse gas emissions over the useful
life of the vehicles; and the highest fuel economy * * *''
    Thus, both EPA and NHTSA have authority over labeling requirements
related to fuel economy and environmental information under EPCA and
EISA, respectively. In order to implement that authority in the most
coordinated and efficient way, the agencies are jointly proposing the
revised labels presented below. NHTSA notes that its proposed
regulatory text changes to 49 CFR Chapter V to implement the EISA
requirements (and to make other proposed changes) are currently
designated as ``reserved.'' This is not to suggest that these sections
will remain ``reserved'' (i.e., blank) for the final rule. NHTSA will
add regulatory text to implement the EISA requirements in these
sections for the final rule consistent with the agencies' final
decisions on label formats and based on review and consideration of all
public comments.

II. Proposed Revisions to the Fuel Economy Label Content (Metrics and
Rating Systems)

    This section discusses the elements that the agencies are proposing
for the fuel economy label. Section A discusses the range of options
considered and proposed for ``conventional'' petroleum-fueled vehicles
(i.e., those powered solely by gasoline or diesel fuel). Current hybrid
vehicles, which are fundamentally gasoline-fueled vehicles,\45\ will
continue to use the same label as other gasoline vehicles, just as they
do today. Many of the approaches discussed in Section A, such as the
rating systems, will apply across all vehicles, including advanced
technology vehicles. Section B specifically discusses the special cases
of advanced technology vehicles. These vehicles--such as electric
vehicles (EVs) and plug-in gasoline-electric hybrid vehicles (PHEVs)
\46\--are one of the key reasons we are proposing new regulations. The
agencies are concerned that current label requirements do not
adequately address these vehicles, and we are seeking to develop labels
that are useful and understandable to consumers, as well as equitable
across the range of different vehicles and technological approaches.
Section C addresses some of the less common fuels and fuel combinations
for which label templates must ultimately be developed, such as
compressed natural gas and methanol.
---------------------------------------------------------------------------

    \45\ Current hybrid vehicles obtain their electric power from
their onboard conventional gasoline engine and energy captured
through regenerative braking. Thus, the vehicle's energy source is
still gasoline.
    \46\ Definitions for hybrid electric vehicles, electric
vehicles, fuel cell vehicles, and plug-in hybrid electric vehicles
can be found in EPA regulations at 40 CFR 86.1803-01.
---------------------------------------------------------------------------

A. Conventional Gasoline, Diesel and Hybrid Vehicles

    The complete effect of this proposal would be a single new label,
which replaces the existing fuel economy label and which contains more
information than is currently displayed, even in the case of
conventional petroleum-fueled vehicles. An example of the current label
is shown here to provide a basis for comparison with the proposed
labels.
[GRAPHIC] [TIFF OMITTED] TP23SE10.002

    The new single label is the result of EPA and NHTSA's decision that
it is good public policy to consolidate label requirements called for
by EPCA and EISA. This label would contain information not only on a
new vehicle's fuel economy, annual fuel cost, and range of fuel economy
within class, but also, for the first time, information on a new
vehicle's fuel consumption, emissions, and comparative rating
information, as required by statute. This expansion of the role of the
label beyond fuel economy information reflects the new EISA
requirements, which are premised on the concept that greenhouse gas and
other environmental information is also in the public interest.
    In developing this proposal, the agencies came up with two distinct
approaches for conveying information on the label. While both
approaches rely on the same underlying data and both meet EPCA and EISA
requirements, they differ in how they present and emphasize the
information. One approach is more traditional, focusing primarily on
MPG values and secondarily on annual fuel cost, but adding new
elements, such as environmental information. A label using this
approach would look familiar to the public, with a style similar to the

existing label. Requiring a label based on the traditional approach
assumes that potential vehicle purchasers will use the information that
is most meaningful to them, whether that is MPG, fuel cost, or other
values. For example, participants in the focus groups leading up to
this proposal indicated that, when considering the current fuel economy
label, nearly all used the city and highway MPG values almost
exclusively, despite the presence of other data elements on the label;
some also used annual fuel cost and within-class comparison
information.\47\
---------------------------------------------------------------------------

    \47\ Environmental Protection Agency Fuel Economy Label: Phase 1
Focus Groups, EPA420-R-10-903, August 2010, p. 10.
---------------------------------------------------------------------------

    The other approach uses the same data, but shifts the emphasis to a
single, more prominent value that reflects fuel consumption and its
counterpart, greenhouse gas emissions, using a format the consumers
will easily recognize--a letter grade. The associated numerical values
and other required elements would remain on the label, but with much
less prominence. This approach makes it simpler for the consumer to
identify those vehicles that use less oil and have a lesser
environmental impact and more clearly expands the role of the label
beyond fuel economy information. Many of the focus group participants
indicated that they trusted the EPA to determine which of these factors
were important, and the agencies believe that consumers might be more
likely to consider a vehicle with higher fuel economy and lesser
environmental impact if they were provided with a simpler label.\48\
---------------------------------------------------------------------------

    \48\ Environmental Protection Agency Fuel Economy Label: Phase 1
Focus Groups, EPA420-R-10-903, August 2010, p. 36.
---------------------------------------------------------------------------

    The agencies believe each approach has merit and that the public
will be well-served by having both be fully considered; therefore, EPA
and NHTSA are co-proposing two label designs based on these two
approaches, without either being the primary proposal. NHTSA and EPA
expect that comments will provide valuable insight on these two
proposed label designs, and seek comment on the merits and drawbacks of
each, recognizing that the label design ultimately finalized may draw
on elements from all the labels presented in this proposal. The labels
are presented in Section III. Label designs 1 and 2 are co-proposed,
with Label 1 being the letter grade approach and Label 2 being the more
traditional approach. Label 3, on which comment is also sought, is an
alternative version of the traditional approach.
    The subsections that follow describe each of the data elements
presented on the labels, how the agencies considered them, and how we
are proposing that they be displayed on each of the co-proposed labels.
1. Fuel Economy Performance
    Since 1977, the EPA fuel economy label has represented the fuel
economy performance of a vehicle with estimates of city and highway
miles per gallon (MPG). With more than 30 years of consumers seeing
these estimates as the most prominent values displayed on the fuel
economy labels, it is not surprising that the consumer research
conducted as part of this rulemaking has revealed a strong attachment
to city and highway MPG values. A combined city and highway MPG value
was first placed on the label starting with model year 2008--as part of
the graphic showing the combined MPG value of the vehicle compared with
other vehicles in the same class \49\ but, even prior to this, the
combined MPG value has always been a key input to estimating the annual
fuel cost value required on the label.\50\
---------------------------------------------------------------------------

    \49\ The vehicle classes are defined in EPA regulations at 40
CFR 600.315-08 and provide a basis for comparing a vehicle's fuel
economy to that of other vehicles in its class as required by
statute. See the discussion in section VI.C for a detailed
discussion of the vehicle class structure.
    \50\ Combined fuel economy is a harmonic average of the City and
Highway MPG values, with the City value weighted 55% and the Highway
value weighted 45%. See 71 FR 77904, December 27, 2006.
---------------------------------------------------------------------------

    Representing the vehicle's fuel economy performance on the label
with an estimate of miles per gallon is a core element of the fuel
economy information requirements of EPCA, which specifically states
that the label must display ``the fuel economy of the automobile'' and
defines ``fuel economy'' as ``the average number of miles travelled * *
* for each gallon of gasoline.'' \51\ In addition, EPA and NHTSA have
determined that continuing to display the fuel economy values on the
label would also meet the new requirements put in place by EISA that
call for a label ``reflecting an automobile's performance [based on
criteria determined by EPA] to reflect fuel economy * * * over the
useful life of the vehicle.'' \52\ Because vehicle fuel economy depends
primarily on fundamental vehicle design characteristics that do not
change over time, the agencies believe that fuel economy remains
essentially stable throughout the life of properly-maintained vehicles.
Thus the agencies believe that the current test methods that determine
label values for new vehicles will meet the EISA requirements by
providing reasonable estimates of fuel economy performance for the full
useful life of a vehicle. Finally, consumers have shown a strong
familiarity with and preference for MPG values, and have consistently
indicated that these values are used as part of the vehicle purchase
decision.
---------------------------------------------------------------------------

    \51\ 49 U.S.C. 32908(b)(1)(A).
    \52\ 49 U.S.C. 32908(g)(1)(A)(i).
---------------------------------------------------------------------------

    For these reasons, the agencies are proposing to continue to
provide mile per gallon estimates to consumers, but with some changes
relative to the current label, and with markedly different approaches
on the two co-proposed labels.
    The agencies recognize that the focus group research suggested that
consumers have a strong familiarity with and preference for the city
and highway fuel economy values \53\ (although this preference was much
stronger for conventional vehicles than for advanced technology
vehicles; in those cases perhaps the complexity of the labels
encouraged them to part with some of the numbers on the label). Focus
group participants who argued strongly for separate city and highway
MPG values on the label often stated, for example, that most of their
driving is either city or highway, and that a combined city-highway MPG
value might make it harder for them to determine what MPG they should
reasonably expect for that vehicle.\54\ The agencies believe that this
apparent preference was formed in large part because of EPA's decision
to present these as the dominant figures on the label for decades, not
because consumers demanded these metrics 33 years ago. Had EPA been
presenting the combined number as the dominant figure on the label
since 1977, we might expect to see a great deal of familiarity with and
understanding of that particular value today. However, the distinction
between city and highway driving does not address the key variables
that could impact energy consumption for alternative technologies, such
as ambient temperature. Thus, the agencies believe that, for labeling
purposes, the city/highway distinction may be a less relevant metric
than in the past.
---------------------------------------------------------------------------

    \53\ Environmental Protection Agency Fuel Economy Label: Phase 1
Focus Groups, EPA420-R-10-903, August 2010, p. 10.
    \54\ Environmental Protection Agency Fuel Economy Label: Phase 1
Focus Groups, EPA420-R-10-903, August 2010, p. 10.
---------------------------------------------------------------------------

    Thus with Label 1, NHTSA and EPA propose that the MPG values be
significantly reduced in prominence (i.e., smaller font and ``below the
fold'' location on the label), with the letter grade rating assuming
the predominant role. Given space constraints and the

amount of information that is required to be provided on the label,
continuing to display MPG estimates with the same or similar prominence
would be likely unnecessary and possibly untenable. The city and
highway MPG values would be available for those who wish to use them,
but the rating assumes the key role of informing the public about the
relative energy use and carbon emissions of a vehicle. The agencies
believe that this de-emphasis on MPG values would have two primary
benefits: First, the rating's predominance should encourage consumers
to use it rather than the specific MPG values to compare across vehicle
technology types (particularly as MPG values become less meaningful for
vehicles that do not run, or only partially run, on fuels dispensed by
the gallon); and second, to address the non-linearity of MPG with
respect to energy use, emissions, and cost, discussed further in
Section II.A.2, which becomes more important as significantly higher
mileage vehicles are poised to enter the marketplace.
    The agencies are proposing a different approach for Label 2, in
which the combined MPG value is displayed prominently, with separate
city and highway values continuing to be shown on the label, but as
subordinate values. This approach focuses attention on MPG since it is
the metric that consumers are the most familiar with and have come to
utilize on the label. However, it downplays the separate city and
highway value in favor of a single, combined MPG, because the agencies
believe that continuing to highlight multiple pieces of fuel economy
information with the same level of prominence could make it more
difficult for consumers to compare vehicles, particularly across
technology types, where MPG becomes a less meaningful metric. A similar
approach is taken on Label 3.
    The agencies seek comment generally on these two approaches to
displaying fuel economy performance information on the labels.
Specifically, comment is sought on whether or not the labels that
emphasize combined city/highway MPG values over separate city and
highway MPG values are helpful to consumers, and why or why not. If
combined MPG is preferred, comment is sought on whether or not city and
highway values should continue to be displayed, and why or why not.
2. Fuel Consumption
    While miles per gallon is statutorily mandated for fuel economy
labels and has appeared on the label for several decades, the agencies
have some concern that it can be a potentially misleading comparative
tool for consumers, particularly when it is used as a proxy for fuel
costs. The problem can be easily illustrated by the following figure,
which shows the non-linear relationship between gallons used over a
given distance and miles per gallon. It can be seen that the difference
in gallons it takes to go 1,000 miles between 10 and 15 MPG (about 33
gallons) is substantially greater than the difference in gallons it
takes to go the same distance between 30 and 35 MPG (about 5 gallons).
In other words, even if consumers clearly understand that higher MPG is
better, those comparing vehicles with relatively low MPG values may not
know that MPG differences that appear to be small, even one or two MPG,
may actually have very different fuel consumption values, and that
selecting the slightly higher MPG vehicle could actually result in
significantly less fuel used, thus saving a considerable amount of
money. Fuel consumption numbers, unlike MPG, relate directly to the
amount of fuel used. Mathematically, they represent gallon per mile,
instead of miles per gallon. Not coincidentally, they also relate
directly to the amount of CO2 emitted, because the grams of
CO2 produced are directly proportional to gallons of fuel
combusted.
[GRAPHIC] [TIFF OMITTED] TP23SE10.003

    This so-called ``MPG illusion,'' which has been widely written
about by a number of economists to illustrate why MPG is a flawed
measure of how a vehicle's efficiency relates to fuel costs,\55\ was
raised as an issue during the development of the 2006 fuel economy
labeling rule. Some vehicle manufacturers suggested at the time that it
may be more meaningful to express fuel efficiency in terms of
consumption (e.g., gallons per mile or per 100 miles) rather than in
terms of economy (miles per gallon).\56\ Fuel consumption is the
primary metric used in Europe, and the Canadian fuel economy labels
report both MPG and a consumption metric (liters per 100 kilometers).
Because a few stakeholders expressed an interest in a fuel consumption
metric at the time, EPA requested comments on a gallons-per-mile metric
and how it could be best used and presented publicly, such as whether
it should be included in the Fuel Economy Guide.
---------------------------------------------------------------------------

    \55\ Allcott, H., Mullainathan, S., ``Energy: Behavior and
Energy Policy,'' Science, March 5, 2010, available at: http://
www.sciencemag.org/cgi/content/summary/327/5970/1204; Larrick, R.L.,
Soll, J.B., ``The MPG Illusion,'' Science, June 20, 2008, available
at http://www.sciencemag.org/cgi/content/full/320/5883/1593;
McArdle, M., ``Department of Mathematical Illusion,'' The Atlantic,
December 24, 2007, available at: http://www.theatlantic.com/
business/archive/2007/12/department-of-mathematical-illusion/2425/.
    \56\ US EPA Response to Comments: Fuel Economy Labeling of Motor
Vehicles, EPA-420-R-06-016, Dec 2006, pp. 60-61.
---------------------------------------------------------------------------

    The comments received in response to this request were mixed.
Public Citizen, on the one hand, responded that, while there may be
some merit to including a fuel consumption metric, consumers are
comfortable with MPG. Any change, they argued, should be carefully
deliberated and involve a massive public outreach campaign to educate
consumers.\57\ They also suggested that the estimated annual fuel cost
provides information derived from consumption values and is thus a
suitable proxy for consumption. Toyota, in contrast, commented that
fuel consumption is a more meaningful measure than MPG for expressing
fuel efficiency, while acknowledging EPA's statutory limitations. They
noted--as have many others--that the MPG metric is fundamentally
nonlinear in relation to issues of consumer interest, such as cost of
fuel or gallons used, and noted that anecdotal evidence shows that the
nonlinear aspects of MPG can lead to consumer confusion. Toyota
concluded that ``* * * this is a matter on which the EPA is obligated
to educate the public as fuel consumption, not fuel economy, is a
direct reflection of the environmental impact of vehicles in use.''
\58\
---------------------------------------------------------------------------

    \57\ Public Citizen Comments on Proposed Fuel Economy Labeling
Of Motor Vehicles, EPA-HQ-OAR-2005-0169-0123.1, Apr 3, 2006, p. 4.
    \58\ Toyota Motor Corporation Comments on Proposed Fuel Economy
Labeling Of Motor Vehicles, EPA-HQ-OAR-2005-0169-0118.1, Mar 31,
2006, p. 7.
---------------------------------------------------------------------------

    EPA responded to these comments in the 2006 final rule by
concluding that switching to a consumption metric without a long-term
consumer education program would cause confusion and that, absent
Congressional action, the fuel economy labels would still have to
continue to report MPG. EPA also agreed with commenters that the
estimated annual fuel cost was a consumption-based metric which conveys
essentially the same information (although the estimated annual fuel
cost on the label is not without its own limitations, as described
below).
    To allow further consideration of this issue, the consumer focus
groups conducted for this rulemaking were asked to specifically explore
the MPG illusion. Most participants were unconvinced that consumption
should be included on the label with primary prominence and, although
many were unopposed to having it as additional information, it was
unclear whether it would add value from their perspective.\59\ This was
the case regardless of the consumption metric tested, ranging from
gallons per 100 miles to annual gallons consumed.
---------------------------------------------------------------------------

    \59\ Environmental Protection Agency Fuel Economy Label: Phase 1
Focus Groups, EPA420-R-10-903, August 2010, p. 17.
---------------------------------------------------------------------------

    However, there is general interest from a number of parties in the
inclusion of a fuel consumption metric on the label. The agencies, as
well, believe that it is important to introduce the concept of
consumption to enable consumers to more accurately consider fuel use
and costs during the vehicle purchase process. Thus, the agencies
propose to introduce such a metric along with the MPG values, expecting
that, over time, and with some education, consumers will begin to
understand energy consumption and the direct connection it has with the
fuel costs and environmental impacts of the vehicle. EPA is therefore
proposing to include an estimate of gallons per 100 miles on the label
under its 49 U.S.C. 32908(b)(1)(F) authority to require other
information related to fuel economy on the label, and requests comment
on doing so, as well as on alternative options for reflecting fuel
consumption, such as annual gallons consumed.\60\ For consumers to use
a consumption number, however, EPA and NHTSA believe that a
comprehensive education campaign would have to accompany the roll-out
of new labels.
---------------------------------------------------------------------------

    \60\ This proposal is being made under EPA's authority to
require other information related to fuel economy on the label, as
described in 49 U.S.C. 32908(b)(1)(F).
---------------------------------------------------------------------------

    The agencies also seek comment on the specifics of displaying a
consumption metric on the two labels being co-proposed. Although the
label may provide city and highway MPG values as well as a combined
city/highway MPG, we are proposing to require only the combined city/
highway consumption value on the label. The agencies are concerned that
requiring a consumption value corresponding to every MPG value would
lead to an undesirable proliferation of numbers on the label.
3. Greenhouse Gas Performance
    In addition to the fuel economy performance information that has
been provided on the labels since 1977, Congress directed NHTSA,
through EISA, to require new vehicles to also be labeled with
information reflecting their greenhouse gas performance, which would be
determined on the basis of criteria provided by EPA to NHTSA. As with
fuel economy, the GHG performance information would be per vehicle
model type. EPA hereby proposes the criteria for determining greenhouse
gas performance, addressing the greenhouse gases to be incorporated,
the emissions sources to include, the underlying test procedures, and
the specific metric to be used. The agencies seek comment on whether
these criteria, as described below, are reasonable and appropriate for
determining the greenhouse gas performance of new vehicles. For
purposes of this NPRM, NHTSA is proposing that the greenhouse gas
performance element of the label be based on these criteria. These same
greenhouse gas performance values would also be used as the basis for
the proposed greenhouse gas rating systems.
    With regard to the greenhouse gases to be covered, the agencies
propose that the label include greenhouse gas performance information
solely on the basis of carbon dioxide (CO2) emissions, which
typically constitute approximately 95% of the tailpipe emissions of
greenhouse gases. Including emission levels of the greenhouse gases
methane (CH4) and nitrous oxide (N2O) along with
CO2 would not provide additional differentiation between
vehicles. This is because, for purposes of compliance with EPA's GHG
standards beginning in model year 2012, CH4 and
N2O values would be based on emission factors-that is, set
values applied to each vehicle,

rather than direct measurements. Because these values would be set at
the same level for all vehicles, the agencies do not believe that
including them would provide consumers with additional useful
information.
    Similarly, the agencies propose that the greenhouse gas information
be based on CO2 emissions for the vehicle model type, rather
than the carbon-related exhaust emissions (CREE) methodology used to
determine fuel consumption for CAFE programs and compliance with the
light duty greenhouse gas requirements. The use of CREE adds a level of
complexity that, while useful for compliance purposes, may not be
beneficial to public understanding of the relative differences in GHG
emissions between vehicles because the levels of other carbon-related
emissions are low relative to CO2 emissions. Although the
agencies propose that the greenhouse gas information on the label be
based only on CO2, we also seek comment on whether and, if
so, how, the other greenhouse gases and carbon-related emissions should
be included.
    Regarding the underlying test procedures to be used to determine
the vehicle-specific GHG performance information for the labels, the
agencies propose that the CO2 values presented on the label
be based on the five-cycle test procedures that are currently utilized
for fuel economy labeling purposes.\61\ These test procedures measure
rates of tailpipe CO2 and other emissions, which form the
basis of the fuel economy values currently used for vehicle labeling.
The five-cycle test procedures have been used for labeling since model
year 2008, and have significantly improved the correlation between
label values for MPG and those seen in actual use. Manufacturers could
thus calculate CO2 emission rates using the same approach
that they use for label fuel economy values, which the agencies know to
be well-correlated with actual performance in use. More specifically,
if a manufacturer uses the ``derived five cycle'' method for
determining MPG for fuel economy labeling, they would use the same
method for determining CO2 for labeling purposes. The city
and highway CO2 emissions test results would then be used in
the derived five-cycle equations, which the EPA has converted from a
MPG basis to a CO2 basis for this purpose. Similarly,
vehicle model types that are using the ``full five cycle'' method for
fuel economy labeling would use the CO2 results from those
tests for purposes of fuel economy labeling. The agencies are therefore
proposing that manufacturers use the same five-methodology currently
utilized for fuel economy labeling purposes for determining GHG values
for purposes of the new label.
---------------------------------------------------------------------------

    \61\ 40 CFR part 600.210-08.
---------------------------------------------------------------------------

    As far as emission sources to include, NHTSA and EPA propose that
the greenhouse gas emissions represented on the label include only
vehicle tailpipe emissions,\62\ and do not account for any GHG
emissions generated upstream of the vehicle. This approach is also
consistent with the vehicle GHG emissions compliance levels recently
adopted by EPA, which treat GHG emissions for electric operation as
zero up to a cumulative production cap per manufacturer.\63\
---------------------------------------------------------------------------

    \62\ The agencies seek comment on the potential inclusion of GHG
emissions reflecting from A/C leakage credits, as described later in
this section.
    \63\ EPA placed a cumulative production cap on the total
production of EVs, PHEVs, and FCVs for which an individual
manufacturer can claim the zero grams/mile compliance value during
model years 2012-2016. The cumulative production cap will be 200,000
vehicles, except that those manufacturers that sell at least 25,000
EVs, PHEVs, and FCVs in MY 2012 will have a cap of 300,000 vehicles
for MY 2012-2016. See 75 FR 25436 (May 7, 2010).
---------------------------------------------------------------------------

    When exploring this issue with focus groups, the agencies found
that most participants did not consider the issue of upstream emissions
either way. A few raised it when they noted that an electric vehicle
indicated zero emissions, and suggested that these vehicles did cause
some emissions at the power plant, which should be represented on the
label.\64\ On further discussion, they generally determined that it
would be challenging for the label to meaningfully represent the range
of emissions from power plants operated on different fuels, and
suggested that this information was obtainable from other sources.\65\
Given space constraints and the difficulty of explaining the potential
range of upstream emissions due to different fuel sources, participants
tended to agree that this issue could be adequately addressed by a
statement on the label indicating that the CO2 values on the
label represented vehicle tailpipe emissions only. The label designs
presented in this NPRM include the words ``Tailpipe Only'' next to the
CO2 value presented; the agencies seek comment on whether
this wording will be readily and uniformly understood to mean that
upstream GHG emissions are not being reflected on the label, or whether
other, more direct wording might be clearer and more helpful to
consumers.
---------------------------------------------------------------------------

    \64\ Environmental Protection Agency Fuel Economy Label: Phase 3
Focus Groups, EPA420-R-10-905, August 2010, p. 42.
    \65\ Environmental Protection Agency Fuel Economy Label: Phase 3
Focus Groups, EPA420-R-10-905, August 2010, p. 42.
---------------------------------------------------------------------------

    Aside from tailpipe CO2, the agencies are not proposing,
but seek comment on the inclusion of an additional factor in the GHG
performance used for labeling: air conditioning (A/C) credits generated
by a manufacturer under the light duty vehicle GHG requirements. Air
conditioning (A/C) systems contribute to GHG emissions in two ways.
Hydrofluorocarbon (HFC) refrigerants, which are powerful GHGs, can leak
from the A/C system (direct A/C emissions). Operation of the A/C system
also places an additional load on the engine, which results in
additional CO2 tailpipe emissions (indirect A/C related
emissions). The efficiency-related A/C impacts are accounted for in the
five-cycle tests utilized for fuel economy labeling and proposed as the
basis for GHG labeling purposes. However, EPA and NHTSA are considering
whether allowing manufacturers that generate credits towards their GHG
compliance obligation by reducing A/C leakage-related GHGs should be
allowed to factor these credits into the CO2 value displayed
on the label and used as the basis for the GHG rating. Allowing
manufacturers to factor A/C credits into the GHG performance metric on
the label would reward them for making A/C leakage improvements, but it
would also cause the GHG performance value and the fuel economy
performance value to diverge, and would impact the methodology for any
rating system that combines GHGs and fuel economy. Because A/C-related
reductions are not ``tailpipe,'' including leakage improvements in the
tailpipe emissions could be misleading and inaccurate. If the final
label includes other non-tailpipe emissions, the agencies may consider
incorporating A/C leakage improvements. EPA and NHTSA seek comment on a
number of issues: whether including A/C leakage adjustments would lead
to widening the gap between what is on the label and what consumers get
in the real world; whether and, if so, how, to allow the use of A/C
credits for the purposes of labeling, with specific focus on the
methodology and how the labels might display the inclusion of A/C
leakage credits if the agencies decided to allow their use.
    EPA and NHTSA are proposing to use grams per mile as the metric to
display greenhouse gas performance information on the label, which
would be consistent with the metric used for GHG emission standards and
compliance for light duty vehicles. The agencies believe that this
metric is also consistent with requirements in 49

U.S.C. 32908(g)(1)(A) that performance reflect emissions ``over the
useful life of the automobile.'' As with fuel economy, the agencies do
not at this time expect notable deterioration of greenhouse gas
emissions levels over a vehicle's useful life. However, the agencies
seek comment on alternative approaches to convey GHG performance
information, such as tons per year, using an approach parallel to that
discussed in section II for annual cost information.
4. Fuel Economy and Greenhouse Gas Rating Systems
    EISA requires that the label include a ``rating system that would
make it easy for consumers to compare the fuel economy and greenhouse
gas and other emissions of automobiles at the point of purchase,
including a designation of the automobiles with the lowest greenhouse
gas emissions over the useful life of the vehicles, and the highest
fuel economy. * * *'' \66\ The two co-proposed label designs present
two variations on ratings systems for fuel economy and greenhouse gas
emissions, based on two interpretations of the statutory language.
These two approaches--separate absolute ratings for fuel economy and
greenhouse gases, and a relative rating that combines the two factors--
are not mutually exclusive, and a label could contain one or both.
---------------------------------------------------------------------------

    \66\ 49 U.S.C. 32908(g)(1)(A)(ii).
---------------------------------------------------------------------------

    In developing rating systems, the agencies are cognizant of the
focus group testing conducted for this proposal, in which it appeared
that many participants did not rely on any rating system. Perhaps due
to their familiarity with the prominently displayed MPG numbers, many
participants relied initially and sometimes exclusively on MPG or MPGe
label values to compare vehicles to one another.\67\ Given this result,
the agencies are proposing two different approaches to the ratings.
---------------------------------------------------------------------------

    \67\ Environmental Protection Agency Fuel Economy Label: Phase 3
Focus Groups, EPA420-R-10-905, August 2010, p. 36.
---------------------------------------------------------------------------

    The first approach is displayed at the bottom of Label 1 and Label
2: Separate ratings scales for fuel economy and greenhouse gas
emissions, bounded by specific values for the ``best'' and the
``worst'' vehicles, and with specific fuel economy and GHG emissions
values for the vehicle model type in question identified in the
appropriate location on the scale. The scales on Label 2 are
essentially larger versions of those on Label 1, with the addition of a
within-class indicator on the fuel economy scale to meet the EPCA \68\
requirement for comparison across comparable vehicles.
---------------------------------------------------------------------------

    \68\ 49 U.S.C. 32908(b)(1)(C).
---------------------------------------------------------------------------

    This variation--absolute rating scales--directly utilizes the
actual fuel economy and CO2 performance values per vehicle
model type to define the rating, which the agencies believe has both
potential benefits and drawbacks. The agencies believe that, by rating
vehicles on an absolute scale, this approach clearly meets the text of
the EISA requirement for providing fuel economy and GHG performance
information and indicating highest fuel economy and lowest GHG
vehicles. The rating system allows the consumer looking at the label on
the dealer's lot to identify precisely the highest and lowest fuel
economy values available, the lowest and highest GHG emissions values
available, and where the vehicle bearing the label falls in relation to
these extremes. When this variation was presented in focus groups, some
participants liked the level of detail provided by absolute rating
scales and found it helpful in understanding how a vehicle compared to
the ``best'' and ``worst'' vehicles available, although others found it
to be more detail than they wanted or did not pay attention to this
information on the label.\69\
---------------------------------------------------------------------------

    \69\ Environmental Protection Agency Fuel Economy Label: Phase 3
Focus Groups, EPA420-R-10-905, August 2010, p. 41.
---------------------------------------------------------------------------

    However, even for those consumers who appreciate this level of
detail in comparing vehicles by fuel economy and GHG emissions, there
is the possibility that the ``best'' will change over the course of the
model year and that the MPG or gram/mile value at the end of the scale
may no longer be accurate. Highest and lowest values to be used on the
scale would be provided to manufacturers by EPA prior to the start of
the model year via annual guidance. Because these values will be based
on the previous model year plus any additional information regarding
the upcoming new sales fleet available to the EPA, they are expected to
be relatively accurate. However, because they are projected values, the
introduction during the model year of any new and unexpected vehicles
not previously identified to EPA could potentially cause inaccuracy in
the end points of the rating scales. In general, because of the
expected introduction of electric vehicles, which have no tailpipe
CO2 emissions and thus anchor one end of the scale at zero,
and because of the expectation that, for the foreseeable future, one or
more vehicles will anchor the opposite end at a relatively constant
level, the agencies believe that the end points will likely remain
relatively constant, but they may not remain exactly constant. The
agencies therefore seek comment on how significant this potential for
inaccuracy could be on consumers' ability to use the absolute rating
scales to compare fuel economy and GHG emissions across vehicles, and
on whether commenters believe the labels would have to be revised in
order to meet the statutory requirement every time a new ``best''
vehicle was introduced if they were not accommodated by the end points.
    The second approach to a rating system is also displayed on Label
1: A combined rating scale for fuel economy and GHG emissions, shown in
the form of a letter grade. Because vehicles that are low in
CO2 emissions have inherently good fuel economy (and vice
versa), and because CO2 emissions are the primary
determinant of fuel economy using EPA test procedures, vehicles would
generally tend to have the same ``score'' for fuel economy as for GHG
emissions. Thus, if the ratings are equivalent, as a practical matter,
it would be consistent with the statutory requirement to provide a
single, combined rating system.
    The proposed letter grade scale would range from A+ to D, including
plus and minus designations to provide more opportunities for
improvement. All vehicles would receive a ``passing'' grade--that is,
the ratings would not include an ``E'' or ``F'' grade--because all
vehicles must meet CAA requirements in order to be sold, and the
agencies do not wish to convey otherwise. Additionally, the ``A+''
vehicles--with associated text stating the range of letter grades--will
indicate which vehicles are the ``best,'' thus, meeting the requirement
that the label designate highest fuel economy and lowest greenhouse gas
vehicles.
    This variation of a fuel economy and greenhouse gas rating system
was suggested by the expert panel and was not presented in focus
groups, but many focus group participants favored the simplification of
information presented when possible, and the agencies believe that such
a well-known rating approach will be immediately recognizable by the
majority of consumers. The agencies are also hopeful that a rating
system as simple as a letter grade may encourage consumers to rely more
on the rating system itself in making purchasing decisions, rather than
on, for example, MPG numbers, which are subject to the ``MPG illusion''
issue discussed above.
    A letter grade allows vehicles purchasers to make a comparative
assessment among vehicles with different grades, consolidating
information so that consumers might

more easily assess the GHG emissions and fuel economy of different
vehicles and make fully informed decisions. The agencies also request
comment on whether any vehicle should receive a grade of A+ or whether
this might lead to mistaken consumer conclusion that the vehicle has no
energy or environmental impacts.
    As noted above, CO2 emissions are directly measured by
EPA and form the basis for calculating the fuel efficiency of the
vehicle; using CO2 as the basis for the rating is the most
direct methodological approach and will avoid any rounding
discrepancies that could occur from converting to MPG and then to fuel
consumption. It also avoids the need to adjust the MPG thresholds by
fuel type to account for differences in the energy content of fuel.
Utilizing CO2 as the controlling factor in the rating
thresholds is a practical consideration and is not meant to imply that
GHG emissions are more important than energy use; both are relevant
considerations and are viewed by the agencies as equally important
under the rating system.\70\
---------------------------------------------------------------------------

    \70\ The direct relationship between CO2 and fuel
consumption breaks down to some extent for vehicles with electric
operation. For these vehicles, tailpipe CO2 emissions are
zero; however, energy is consumed by the vehicle and an energy
efficiency value other than infinity can be assigned. Nevertheless,
given that electric drive trains are currently much more efficient
than those for conventional vehicles, the relationship between those
vehicles emitting zero CO2 and having the highest energy
efficiency holds true at the present time. This approach may need to
reassessed in the future if efficiencies of electric drive and
conventional vehicles begin to approach each other, or if it is
desired to differentiate between the efficiencies of electric-
powered vehicles, but should not be a necessary consideration in the
foreseeable future.
---------------------------------------------------------------------------

    The agencies propose to base this rating system approach on the
range of CO2 emissions for the projected fleet, placing the
middle of the rating scale at the combined 5-cycle CO2
emissions rate for the median vehicle,\71\ with equal-sized increments
of CO2 assigned to each grade or rating.\72\ The higher-GHG
end of the scale would therefore be twice the CO2 emissions
rate of the median value, although, effectively, any vehicle higher
than this level would also receive the lowest rating. Under such an
approach, the median value would become more stringent over time as a
result of GHG emissions requirements and, thus, the entire scale would
shift toward lower GHG levels. Unless a vehicle model reduced its rate
of CO2 emissions across the model years, its ratings would
gradually drop over time. This approach would be consistent with both
the evolution of fuel economy and emission requirements, and the public
expectation that products evolve over time. The CO2
thresholds associated with each rating would be determined on an annual
basis and provided through guidance in advance of the model year. EPA
would require that manufacturers use the ratings from the prior year if
they are in a position to need to label a vehicle before the annual
guidance has been issued. The agencies recognize that revising the
median baseline vehicle each year may lead to some consumer confusion,
but this dilemma is no different than what consumers currently
encounter when they view identical vehicles from different model years
and their associated annual fuel cost or the comparative fuel economy
slider bar for each vehicle displayed on today's label. The agencies
continue to believe that the underlying assumptions need to be up-to-
date to be most useful to consumers. Nevertheless, the agencies request
comment on what the agencies might do to avoid potential confusion.
---------------------------------------------------------------------------

    \71\ Median vehicle is determined by vehicle model type, with
model type as defined in 40 CFR 600.002-08.
    \72\ The agencies evaluated several potential methodologies for
creating this rating system besides equal increments of
CO2. We rejected an approach that would create the rating
system based on establishing equal size categories for the ratings
using miles per gallon--that is, taking the range of MPG of the
vehicle fleet and dividing that range into ten equal segments. Given
that the fleet will soon see vehicles that achieve MPG-equivalent
values of 75 to 100, the agencies were concerned that this
methodology would create a situation where a vehicle such as the
2010 Toyota Prius (which gets a combined MPG of 50 MPG) would
receive only an average rating. Using this method would result in
the vast majority of vehicles receiving a rating well below the
middle rating, which would not seem to be an appropriate result of a
rating system. However, the agencies seek comment on whether a
combined rating system based on MPG instead of on CO2
might be developed in a way that avoided these results.
---------------------------------------------------------------------------

    The following example is based on model year 2010 data and assumes
that one or more vehicles that emit zero CO2 tailpipe
emissions (i.e., electric or fuel cell vehicles) have entered the
market. Gasoline-equivalent MPG values are provided in the table for
clarity. However, the agencies propose that the CO2 values
be controlling for purposes of assigning the rating.

  Table II.A.4-1--Example Fuel Economy and Greenhouse Gas Rating System
------------------------------------------------------------------------
                                               Combined gasoline MPG or
  CO2 range  (grams per mile)       Rating               MPGe
------------------------------------------------------------------------
0-76...........................  A+           117 and higher.
77-152.........................  A            59-116.
153-229........................  A-           40-58.
230-305........................  B+           30-39
306-382........................  B            24-29.
383-458........................  B-           20-23.
459-535........................  C+           18-19.
536-611........................  C            16-17.
612-688........................  C-           14-15.
689-764........................  D+           13.
765-842 and higher.............  D            12 and lower.
------------------------------------------------------------------------

This example would result in the following distributions of ratings,
based on 2010 vehicle model types, plus several additional vehicles
indicated as ``Electric Vehicle'' and ``Plug-in Hybrid Electric
Vehicle.'' \73\
---------------------------------------------------------------------------

    \73\ The additional vehicles are examples of types expected to
enter the commercial market. The CO2 and MPGe values
shown are examples only and are not based on any formal testing or
certification data.

---------------------------------------------------------------------------

[GRAPHIC] [TIFF OMITTED] TP23SE10.004

                                                                    Ratings by Class
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          A+       A        A-       B+       B        B-       C+       C        C-       D+       D
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small car............................................        1        2        8       71      215      306       79       57       30        2  .......
Midsize car..........................................  .......  .......        6        5       79       92       43        6        8  .......        2
Large car............................................  .......  .......  .......  .......       11       31       41       10       13        6  .......
Minivan..............................................  .......  .......  .......  .......        2        9       18  .......        2  .......  .......
Pickup...............................................  .......  .......  .......  .......        2       30       56       52        9  .......  .......
Station wagon........................................  .......  .......  .......       12       75       65       12  .......  .......  .......  .......
SUV..................................................  .......  .......  .......        8       68      167      166       68       45        4  .......
Van..................................................  .......  .......  .......  .......  .......  .......        4        2       10  .......  .......
--------------------------------------------------------------------------------------------------------------------------------------------------------

Applying this rating system to model year 2010 data would assign the
ratings as follows for the sample vehicles listed. Of course, future
model year vehicles could receive different ratings from those shown in
this example.

----------------------------------------------------------------------------------------------------------------
                                       CO2 g/mi                      MPGe                   Sample vehicles
----------------------------------------------------------------------------------------------------------------
A+.........................  0-76.......................  117 and up................  Electric Vehicle.
A..........................  77-152.....................  59-116....................  Plug-In Hybrid Electric
                                                                                Vehicle.
A-.........................  153-229....................  40-58.....................  Ford Fusion Hybrid, Honda
                                                                                Civic Hybrid, Toyota
                                                                                Prius.
B+.........................  230-305....................  30-39.....................  Chevrolet Cobalt (Manual),
                                                                                Ford Escape Hybrid (2WD),
                                                                                Honda Fit, Nissan Altima
                                                                                Hybrid, Toyota Camry
                                                                                Hybrid, Toyota Corolla
                                                                                (1.8L Manual), Toyota
                                                                                Yaris, Volkswagen Golf.
B..........................  306-382....................  24-29.....................  Chevrolet Cobalt
                                                                                (Automatic), Chevrolet
                                                                                Malibu (2.4L), Ford
                                                                                Escape (2.5L Manual),
                                                                                Ford Escape Hybrid (4WD),
                                                                                Ford Focus, Ford Fusion
                                                                                (2.5L), Ford Ranger (2.3L
                                                                                Manual), Honda Accord
                                                                                (2.4L), Honda Civic,
                                                                                Honda CR-V (2WD), Hyundai
                                                                                Elantra, Hyundai Sonata
                                                                                (2.4L), Jeep Patriot
                                                                                (2.0L, 2.4L Manual),
                                                                                Mazda 3, Nissan Altima
                                                                                (2.5L), Nissan Sentra,
                                                                                Porsche Boxster
                                                                                (Automatic), Toyota Camry
                                                                                (2.5L), Toyota Corolla
                                                                                (1.8L Automatic, 2.4L),
                                                                                Toyota Highlander Hybrid,
                                                                                Toyota Matrix, Toyota
                                                                                RAV4 (2.5L).
B-.........................  383-458....................  20-23.....................  Cadillac CTS (3.0/3.6L,
                                                                                Automatic), Chevrolet
                                                                                Impala, Chevrolet Malibu
                                                                                (3.5L and 3.6L),
                                                                                Chevrolet Silverado 15
                                                                                Hybrid, Chevrolet Tahoe
                                                                                1500 Hybrid, Dodge
                                                                                Charger (2.7/3.5L with 4-
                                                                                speed Automatic), Dodge
                                                                                Grand Caravan (4.0L),
                                                                                Ford Escape (2.5L
                                                                                Automatic), Ford Fusion
                                                                                (3.5L), Ford Mustang
                                                                                (4.0L Manual), Ford
                                                                                Ranger (2.3L Automatic),
                                                                                GMC Canyon (2.9L), GMC
                                                                                Sierra 15 Hybrid, Honda
                                                                                Accord (3.5L), Honda CR-V
                                                                                (4WD), Hyundai Sonata
                                                                                (3.3L), Hyundai Santa Fe,