operating modes into a single ``merged'' value reflecting an ``average
driver.'' One group that is developing guidance for how individual
operating mode data could be combined for an ``average driver'' is the
Society of Automotive Engineers Hybrid Technical Standards
Committee,\128\ and the agencies will continue to monitor the work of
this and other relevant committees.
---------------------------------------------------------------------------

    \128\ SAE J2841.
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    The rationale for including a merged value is that (1) some
consumers may find information on the individual operating modes to be
``too much'' and may be more likely to pay attention to a single set of
performance information, (2) few, if any, consumers will exclusively
drive in a single operating mode, so some kind of combined information
could be helpful, (3) a single, merged value can facilitate comparisons
across different vehicle technologies and models and (4) customers of
this new technology will not know how much they will operate the
vehicle in each mode, so an average provides more complete information
to them.
    The arguments against including merged values are (1) the
variability between the performance values for different operating
modes can be very large, and so any assumptions about an ``average
driver'' will be accurate for some consumers, but very inaccurate for
many other consumers, and (2) including merged values, in addition to
individual operating mode values, will add to an already busy label.
    The agencies seek public comment on the question of whether labels
for advanced technology vehicles with multiple operating modes should
also include merged values that combine the various vehicle operating
modes, and if so, on the best methodology for doing so.
f. City/Highway Versus Combined Values
    EPA's conventional vehicle labels have long reported fuel economy
values for both city and highway driving. For most conventional
vehicles, highway fuel economy values are typically 40-50% higher than
city fuel economy values. The agencies believe that this is another
issue that is worth reexamining with respect to advanced technology
vehicle labels.
    Arguments for including separate city and highway information on
advanced technology vehicle labels include (1) focus group feedback and
other research has consistently shown that consumers find it useful to
have separate fuel economy values for both city and highway driving for
conventional vehicles,\129\ and (2) since driving habits can vary
widely, separate city and highway performance information can be
helpful to those consumers who want to ``customize'' label information
to their own driving habits.
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    \129\ Environmental Protection Agency Fuel Economy Label: Phase
1 Focus Groups, EPA420-R-10-903, August 2010 and Environmental
Protection Agency Fuel Economy Label: Phase 3 Focus Groups, EPA420-
R-10-905, August 2010, p. 12.
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    Arguments for not including separate city and highway information
on advanced technology vehicle labels include (1) some advanced
technologies, for example EVs, show less of a change in energy
consumption values between city and highway driving than do
conventional vehicles which was one of the primary reasons why EPA
originally displayed separate city and highway MPG values on
conventional fuel economy labels, and (2) not reporting separate city
and highway values can reduce some information by either a factor of
two (if a combined value is shown instead of separate city and highway
values) or three (if city, highway, and combined values were all
shown), thus reducing the ``number of numbers'' on the label and
possibly making the labels more readable and accessible for consumers.
Focus group participants, when viewing whole labels for both
conventional and advanced technology vehicles, did not express a
preference for displaying city/highway numbers for advanced technology
vehicles, although they did express a clear preference for city/highway
values for conventional vehicles.
    The agencies seek public comment on the following questions related
to separate city and highway information for advanced technology
vehicle labels. One, should EPA never report separate city and highway
values, always report separate city and highway values, or retain
discretion for doing so only when it is appropriate (i.e., when the
differences between city and highway are significant enough to be
meaningful)? Two, would it be acceptable for EPA to require the use of
separate city and highway fuel economy values for conventional
vehicles, but to not do so, in some or all cases, for advanced
technology vehicles?
g. Methodology for Merged Values for PHEVs
    One specific issue for PHEVs is the methodology for determining a
single merged value that combines the various

operating modes into a single overall value, given that PHEVs use both
gasoline and grid electricity. The agencies expect that consumers who
purchase a PHEV will do so with the intention of utilizing the
capability of both fuels (e.g., it seems reasonable to assume that most
consumers who purchase a more expensive PHEV would then charge the PHEV
as frequently as possible in order to achieve fuel savings by
maximizing their use of electricity and minimizing their use of
gasoline). It thus seems appropriate to include the operation on both
fuels in any merged values, using a weighted average of the appropriate
metric for each of the modes of operation. The agencies propose and
seek comment on using a methodology developed by SAE and DOE based on
utility factors (UFs)--which predict the fractions of total distance
driven in each mode of operation (electricity and gas)--to assign
weighting factors for gasoline and electricity use for PHEVs for the
purposes of determining merged values for fuel economy and/or
greenhouse gas ratings and for any other metrics for which a single,
merged value is appropriate. The proposed UF methodology is described
in detail in Section VI.B.
h. Advertising Restrictions
    The Federal lead on guidelines for the use of vehicle label
information in automaker marketing campaigns rests with the Federal
Trade Commission (FTC). The agencies believe that the unique issues, as
well as in the likely increased complexity and ``number of numbers,''
associated with advanced technology vehicle labels, warrant additional
consideration of whether there needs to be new guidelines for the use
of label information in private marketing campaigns. The agencies
intend to raise this issue with the FTC, and seek comments from the
public that could help inform our input to the FTC.

C. Labels for Other Vehicle/Fuel Technologies

    Labels for conventional gasoline and diesel vehicles and for
certain advanced technology vehicles are the primary focus of this
proposed rule. Conventional gasoline and diesel vehicles are expected
to make up a majority of the fleet well into the future, and improving
on the communication of conventional vehicle fuel economy and related
information is a continued priority of EPA and NHTSA. Electric vehicles
and plug-in hybrid electric vehicles are entering the fleet in the near
term, and there is the potential for a rapidly increasing market
penetration of these vehicles in the future, yet labeling these
vehicles in an understandable and equitable way presents significant
challenges. However, there are several other specific vehicle
technologies for which EPA currently has labels, and EPA is also
proposing new label templates for those as well.
1. Flexible Fuel Vehicles
    Flexible fuel vehicles (FFVs) (also called flex-fuel, dual-fueled
or bi-fueled vehicles) are vehicles that can operate either on gasoline
or diesel fuel, on an alternative fuel such as ethanol or methanol, or
on a mixture of conventional and alternative fuels. Produced since the
1980s, flexible fuel vehicles (FFVs) are the most numerous of the
currently available alternative fuel vehicles, with dozens of 2010 car
and truck models available from General Motors, Chrysler, Ford, Mazda,
Mercedes, Nissan, and Toyota. Essentially all FFVs today are E85
vehicles, which can run on a mixture of up to 85 percent ethanol and
gasoline. These vehicles are considered ``dual fueled vehicles'' under
EPCA, which states that the label for dual fuel vehicles must
``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) of this section is
published and distributed by the Secretary of Energy.'' \130\
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    \130\ 49 U.S.C. 32908(c)(3).
---------------------------------------------------------------------------

    The current labeling requirements for dual-fueled vehicles are
consistent with these requirements. While not required, manufacturers
may voluntarily include the fuel economy estimates (and estimated
annual fuel costs) for the alternative fuel on the label, in addition
to the gasoline information.\131\ Consumers can view the gasoline and
E85 fuel economy estimates of all FFVs in the Fuel Economy Guide and at
http://www.fueleconomy.gov. In fact, EPCA requires that the Fuel
Economy Guide contain information such as: (1) The fuel economy when
operating on the alternative fuel, (2) the driving range when operating
on the alternative fuel, and (3) information about how the performance
might change when operating on mixtures of the two fuels.
---------------------------------------------------------------------------

    \131\ 40 CFR 600.307-08(b)(14).
---------------------------------------------------------------------------

    EPA did not propose changes to these requirements in the 2006
labeling rule and did not seek comment on the topic. However, EPA
received late public comments from several environmental and consumer
groups urging EPA to require additional information on the use of E85
on FFV labels. Since EPA did not propose and request comments on this
topic in the 2006 rulemaking, the agency did not finalize any such
requirements.
    EPA and NHTSA request public comment on three options for FFV
labels.
    One option is to make no changes to the current requirements for
FFV labels and continue to use fueleconomy.gov and the Fuel Economy
Guide to provide information on E85 use to consumers.\132\ Consistent
with the current requirements, EPA and NHTSA would finalize regulations
that would allow manufacturers to display the E85 fuel economy values
on the label on a voluntary basis.\133\ The final regulations would
include a template for such a label.
---------------------------------------------------------------------------

    \132\ Consumers do get some information regarding E85 efficiency
on a label required by the FTC. Currently the FTC label for FFVs
displays the driving range on both fuels and some additional
information regarding the use of alternative fuels. See 16 CFR part
309.
    \133\ Label examples for FFVs are shown in Section III, but
these reflect only a transition of the currently used label content
(some of which is required by statute) to the proposed label
designs.
---------------------------------------------------------------------------

    A second option is to require the addition of E85 fuel economy
values to FFV labels using the units of miles per gallon. Since E85 has
a lower energy density (i.e., about 25% less energy per gallon) than
gasoline, this means that, other things being equal, an FFV will have a
lower fuel economy on E85 than it will on gasoline. EPA recognizes that
this does not mean that ethanol is a ``less efficient'' fuel than
gasoline; in fact, FFVs are typically slightly more efficient on E85
than on gasoline in terms of miles per unit of energy. Accordingly, one
approach under this option would be to add text such as the following
wording on the label that conveys this message: ``While the E85 MPG
values are lower than the gasoline MPG values, the use of E85 is
typically slightly more energy efficient than the use of gasoline.''
Under this option, it would also be possible to add E85 values for
CO2 emissions (an FFV typically emits slightly less
CO2 per mile on E85 than on gasoline) and fuel costs (an FFV
typically costs somewhat more to operate on E85 than gasoline, though
this can vary by region). If CO2 values are not shown, it
would also be possible to include a statement such as ``Using E85 uses
less oil and typically produces less CO2 emissions than
gasoline.''
    A third option is to utilize the concept of miles per gallon of
gasoline-

equivalent (MPGe), which is a way to quantitatively account for the
slightly higher miles per unit of energy that an FFV achieves on E85
relative to gasoline. Because a gallon of gasoline has about 33 percent
more energy than a gallon of E85, this means that an E85 MPG is
multiplied by about 1.33 to convert it to a MPGe value. For most
current FFVs, an E85 MPGe value will be slightly higher than the
gasoline MPG value. The E85 MPGe value could be in place of, or in
addition to, an E85 MPG value. As with the second option above,
CO2 and fuel costs values for E85 could also be included.
    The Federal Trade Commission (FTC) currently requires the use of a
label that displays the cruising range of FFVs and other alternative
fuel vehicles. If the agencies finalize one of the options to include
E85 information, and the FTC determines that that information is
duplicative with its own information, it opens up the possibility that
the FTC might review its requirement.
    One remaining issue with FFVs is the methodology for assigning an
overall combined value for greenhouse gas or fuel economy-based ratings
or for any other metrics for which a single ``merged'' value is shown,
given that two different fuels can be used. There is empirical evidence
that approximately 99% of all FFV owners currently use gasoline rather
than E85 fuel. Given this, the agencies propose, as a default, to base
any merged values for FFVs on the assumption that the vehicle is
operated on gasoline 100% of the time. However, if a manufacturer can
demonstrate that some of its FFVs are in fact using E85 fuel in use,
then the merged values can be based in part on E85 performance,
prorated based on the percentage of the fleet using E85 use in the
field. This approach is consistent with that used for vehicle GHG
emissions compliance under the joint EPA/DOT standards for 2016 and
later model year vehicles.\134\ The agencies seek comment on applying
the same approach here.
---------------------------------------------------------------------------

    \134\ 75 FR 25433, May 7, 2010.
---------------------------------------------------------------------------

2. Compressed Natural Gas Vehicles
    EPA regulations currently provide a label template for vehicles
operating on compressed natural gas (CNG), and there is one major
manufacturer currently selling a natural gas vehicle in selected
markets. Given that a CNG vehicle is a single-fuel vehicle, EPA
believes that the label designs developed for conventional or other
alternative fuel vehicles can be easily adapted to gaseous-fueled
vehicles, as has been done in the past. In fact, EPCA provided specific
instructions regarding how to determine the fuel economy for dedicated
alternative fuel vehicles such as gaseous-fueled vehicles. The statute
states that for dedicated automobiles the fuel economy ``is the fuel
economy for those automobiles when operated on alternative fuel,
measured under section 32905(a) or (c) of this title, multiplied by
0.15.'' \135\ Section 32905(c) applies to gaseous-fueled vehicles, and
it requires the following: ``For any model of gaseous fuel dedicated
automobile manufactured by a manufacturer after model year 1992, the
Administrator shall measure the fuel economy for that model based on
the fuel content of the gaseous fuel used to operate the automobile.
One hundred cubic feet of natural gas is deemed to contain .823 gallon
equivalent of natural gas. The Secretary of Transportation shall
determine the appropriate gallon equivalent of other gaseous fuels. A
gallon equivalent of gaseous fuel is deemed to have a fuel content of
.15 gallon of fuel.'' \136\
---------------------------------------------------------------------------

    \135\ 49 U.S.C. 32908(b)(3).
    \136\ 49 U.S.C. 32905(c).
---------------------------------------------------------------------------

    This methodology is currently specified in EPA regulations. Note
that 32905(c) applies a factor of 0.15, which is essentially a
``credit'' that increases the fuel economy of gaseous-fueled vehicles
by a factor of about 6.7 for the purpose of CAFE calculations. But the
statute recognizes that incorporation of this credit factor in the
label values is not appropriate, hence the provision in 32908(b)(3) to
multiply the 32905(c) result by 0.15, thus removing the credit value
and resulting in an appropriate real-world label value.
    The current EPA regulations interpret the statute as requiring that
the label for CNG vehicles display a gasoline-equivalent value, and a
label template for CNG is provided in the current regulations.\137\ As
can be seen, the current label for CNG vehicles is fundamentally the
same as for gasoline vehicles, except that the fuel economy values are
described as ``gasoline equivalent'' values, and the estimated annual
fuel cost is based on a combined city/highway gasoline equivalent value
and the price per gallon equivalent of CNG. The current label also
contains text that reads ``This vehicle operates on natural gas fuel
only. Fuel economy is expressed in gasoline equivalent values.''
---------------------------------------------------------------------------

    \137\ Appendix IV to 40 CFR Part 600, Sample Fuel Economy Labels
for 2008 and Later Model Year Vehicles.
---------------------------------------------------------------------------

    We are therefore proposing that labels for CNG vehicles be
essentially the same in terms of content and appearance as those
proposed for conventional vehicles, with only a few exceptions. First,
where the proposed labels indicate the fuel type, labels for CNG
vehicles would state ``Compressed Natural Gas Vehicle.'' Second, the
fuel economy value(s) would be stated as gasoline-equivalent values. As
is the case for the proposed labels for electric vehicles, the CNG
labels would indicate the conversion factor that is used to determine
the gasoline equivalent values (0.823 gallons-equivalent per 100 cubic
feet of CNG, as required by statute).\138\ Third, the estimated annual
fuel cost would be calculated using the combined city/highway gasoline
equivalent value and the cost per gallon equivalent of CNG. The use of
gasoline-equivalent gallons is appropriate because this is how CNG is
dispensed, priced, and sold at current CNG fueling stations. Finally,
because the cruising range of CNG vehicles is typically limited
relative to conventional vehicles, we are proposing the addition of
cruising range to the CNG vehicle label (in this way the label would
mimic the electric vehicle label). As is the case with electric
vehicles, we believe that range is a key piece of information for the
consumer who is considering a CNG vehicle. Other information on the
label, such as the greenhouse gas and other pollutant emissions and
ratings, would be determined from emission and fuel economy test
results and the proposed calculation methodologies as is the case for
all vehicles.
---------------------------------------------------------------------------

    \138\ 49 U.S.C. 32905(c).
---------------------------------------------------------------------------

    Section III presents the proposed and alternative label designs,
including a proposed design for CNG vehicles. We request comment on the
proposed approach for CNG vehicles, and whether there is additional
information specific to CNG or alternative fuels that should be on the
label.
3. Dual Fuel Natural Gas & Gasoline Vehicles
    Although there is currently a template for dual fuel CNG/gasoline
vehicles in the existing regulations, there are no manufacturers that
are currently manufacturing new vehicles that run on CNG and on
gasoline.\139\ Thus we request comment on whether there is a need to
develop a template for these vehicles based on the new labels. The
agencies envision that such a label would be based largely on the
proposed approach for dual fuel gasoline/ethanol vehicles discussed
above, in that the fuel economy and related information

for both fuels would be displayed on the label.
---------------------------------------------------------------------------

    \139\ Some aftermarket fuel conversion companies offer such
vehicles, but EPA regulations do not currently require fuel economy
labels for aftermarket fuel conversions.
---------------------------------------------------------------------------

    Although this proposal addresses most current technologies, it does
not need to address every possible fuel and technology combination
either in existence or that may emerge in the future. EPA has the
authority to prescribe test procedures and label content for vehicles
that are not specifically addressed by the regulations, and expects to
do so on an as-needed basis to address new technologies and fuels.\140\
In fact, EPA expects to exercise this authority with respect to labels
for electric vehicles and plug-in hybrid electric vehicles that arrive
on the market before the 2012 model year.
---------------------------------------------------------------------------

    \140\ 40 CFR 600.111-08(f) (test procedures) and 40 CFR 600.307-
08(k) (label format requirements).
---------------------------------------------------------------------------

4. Diesel Fueled Vehicles
    EPA proposes to continue to calculate the fuel economy of diesel
vehicles in miles traveled on a gallon of diesel fuel. Diesel fuel has
a long history of being sold on a volumetric basis, and the energy
content difference between a gallon of gasoline and a gallon of diesel
fuel is relatively small.

III. Proposed Revisions to Fuel Economy Label Appearance

    This section presents and requests comment on three label designs.
The agencies are co-proposing Label 1 and Label 2 design options,
meaning that the agencies currently expect to finalize one of the two
options. A third label design is being presented as an alternative on
which the agencies are requesting comment. All of these designs take
into account and meet the variety of statutory requirements in EPCA and
EISA as discussed in Section I. It is important to note that although
all of the label designs shown in this section make use of color to
varying degrees, this Federal Register notice is capable of only
displaying gray-scale versions. Full color versions can be viewed and/
or downloaded from the docket (search for docket number EPA-HQ-OAR-
2009-0865\141\ or docket number NHTSA-2010-0087 at http://
www.regulations.gov) or from the agencies' Web sites where all
information related to this action will be posted (http://www.epa.gov/
fueleconomy/regulations.htm and http://www.nhtsa.gov/fuel-economy). To
the extent possible this section will describe the use of color on the
labels, but interested parties should view the color versions to
understand the full effect of the label designs.
---------------------------------------------------------------------------

    \141\ See Memorandum from Roberts W. French, Jr. to EPA Docket
 EPA-HQ-OAR-2009-0865, ``Color versions of labels proposed
by EPA and DOT in Notice of Proposed Rulemaking ``Revisions and
Additions to Motor Vehicle Fuel Economy Label,'' August 26, 2010.
---------------------------------------------------------------------------

    Each design family consists of a set of labels applicable to an
array of vehicle technology/fuel types. Specifically, we show label
examples that apply to conventional vehicles (that is, vehicles
operating on a single fuel with internal combustion engines or hybrid
electric drive), flexible-fuel vehicles (for example gasoline-ethanol),
compressed natural gas vehicles, electric vehicles, and plug-in hybrid
electric vehicles. Each label family could be readily adapted to
accommodate additional vehicle technologies or fuels, such as vehicles
powered by fuel cells or other upcoming technologies. The agencies
intend to finalize a label family with a consistent look and feel
across vehicle types, in the belief that such consistency will most
effectively allow for recognition of the label as well as comprehension
of its content.
    The agencies found through the focus groups and expert panel that
many consumers will view the fuel economy label quickly, some using it
to confirm the vehicle information they have previously researched on a
manufacturers' website or a third party website such as Consumer
Reports or Edmunds.com. Other consumers, in contrast, will view the
fuel economy information for the first time when they visit a dealer
lot or showroom. While a new vehicle purchase represents a significant
financial outlay, the agencies learned through their research that
consumers like it simple, and do not necessarily act on details.
Therefore, while the agencies want and need to add certain pieces of
information to meet statutory requirements and to help consumers make
informed decisions about the fuel consumption and environmental impacts
of their vehicle choices we must balance these objectives with the need
to keep the new labels consumer friendly. To accomplish this, the
agencies were guided by a set of core principles in designing these
labels. The labels should:
    [dec221] Create an immediate first impression for consumers.
    [dec221] Be easy to read and understand quickly.
    [dec221] Clearly identify vehicle technology (conventional, EV,
EREV, PHEV).
    [dec221] Utilize color.
    [dec221] Chunk information to allow people to deal with ``more
information.''
    [dec221] Be consistent in content and design across technologies.
    [dec221] Allow for comparison across technologies.
    [dec221] Make it easy to identify the most fuel efficient and
environmentally friendly vehicles.
    The agencies are requesting comment on both the design and content
of each label. Design issues are self-evident on the labels as
presented, and we seek comment on the design aspects of each label
family, including format, color, font, and graphical elements. Content
issues have been extensively discussed throughout the preamble; for
illustrative purposes, presentation of content varies somewhat from one
label family to another and we seek comment on the various approaches.
Specifically, we seek comment on the layout, prominence, and grouping
of label elements in terms of clarity, apparent relative importance,
responsiveness to consumer information needs, and effectiveness at
meeting public policy goals. These sample labels do not present every
possible configuration of each label; for example, gas guzzler
information is not depicted, as it is utilized on only a small subset
of labels. The final rule will provide specific templates for these
unique cases. Detailed specifications for presenting all required label
information will be included in the regulations.
    Although we will finalize labels with a uniform look and feel,
commenters should not view the content of the labels below as being
necessarily tied to one label design. For example, just because Labels
1 and 3 for PHEV are the only labels that display the all-electric
range for a PHEV does not mean that the information could not be
incorporated into Label 2 or into other label designs. We are
interested in comments that relate both to content that should be on
the label, how it should be communicated, and what overall label
presentation is most effective and consumer friendly.
    Finally, please note that although the agencies have made every
effort to make these labels as realistic as possible and to ensure that
the values on each label are internally consistent, the labels
presented here should be considered examples that are not intended to
represent real automobiles.

A. Proposed Label Designs

    The agencies are proposing two label designs, presenting both
designs as equal ``co-proposals'' but expecting to finalize only one
design based on public comments and other information gathered after
the proposal. Although the two designs shown below have fundamentally
different visual appearances and will no doubt elicit very different
reactions from some viewers, they essentially present exactly

the same basic information. For conventional vehicles, for example,
each design displays the following:
     City MPG.
     Highway MPG.
     Combined gallons/100 miles.
     CO2 grams per mile (combined city/highway).
     Estimated annual fuel cost.
     Range of fuel economy within the class.
     The fuel the vehicle uses.
     Three ``slider bars'' showing the performance of the
labeled vehicle relative to other vehicles for MPG, CO2, and
other air pollutants.
     Annual fuel cost assumptions.
     A symbol that can be read by a ```Smartphone''' for
additional consumer interactions (i.e., a ``QR'' Code).
     A Fuel Economy Guide statement.
     EPA, DOE, and DOT logos.
1. Label 1
    Label 1 is fundamentally different from Label 2 and 3 designs
presented in this section in three different ways:
     First, the orientation is a portrait orientation, rather
than the landscape style of the current label.
     Second, a rating reflecting the energy efficiency and
environmental impacts of the vehicle is given overall prominence.
Instead of providing a series of numbers on the label with varying or
equal prominence, which may make it difficult for consumers to evaluate
at a glance, this label presents the energy and environment rating as a
letter grade (a system familiar to all consumers) with major prominence
at the top of the label. The letter grade is simply another familiar
scale on which to present a linear rating, comparable to the star
system or a 1-10 rating. This grade would be based on CO2
emissions and fuel economy consumption as described in Section II. To
further help consumers identify the grade of a vehicle on the dealer
sales lot, the agencies are proposing that different colors be used to
differentiate between grade ``families.'' In other words, the dominant
color on all the ``A'' grade labels would be one color, the ``B'' grade
labels would use a different color, and so on. For example, the circle
which surrounds the letter grade would be a different color depending
on the grade. The color versions of the labels demonstrate this, using
green for A grades, yellow for B grades, orange for C grades, and a
dark orange for D grades.
     Third, this label provides new fuel cost savings
information not seen on any other label designs. Secondary only in
prominence to the letter grade, and immediately below the letter grade,
Label 1 would display the 5-year fuel cost of the vehicle in comparison
to the average vehicle. For vehicles with fuel economy ratings above
the median vehicle, the label would display how much the consumer would
save, and for vehicles with ratings below average the label would
display how much more the consumer would be spending.
    All the remaining information is displayed in the bottom portion of
the label and would be available to consumers who want to know the more
detailed information or who take a more analytical approach to
evaluating the vehicle. The agencies believe that this approach uses a
rating system that is easily understood by consumers and that would
dramatically simplify the process of evaluating the overall energy
efficiency and environmental impacts of the vehicles they are
considering. The de-emphasis of MPG on this label--indeed, one purpose
of directing consumers to the overall rating--is intended to enable
consumers to make the best fuel consumption and environmental choices,
choices made easier by the addition of the comparative cost
information. Additionally, a consumer that uses the letter grade and
cost information on this label may be able to avoid the effect of the
``MPG illusion'' described in Section II.
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    Option 2 for the PHEV version is offered as an alternative
representation of plug-in hybrid electric vehicles. This option was
developed to be consistent with other dual-fuel vehicle labeling
approaches. It also provides an example of how more information about
the different modes of operation for PHEVs could be displayed on Label
1. The agencies seek comment on whether this alternate approach to PHEV
labeling for Label 1 provides better information for consumers or
whether the first option is more useful.
2. Label 2
    Label 2, shown below takes a more traditional approach, similar to
the

current fuel economy label and highlights the key metrics of MPG and
annual fuel cost. The agencies are seeking comment about whether, if
this label were finalized, the prominence of gallons per hundred miles
should be gradually increased on the label through one or more
rulemakings to facilitate consumer familiarity with and usage of a
consumption metric. As explained in Section II, these labels show the
combined city/highway MPG with the highest prominence. The additional
ratings are essentially identical to those of Label 1, except with the
additional space for the MPG rating ``slider bar.'' Because of this
extra space for the slider bars, Label 2 can also display the range of
fuel economy of the applicable vehicle class (Label 1 provides this
information in text form) in the context of the range of fuel economy
for the whole fleet. Label 2 uses the slider bar approach like Label 1
for all of the specific ratings, and, like Label 1, has separate
ratings for MPG, greenhouse gases, and other air pollutants. The
electric vehicle label in this series does have an additional piece of
information relative to Label 1--the battery charging time. And unlike
Label 1 and Label 3, the PHEV label in this series provides separate
annual cost estimates for both the electric and gas modes of operation,
which may be more useful to consumers who want to understand the costs
specifically associated with operating the vehicle solely on mode
either when operating on electricity or in gas-only operating mode.
BILLING CODE 6560-50-P
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B. Alternative Label Design (Label 3)

    The agencies also seek comment on a third label design that
includes the same information as the other labels, but displays
alternative ways of communicating the information. For example, this
label (Label 3) combines the greenhouse gas and fuel economy ratings
into one slider bar using a 1-10 rating scale (rather than the absolute
values used in the other label designs), and instead of a relative
``slider bar'' scale for the other air pollutant rating, Label 3 uses a
star rating system. Other than the difference in the rating systems,
the Label 3 electric vehicle label provides essentially the same
information as Label 2. For PHEVs, Label 3 provides only one annual
fuel cost number (like Label 1) that merges the electric and gasoline
modes. This label also displays for PHEVs an all-electric range, if the
vehicle is capable of such operation.

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[GRAPHIC] [TIFF OMITTED] TP23SE10.023

BILLING CODE 6560-50-C

IV. Agency Research on Fuel Economy Labeling

    As discussed above, the fuel economy label must contain certain
pieces of information by statute, and may additionally contain other
pieces of information considered helpful to consumers. Given that all
of the label information must be presented so as to maximize usefulness
and minimize confusion for the consumer, EPA and NHTSA embarked upon a
comprehensive research program beginning in the fall of 2009.
Developing an effective label--one that conveys the required and
desired information to consumers so that they can understand and use it
to make decisions--involves some inherent subjectivity, since what is
understandable and useful for one consumer may be confusing or
unhelpful to another. To better ground our proposed label designs in
actual human responses, the agencies set out to better understand the
following general issues: whether, how, and to what extent consumers
use the current fuel economy label in the vehicle purchase process; the
barriers to consumer understanding of the fuel efficiency of vehicles
relative to one another (including both conventional vehicles and
advanced technology vehicles); and how a newly redesigned label could
most effectively convey information to consumers on fuel economy, fuel
consumption, fuel cost, greenhouse gas, and other emissions.
    When EPA last redesigned the fuel economy label in 2006, consumer
research was valuable in helping to inform the development of that
label.\142\ 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 more
comprehensive consumer research program than that undertaken in 2006
and have used this research to help develop the labels proposed in this
NPRM.
---------------------------------------------------------------------------

    \142\ The current label was redesigned and implemented for model
year (MY) 2008 vehicles. See 71 FR 77871-77969 (December 27 2006).
---------------------------------------------------------------------------

A. Methods of Research

    To gather information about the topics described below, the
agencies designed a research plan including a review of literature on
the vehicle buying process, three sets of focus groups in four
different cities, a day-long facilitated consultation with experts in
the field of shifting consumer behavior, and an internet survey of
responses to proposed label designs (which will occur during the
comment period following this NPRM). A more thorough discussion of each
research method is provided below.
1. Literature Review
    EPA and NHTSA conducted a review of the existing literature to
understand the vehicle buying process. Specifically, the literature
review addressed the sources of information that consumers use to
research vehicles, their decision-making process, and the factors that
influence which vehicles consumers choose to buy. These include
vehicle-specific factors such as price, fuel economy, and safety, as
well as the role that demographics and psychographics play in
purchasing decisions. Literature examining consumer attitudes toward
buying more fuel efficient and environmentally friendly (i.e.,
``green'') vehicles was also reviewed. Understanding when and how
consumers consider fuel economy and the environmental impact in their
vehicle purchase decisions helped the agencies determine the most
effective ways to provide useful information to consumers on the
vehicle label.
    Additionally, the literature review report included an overview of
existing educational campaigns aimed at helping consumers use
information on the fuel efficiency and the environmental effects of
their transportation choices. Review of these campaigns may help inform
the agencies' development of educational tools and messages beyond the
label to provide consumers with useful information on fuel efficient
and environmentally friendly vehicles.
    A broad range of sources were reviewed for this report, including
journals in marketing, economics, and transportation research; business
magazines; government documents; conference proceedings; and a variety
of websites. Some of the key findings from the literature review are
described in Section IV.B. A more detailed report is available in the
docket.\143\
---------------------------------------------------------------------------

    \143\ Environmental Protection Agency Fuel Economy Label:
Literature Review, EPA420-R-10-906, August 2010.
---------------------------------------------------------------------------

2. Focus Groups
    The agencies felt it was critical to consider understandability and
consumer reaction to a variety of label concepts given that the purpose
of the fuel economy label is to inform consumers of the vehicle's fuel
economy and, with the amendments enacted by EISA, greenhouse gases and
other emissions. EPA and NHTSA additionally saw a need to conduct
research beyond that of the previous rulemaking due to the advancements
in vehicle technology underway, the increased market share of vehicles
that use fuels other than gasoline, and the introduction of
environmental information to the label. The agencies determined that
they would gather in-depth, qualitative feedback about fuel economy
labeling, potential new label information, and ways of displaying the
information through focus groups. The focus group format allowed for
in-depth probing around a variety of topics, including comprehension of
potential elements on the fuel economy label and how consumers may use
that information in making purchase decisions. The focus groups were
not intended to provide quantitative results, but were instead designed
to help EPA and NHTSA discern the subtleties of the large number of
decisions that are necessary when creating a label that should convey
numerous and sometimes complicated information.
    The focus group process included a recruitment screener, on-line
pre-focus group survey, and at least two gender-differentiated focus
groups in four different cities for each of the three separate phases.
The focus group methodology and results, including the recruitment
screener and pre-focus group on-line surveys, are discussed in greater
detail in the focus group Technical Memoranda available in the public
docket for this rulemaking.\144\
---------------------------------------------------------------------------

    \144\ EPA-HQ-OAR-2009-0865.
---------------------------------------------------------------------------

    The agencies concluded that conducting three phases of focus
groups, each with a different concentration, was necessary to gather
adequate information to explore the complex and numerous issues raised
by this rulemaking. Phase 1 gathered qualitative information on
consumer understanding and use of the current fuel economy label,
consumer reaction to potential new information and metrics on the label
for conventional vehicles, and also initial identification of effective
displays for this information. Phase 2 asked consumers to identify what
information they were interested in seeing on the label for advanced
technology vehicles and explored the understandability and sufficiency
of various information and metrics for PHEVs and EVs. Phase 3 explored
the understandability and usefulness of new information integrated into
whole label designs for both conventional and advanced technology
vehicles. Thus, overall, focus groups were used to obtain a qualitative
understanding of consumers' comprehension and reactions to fuel economy
label information.

    The agencies assumed that individuals who had recently purchased
vehicles would have the best insight into how the current fuel economy
label is used and would therefore also be best suited to provide input
about any changes that might be made to the label. To that end,
participants were selected based on having purchased a vehicle within
the past year, but not during the ``cash for clunkers'' purchase
window.\145\ A ``participant screener'' was used to ensure a reasonable
cross-section of purchasers was represented in each group. Some of the
demographic variations purposefully considered included the type of new
vehicle purchased, price range of the new vehicle, average daily
driving distance, and whether the individual had seriously considered
or actually purchased an advanced technology vehicle such as a gasoline
hybrid.
---------------------------------------------------------------------------

    \145\ ``Cash for Clunkers'' (Consumer Assistance to Recycle and
Save Act of 2009, Pub. L. 111-32) was a NHTSA program that provided
a tax incentive to trade-in low fuel efficient vehicles for new,
higher fuel efficient vehicles. The purchase period in which this
program operated was excluded to avoid any bias of participants,
since the program was explicitly focused on fuel economy.
---------------------------------------------------------------------------

    Each focus group participant was also asked to complete a short on-
line survey before attending the session. This survey served three
purposes: (1) To collect demographic data about the participants and
information about their specific vehicle purchase process; (2) to
provide participants with some background information about advanced
technology vehicles so that the participants would have some exposure
to new technologies prior to the focus group meeting; and (3) to gather
information about how the participants had used the current fuel
economy label in their purchase decisions, if at all. This survey data
was not intended to be examined as a nationally representative sample
and was only used as supplementary information when describing the
focus group results.
    The agencies anticipate that there will be additional focus groups
prior to rule finalization in each of the four cities where focus
groups were held pre-proposal. These focus groups will examine revised
labels based on feedback the agencies receive during the comment period
and will provide additional input on whole label designs. The agencies
will place information obtained from these focus groups in the docket
as it becomes available and encourages all interested parties to check
the docket for updated information.
3. Internet Survey
    While the focus groups were used to develop new label designs, the
internet survey is meant to examine how understandable the new label
designs are, and whether the proposed new label and alternative labels
will improve consumers' knowledge about more efficient vehicles. The
planned survey is scheduled to begin concurrent with the signing of
this proposal and will test these questions for both conventional and
advanced technology vehicles. A notice of the survey, published in the
Federal Register on May 12, 2010, requested comment on the survey
methodology.\146\ No substantive comments were received.
---------------------------------------------------------------------------

    \146\ U.S. EPA, ``Agency Information Collection Activities;
Proposed Collection; Comment Request; Internet Survey Research for
Improving Fuel Economy Label Design and Content; EPA ICR No.
2390.01, OMB Control No. 2060-NEW,'' 75 FR 26751 (May 12, 2010).
---------------------------------------------------------------------------

    This survey will use two samples: Self-selected U.S. new vehicle
purchasers and people who expressed an intention to purchase a new
vehicle by requesting a price quote from a dealer.\147\ Each of these
samples is divided into three separate groups. One version of the
survey was developed for each group, identical in every way except that
each of the groups will see only one of the label designs.
---------------------------------------------------------------------------

    \147\ Sources of respondents were databases owned by Autobytel,
http://www.autobytel.com (for those intending to buy new vehicles),
and Focus USA (for those who purchased a vehicle in the last year),
http://www.focus-usa-1.com.
---------------------------------------------------------------------------

    The survey tests respondents' understanding of the labels by
showing each respondent a series of label pairs. In each pair, all
vehicle characteristics are held constant except the information on the
vehicle label. For instance, the fuel economy of the vehicles may
differ, or one may have a conventional vehicle and one an electric
vehicle. Respondents are then asked to identify which vehicle is better
to use for trips of specified distances.\148\ The key metric of
interest is whether the label designs produce statistically
significantly different results. If one label produces more correct
responses than other labels, then it can be considered more
understandable; if the labels do not produce statistically different
results, then the labels can be considered equivalently understandable.
---------------------------------------------------------------------------

    \148\ Respondents were asked which was better, rather than which
was more fuel-efficient or less costly, so as to leave the
respondents with the choice of what information on the label to use
for the comparison. A later question asked which information they
used in their response. While this somewhat ambiguous approach may
reduce the absolute number of correct answers to the questions, the
goal is testing the relative effects of the labels, not the absolute
effects.
---------------------------------------------------------------------------

    To test the potential influence of the labels on vehicle purchases,
respondents see pairs of labels for vehicles with all vehicle
attributes constant except those varied on the label, such as the
technologies of the vehicles, their efficiencies, and their energy
costs. Instead of using the label to identify the better vehicle for a
scenario, the respondents are asked which of these vehicles they would
prefer to buy, based on their individual driving patterns. Comparisons
involve both conventional and advanced technology vehicles. Because the
survey asks respondents about their typical daily driving distances, it
is possible to see whether respondents chose the vehicle better suited
for their habits. The key variable is whether the responses differ for
different label designs.
    The Internet survey data collection is planned to occur in early to
mid-August 2010. The results of the survey will be made public as soon
as they are available. The results will be made available in the public
docket for this rulemaking at regulations.gov. If the results are not
placed in the docket 30 days before the end of the comment period, the
agencies will accept comments on these results up to 30 days from when
they were placed in the docket.
4. Expert Panel
    In order to gather additional feedback on the label designs
developed from the focus groups and to identify 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, EPA and NHTSA convened an expert panel.
``Experts'' were selected based on their past experience in changing
social norms either by successfully launching new products or leading
national education campaigns that have had a broad and significant
impact. The method for selecting the panel began by first generating a
list of products and social changes that met the criteria of impacting
a significant percentage of the population quickly, while also
demonstrating staying power. Individuals who had roles critical to the
success of these efforts were then identified and recruited. Nine
``experts'' participated on the panel, with experiences that included
launching very successful public health campaigns, Internet sites, new
technologies, and cable networks. The

meeting was held from 9 a.m. to 3 p.m. in Washington, DC on June 9,
2010.
    The topics covered include: Background information, review and
feedback on the EPA/NHTSA research process, messaging techniques,
outreach strategies, and feedback on possible label designs. The Expert
Panel is discussed in greater detail in the Expert Panel Report in the
public docket for this rulemaking.\149\
---------------------------------------------------------------------------

    \149\ Environmental Protection Agency Fuel Economy Label: Expert
Panel Report, EPA420-R-10-908, August 2010.
---------------------------------------------------------------------------

B. Key Research Questions and Findings

    The agencies identified the following key research questions, given
the overarching issues provided above:
     How should labels portray information about fuel
consumption and fuel economy, fuel cost, greenhouse gas, and other
emissions for consumers in a way that is most understandable and useful
to them?
     How should labels for advanced technology vehicles portray
information about fuel economy, fuel cost, greenhouse gas, and other
emissions for consumers in a way that is most understandable and useful
to them?
     How should the new labels be designed to meet the
statutory requirements while best raising consumers' understanding of
fuel efficiency, fuel cost and environmental impact?
     How can consumers compare vehicles when they are shopping?
     What purchase process do consumers currently use to make
new vehicle purchasing decisions? Given this process, when are the most
effective opportunities to communicate fuel economy and environmental
information?
1. Effective Metrics and Rating Systems for Existing and New Label
Information
    How should labels portray information about fuel consumption and
fuel economy, fuel cost, greenhouse gas, and other emissions for
consumers in a way that is most understandable and useful to them?
    As described in Section I, EPCA and EISA require the fuel economy
label to provide fuel economy, cost, and environmental information, as
well as provide a means to compare vehicles based on fuel economy,
greenhouse gases, and other emissions. The agency's research program
explored how this information might be displayed on the label in a
useful and accessible format for consumers.
a. Fuel Consumption and Fuel Economy
    EPCA requires the label to display the ``fuel economy of the
automobile.'' However, fuel economy, commonly thought of as ``MPG''
(the number of miles that can be traveled consuming one gallon of fuel)
is often misunderstood by consumers. As discussed more extensively in
Section II, because MPG is not linear, when people compare vehicles
with different MPG values they are apt to incorrectly estimate the fuel
savings of one vehicle over another. For example, switching from a 15
MPG vehicle to a 20 MPG vehicle will save more fuel than switching from
a 30 MPG vehicle to a 35 MPG vehicle. Thus, comparing vehicles based on
MPG is not as helpful to consumers in making quick and accurate
comparisons as consumers may believe it to be. Fuel consumption (the
number of gallons of fuel consumed to travel a given distance), on the
other hand, does yield the type of linear comparison that consumers
should find useful. Therefore, the agencies explored ways to convey
fuel consumption on the label.
    Focus groups were instrumental in helping the agencies learn about
communicating fuel consumption. Specifically, Phase 1 focus groups set
out to gauge how receptive consumers were to a fuel consumption value
and whether there were particular presentations of that value which
were more understandable. To do this the `Fuel Economy (MPG) Illusion'
was introduced in the pre-focus group on-line survey, followed by
specific probing in each group around what ``fuel consumption'' means.
Phase 1 focus groups generally responded that it was the distance one
can travel on a gallon of gas (which is fuel economy, rather than fuel
consumption). Following this discussion the participants were presented
with four different designs, each conveying fuel consumption and fuel
economy information. The prominent value displayed within each design
was fuel consumption, given in gallons per 100 miles while the less
prominent value was fuel economy, given in miles per gallon. Even when
participants demonstrated that they properly understood fuel
consumption, most still indicated that they preferred miles per gallon
over gallons per 100 miles. Participants indicated this to be the case
even after the moderator explained the `MPG Illusion.' A few
participants did indicate that viewing gallons per 100 miles, instead
of miles per gallon, might get them to switch to more efficient vehicle
types. Some participants also said that they believed they would use
the gallons per 100 mile fuel consumption information on the label to
learn about the vehicle's city and highway gas consumption and to
compare between different vehicles in making their purchase decision.
However, most participants were not enthusiastic about using the fuel
consumption information.
    Almost all focus group participants showed a strong attachment to
MPG. They like and use the city and highway MPG and are not familiar
with gallons per 100 miles. If a new fuel consumption metric, such as
gallons per 100 miles, were added to the label participants would still
want the familiar MPG metric to be prominent on the label. Recognizing
that consumers believe they derive significant value from MPG, but that
consumption information may be more accurate and ultimately valuable to
consumers, another approach to displaying fuel consumption was also
devised and presented to focus groups: An ``annual gallons used''
value. The basis for deriving this new metric was that (1) it makes the
magnitude of comparing vehicles based on consumption more apparent, and
(2) it provides a clear link between the annual cost value and fuel
consumption value. An annual gallons metric was also found to be one of
the more effective ways to demonstrate the fuel economy illusion. While
the agencies considered displaying the annual gallons of fuel
information on the label we ultimately determined that the gallons per
100 mile metric should be introduced on the label as the new
consumption metric, and that the introduction of the five year cost or
savings information would also help consumers in overcoming the effects
of the MPG illusion while also providing important additional
information.
    Phase 1 focus group participants also evaluated four different
graphical display options for fuel consumption and were asked which was
the most understandable design. Participants responded by identifying
the design they felt was simple, informative and in a familiar format.
However, participants did not agree on which design accomplished this.
    The agencies further explored fuel economy and fuel consumption
designs in Phase 3 where focus group participants were asked to
evaluate whole label designs encompassing both fuel economy and fuel
consumption values. In each of the three labels presented, the MPG
value was a

dominant metric.\150\ For each design participants were asked to
determine between two labels, which represented the more fuel efficient
vehicle. Participants were also asked to identify what piece of
information on the label they used to make this determination. Fuel
consumption was rarely identified as being used by participants.
Instead, participants used MPG and cost values most often.\151\
---------------------------------------------------------------------------

    \150\ Environmental Protection Agency Fuel Economy Label: Phase
3 Focus Groups, EPA420-R-10-905, August 2010. (Contains visual
depictions of each of the Phase III label series.)
    \151\ Environmental Protection Agency Fuel Economy Label: Phase
3 Focus Groups, EPA420-R-10-905, August 2010, p.12.
---------------------------------------------------------------------------

    In Phase 3, the agencies explored simplification of the labels by
displaying on two of the three label designs only the combined (55%
city and 45% highway) fuel economy value in lieu of listing the city
and highway values separately. (See Section IV.B.4 for a discussion of
whole label designs and why simplification is perceived as an
overarching goal.) When participants were probed about why they did or
did not like certain label designs, the presence of city and highway
values was often cited as a positive for a label design, and the
absence of the city and highway values was cited as a negative for a
label design. In addition, when asked how to improve the label designs,
several focus group participants asked for the city and highway values
to be added to the label designs that did not include them.
    The agencies gathered additional input on the most effective
approaches for portraying fuel economy and fuel consumption information
during the expert panel meeting. After viewing three label designs,
expert panel participants provided comments on how the label could be
made more understandable and useful for consumers. The expert panel
emphasized that in order to be effective, the fuel economy label should
be simple and able to be understood by consumers within a short amount
of viewing time. To implement this goal, the expert panel suggested
that the agencies develop a single, overall metric for vehicles that is
easy for consumers to understand, such as a letter grade (A , B , etc.).\152\
---------------------------------------------------------------------------

    \152\ Environmental Protection Agency Fuel Economy Label: Expert
Panel Report, EPA420-R-10-908, August 2010, p. 15-17.
---------------------------------------------------------------------------

    The expert panel also suggested that the agencies consider
redesigning the label such that the single metric is prominently
featured on the top half, and any additional vehicle information and
more specific metrics be included on the label in smaller font and in a
less prominent location. The expert panel stated that this approach
would provide interested consumers with more detailed information
without distracting from the simpler, overall metric that all consumers
could easily understand. The rationale for this label design is that it
can provide useful comparative information to the consumer who may only
glance at it, while also providing the necessary details to those who
want more in-depth information. Additionally, the expert panel
suggested prominently featuring a website URL and a QR Code[reg] for
smartphones to provide consumers with access to more detailed vehicle
information elsewhere.\153\ For example, the website and smartphone
application might contain tools for consumers to calculate the fuel
economy they can expect based on their own driving habits or allow
consumers to quickly compare fuel economy and consumption for different
vehicle models.
---------------------------------------------------------------------------

    \153\ Ibid.
---------------------------------------------------------------------------

b. Fuel Cost
    EPCA requires the fuel economy label display the ``annual fuel cost
of operating the automobile.'' Recognizing that some consumers have
previously appeared to distrust or dismiss annual costs as not
representative of their own experience, EPA and NHTSA explored whether
there were other cost units (such as cost per month, per mile, per
week, etc.) that could be additionally provided that would be more
meaningful to consumers.
    Throughout the focus groups in Phase 1 and 2, participants
indicated that they tended to dismiss the annual cost information on
the current label because gas prices fluctuate and vary with location,
and they do not drive 15,000 miles per year.\154\ Nevertheless, Phase 1
focus group participants identified the estimated annual fuel cost as
the second most used piece of information on the label. In addition, in
Phase 2 focus groups, where participants were asked to create labels
from scratch, most groups placed a cost value on the label. When cost
values are used, focus group members indicated they used it as a
comparative tool to evaluate the fuel efficiency of different vehicles.
---------------------------------------------------------------------------

    \154\ 15,000 miles per year is the current annual mileage
assumption used on all fuel economy labels to estimate the annual
fuel cost of operating a vehicle.
---------------------------------------------------------------------------

    When asked what they thought about cost, focus group participants
indicated they thought about the cost to fill a gas tank, the fuel cost
over a period of time (daily, weekly, monthly, yearly, etc.), and the
fuel cost over a given distance (cost per mile, 100 miles, 1000 miles,
etc.). When Phase 1 focus group participants were presented with a
variety of cost units, the two most popular choices among cost units
were annual cost and cost per month. However, in Phase 3, when
presented with labels that displayed both a monthly cost and an annual
cost, participants suggested that the monthly cost value could be
dropped.
    Participants in the expert panel meeting suggested that the
agencies provide information on the savings consumers could achieve by
purchasing a more fuel efficient vehicle. One expert panel participant
noted that the current label designs demonstrate costs, but that it
would be better to demonstrate savings, which tends to be a very strong
motivator.\155\ One approach to communicating this information on the
label would be to display the savings a consumer might expect over five
years by purchasing and driving a vehicle with a higher overall letter
grade.
---------------------------------------------------------------------------

    \155\ Environmental Protection Agency Fuel Economy Label: Expert
Panel Report, EPA420-R-10-908, August 2010, p. 17.
---------------------------------------------------------------------------

c. Environmental Metrics
    Environmental information on greenhouse gases (GHGs) and other
emissions has not been previously displayed on the fuel economy label,
so the agencies were interested in learning how a label might best
convey to consumers information about the emissions impact of a new
vehicle. The available literature on the impact of ``eco-labeling''
vehicles is mixed.\156\ Some of the research indicates that consumers
may welcome an eco-label on their vehicle, although they say that it is
unlikely to impact their purchase decision. Through its consumer
research, the agencies investigated what combination of metrics and
ratings might be displayed on the fuel economy label to provide this
information in an effective and consumer-friendly way, including a
stand-alone CO2 performance metric, relative versus absolute
rating systems, a comparison system, and an environmental certification
mark.
---------------------------------------------------------------------------

    \156\ Environmental Protection Agency Fuel Economy Label:
Literature Review, EPA420-R-10-906, August 2010, p. 24.
---------------------------------------------------------------------------

    For the most part, Phase 1 focus group participants indicated that
they did not research environmental information (beyond fuel economy)
as part of the vehicle purchase process. While some participants
indicated that they would use environmental information to compare
different vehicles if it was placed on the fuel economy label the
majority of focus group participants were indifferent to the inclusion
of

environmental impact information on the label and indicated they were
not likely to visit a website for environmental information. However,
when presented with whole label designs in Phase 3 many respondents
indicated that the environmental metric should be on the label, so that
it is available for those who were interested.
    In Phase 1, participants were presented with four different
environmental metric options and approaches to displaying environmental
information, and were asked to rate the most understandable and least
understandable. Participants stated that they understood the
environmental information in general, but did not understand what
``grams of CO2'' meant. The display featuring a rating for
other emissions in stars and grams of CO2 numerically was
most frequently chosen by Phase 1 participants to be the most
understandable. Participants generally favored presentations that
showed information in a simple format, though there was no consensus on
which format achieved this. In general Phase 1 and 2 focus group
findings indicate that we must keep environmental information simple if
we want consumers to pay any attention to this information on a label.
An overall environmental rating was most favorably received with the
general reaction being that EPA was trusted to decide how to combine
environmental impacts into a single rating.
    Phase 1 focus groups were also asked if they recognized and knew
what the ``SmartWay'' logo meant. None of the participants recognized
the logo. However, when probed, most ascertained that it was an EPA
designation of some sort. While some participants indicated the logo
may confer credibility to an environmentally friendly vehicle, none
indicated they would be less likely to purchase a vehicle without the
logo.
    In Phase 3 focus groups the agencies sought to examine further how
environmental information might be displayed most effectively. Several
permutations of graphical rating systems were shown to participants.
These included designs in which ``greenhouse gases'' and ``other air
pollutants'' were displayed as one combined environmental rating or
separately. Rating scales were examined that were based on relative
values, such as a ``5 leaf'' rating system as well as a linear scale
that had the vehicle's absolute CO2 value identified on a
scale that had end-points identifying the approximate highest and
lowest emitting vehicles available.\157\
---------------------------------------------------------------------------

    \157\ See Environmental Protection Agency Fuel Economy Label:
Phase 3 Focus Groups, EPA420-R-10-905, August 2010, p. 39-40 for a
detailed description of the metrics examined.
---------------------------------------------------------------------------

    The expert panel, when shown the labels designed by the agencies
based on focus group input, stated that they neither understood the
environmental information presented nor found it compelling. As
described in Section IV.B.4, the expert panel recommended developing an
overall rating for vehicles, which could combine fuel economy and
environmental impacts. The expert panel noted that additional metrics
(e.g., CO2 performance) could be included in a less
prominent position on the label for consumers interested in more
detailed environmental information. Expert panel participants also
suggested that environmental performance information could be made
available on a website and accessed through the smartphone interactive
(QR Code[supreg]) featured on the label.\158\
---------------------------------------------------------------------------

    \158\ Environmental Protection Agency Fuel Economy Label: Expert
Panel Report, EPA420-R-10-908, August 2010, p. 15-17.
---------------------------------------------------------------------------

2. Effective Metrics and Ratings Systems for Advanced Technology
Vehicles
    How should labels for advanced technology vehicles portray
information about fuel economy, fuel cost, greenhouse gas, and other
emissions for consumers in a way that is most understandable and useful
to them?
    In addition to the issues discussed above for conveying information
generally on labels, advanced technology vehicles that operate on fuels
which differ from conventional gasoline and diesel fuel require new
strategies to communicate and display fuel economy information
effectively.\159\ Through the research program, we explored potential
approaches to communicating useful fuel economy, cost, and
environmental information about electric vehicles and several
variations of plug-in hybrid electric vehicles. As discussed further
below, the research probed consumers to identify what specific
information they would need if they were to seriously consider
purchasing an advanced technology vehicle and what information would be
most helpful on an advanced technology fuel economy label.\160\
---------------------------------------------------------------------------

    \159\ See Section III.B. and III.C. for a discussion of the
challenges that advanced technology and other non-traditional
vehicles present for consumers when making vehicle purchase
decisions.
    \160\ Environmental Protection Agency Fuel Economy Label: Phase
2 Focus Groups, EPA420-R-10-904, August 2010.
---------------------------------------------------------------------------

    Phase 2 focus groups were devoted to exploring what label
information consumers believed was most important to display for
advanced technology vehicles given the limited space provided on the
fuel economy label. The focus group discussions were broken into
segments based on three different vehicle technologies: EVs, extended
range PHEVS, and blended PHEVs. Focus group discussions thus separated
the different technologies in order to ascertain more accurately what
information would be most useful to consumers to understand these new
technologies. Phase 2 focus groups were tasked with ``building'' three
different labels, each for different advanced technology vehicles and
were given a large number of metrics from which to choose the building
blocks. Almost all of the labels built by each focus group included the
following elements: (1) The range that the vehicle could travel while
depleting a full battery, the charge depleting operation; (2) the
length of time it takes to charge the battery; (3) the cost of charging
the battery, and if operating in two separate fuel modes, the cost
associated with each mode of operation; and (4) an environmental
metric.\161\ When asked to identify the two most important pieces of
information on the label, participants said, regardless of the city,
gender, or technology discussed, that information on the range an
advanced technology vehicle can travel on a fully charged battery and
the length of time is takes to charge the battery were the most
important information they needed to have in order to seriously
consider purchasing these type of vehicle.
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    \161\ Environmental Protection Agency Fuel Economy Label: Phase
2 Focus Groups, EPA420-R-10-904, August 2010. Appendix K.
---------------------------------------------------------------------------

    The expert panel's label recommendations did not differentiate
between conventional and advanced technology vehicles. The
recommendations they made for the conventional vehicle label would
apply to the advanced technology vehicle label as well.
a. Range
    Focus group participants stated that for any vehicle that operates,
even just part of the time, on electricity, it is important for them to
know the distance the vehicle can travel on a fully charged battery.
Participants saw this as vital to their understanding of the vehicle's
fuel economy. While Phase 2 focus groups expressed interest in seeing
the range displayed for both city and highway values, when Phase 3
participants were presented with full labels, no one asked

for the range to be broken down by city and highway values.
b. Fuel Cost
    Across all advanced technologies, participants were interested in
battery charging costs. There was a fairly even split between cost per
mile, annual cost and monthly cost values, regardless of technology.
For any vehicle with a gasoline-only mode of operation, participants
expressed a desire to see the cost expressed annually. The groups also
indicated that labels for any vehicle that operated in a combined gas
and electric mode should provide cost information on an annual basis.
In Phase 3, when presented with annual fuel cost and monthly fuel cost
options, many participants used the annual fuel cost when comparing
across advanced technology vehicles. Some indicated that the monthly
cost was useful for these advanced technology vehicles. In particular,
people equated the electricity consumption to their monthly home
electricity statements.
c. Fuel Consumption and Fuel Economy
    For any advanced technology vehicle that operates in a gas-only
mode, the Phase 2 focus groups indicated a strong desire to see fuel
consumption expressed in miles per gallon. In any vehicle that had an
electric-only mode of operation, the focus groups favored seeing the
electric consumption information expressed in an MPG equivalent of
``MPGs''. (See Section II.B for a detailed discussion of MPGe). The
second most understandable metric of electric-only operation was
kilowatt-hour per 100 miles, but many participants felt strongly that
kilowatt hours are very unfamiliar and should not be chosen as a
metric. For the PHEVs with a blended mode (gas and electric), focus
groups were interested in seeing an MPGe that combined the MPGe of
electric operation and the MPG of gas operation. In any vehicle that
could operate in more than one mode of operation, such as an EREV or
PHEV, participants were interested in seeing fuel consumption values
for each mode of operation, although some were interested in seeing a
consumption value for the two modes expressed in MPGe \162\ in addition
to displaying the separate consumption information.
---------------------------------------------------------------------------

    \162\ Participants were given this option using existing utility
factor data as the method for combing the two modes of operation.
See Section VI.B for a discussion about utility factors.
---------------------------------------------------------------------------

d. Environmental Information
    Focus group participants did not independently identify the need to
have environmental information on the label. However, in Phase 2, with
the exception of one group, when given the option, all the groups
elected to include environmental information on the label. Of the
designs provided many participants selected a horizontal slider scale
that ranked the vehicle's impact as the most understandable conveyance
of environmental information.
    Other displays of environmental metrics were examined in Phase 3.
These displays included sliding scales segmented with relative rating
systems as well as those with absolute values. Relative ratings such as
stars or leaves were also shown. Participants commented that they
wanted something that was quick and easy to read. Most focus group
participants preferred something that was quick with little detail
while some wanted more detailed information to help inform their
decisions. Based on this finding, the agencies incorporated this
approach into the co-proposed label designs in attempt to find the
right balance of simple and detail information presentation. See
section IV.B.1 for more comprehensive discussion of the environmental
information focus group findings.
3. Effective Metrics To Enable Vehicle Comparison
    How can consumers compare vehicles when they are shopping?
    Beyond the statutory requirement to develop rating systems for fuel
economy, GHGs, and other emissions, with designations of the ``best''
vehicles in terms of fuel economy and GHG emissions, the agencies
recognize that the labels need to be consumer-friendly in terms of
facilitating cross-vehicle and cross-technology comparisons. If
consumers first encounter advanced technology vehicles on the dealer's
lot, and are not predisposed to buy one, a label that effectively
conveys the benefits of purchasing such a vehicle through a clear and
understandable rating system will be helpful in informing consumers and
potentially educating consumers about the benefits of these vehicles.
Through the research program, the agencies also investigated how the
fuel economy labels might be designed so that consumers could easily
compare the fuel economy, costs, and environmental impacts across a
range of vehicle technologies--from conventional gasoline and diesel
vehicles to electric and plug-in hybrid vehicles.
    Focus groups also provided feedback about various metrics which
were intended to help a consumer compare a vehicle to other vehicles,
as required by statute. In Phases 1 and 3, participants were shown not
only rating scales such as a numerical or five stars system, but also a
slider scale similar to the bar that exists on the current fuel economy
label for within-class comparisons, both of which the agencies believed
would meet the statutory requirement to provide a rating system. The
participants seem to be split into two camps: Those that prefer the
analytical detail of the value scale, and those that prefer the
simplicity of a star-type rating scale.
    For fuel economy and fuel consumption, Phase 1 participants were
shown two kinds of examples: One that compared vehicles only within
their current fuel economy class, and one that showed both a within-
class comparison and a comparison among all vehicles. These comparisons
were shown using gallons per hundred mile values and miles per gallon
values. The majority of participants preferred the metric that showed
the subject vehicle as it compared to all vehicles and as it compared
to its fuel economy class in units of miles per gallon.
    In Phase 2 most focus group participants said that they would like
an effective way to compare among disparate vehicle technologies. Many
settled on miles per gallon equivalent as a comparative metric, but
most did not know what the equivalency was based upon. In Phase 3, when
comparing advanced technology vehicles, most participants either used
the MPGe value or the annual cost value to compare across vehicles.
Some used the fuel economy rating systems that were provided. In
general, the findings from the focus groups established no clear
preference or approach for how to effectively communicate comparative
vehicle information that would be useful to most consumers.
    The expert panel disagreed that the focus group generated labels
could be used effectively to compare across vehicle technologies--
especially to the level of information found on the advanced technology
labels, which they described as ``scary'' and ``unfriendly.'' They were
clear to point out, however, that their issues were with the label
design, and that they were not rejecting the information contained on
the label. The expert panel stated that there are inherent differences
in reviewing labels in a focus group compared to on a dealership lot,
where you have, on average, very short viewing time. The expert panel
suggested that processing this amount of information quickly would be
challenging, which could lead many consumers to tune out the label
completely. As mentioned above, the panel recommended that the agencies
roll up fuel economy, environmental

impacts and cost information into a single easily understood letter/
grade approach that will be intuitive for most consumers. The grade
could be used across all technologies providing consumers easy
comparative information. The expert panel allowed that the more
complicated information could be made available in the bottom half of
the label but argued that it would be crucial to retain a simple
compelling comparison in the top portion of the label. The panel also
suggested including a comparative metric that shows the potential
savings from buying a more fuel efficient vehicle, as saving money
historically has been a very strong motivator for consumers.
4. Effective Whole Label Designs
    How should the new labels be designed to meet the statutory
requirements while best raising consumers' understanding of fuel
efficiency, fuel cost and environmental impact?
    In addition to the examination of individual label elements
described above, consumer research designed by EPA and NHTSA
investigated the effects of various whole label designs on consumer
comprehension and utilization, in order to test whether the labels
would still be useful when all of the elements were put together. This
inquiry is important because there is only so much space that
information can occupy both on the label and in the consumer's mind
when standing on the dealer's lot and confronted with so much other
information. In order to provide sufficient information while ensuring
that it remains understandable for the greatest number of consumers, a
balancing act is inevitable. The consumer research attempted to assess
how best the balance could be struck, as discussed further below in
Section III.
    The expert panel offered very strong opinions on what, given their
experience, would make a label effective in engaging the public. They
strongly recommended that the top portion of the label contain only one
element--a ``grade'' that would combine as many of our required metrics
as possible. This information should be big, bold, and easy to process
while walking around a dealership. The label space under the grade
would be reserved for the specific information required in the statute
or deemed important in focus groups and other market research. When the
panel was presented with label designs that had multiple metrics,
explanatory text, and graphical icons, with no one element standing
out, they felt that the labels were confusing and intimidating. The
expert panel's consensus view, after viewing the draft labels developed
through the focus groups, was that these labels would be daunting for
most consumers to process, making them inclined to ``tune out'' even
the most basic information. Their strongest recommendation: Keep it
simple.\163\
---------------------------------------------------------------------------

    \163\ Environmental Protection Agency Fuel Economy Label: Expert
Panel Report, EPA420-R-10-908, August 2010, p. 15-17.
---------------------------------------------------------------------------

5. Tools Beyond the Label
    What purchase process do consumers currently use to make new
vehicle purchasing decisions? Given this process, when are the most
effective opportunities to communicate fuel economy and environmental
information?
a. Vehicle Purchase Process
    The vehicle purchase process is complex and iterative. There may be
many opportunities to inform consumers about the fuel economy and
environmental impact of the vehicles they are considering. Although
much of this proposal focuses on the actual fuel economy label, the
agencies recognize that consumers seek out fuel economy and
environmental information at other times in the purchase process beyond
simply viewing the fuel economy label on vehicles during visits to
dealerships. In order to determine the most effective means to provide
fuel economy and environmental information to consumers, the agencies
sought to better understand when and how consumers encounter or search
for this type of information in their vehicle purchase decision-making
process.
    Information on this vehicle buying process was obtained in an on-
line survey of focus group participants prior to the actual focus
groups. In addition, at the start of each session, participants were
asked to discuss their purchase process so we could better understand
the nuances associated with the responses we had received through the
on-line survey. The pre-group online survey indicated that a majority
of respondents already had a vehicle type in mind when they began the
process. Consumers appear to narrow the spectrum from all available
vehicles to the vehicle type or types they will research depending on
their specific needs and interests. In general, the focus groups used
broad categories to describe vehicle groupings, such as SUVs, minivans,
sport cars, trucks, economy cars, and midsize cars.\164\ For example,
some focus group respondents said they narrowed their search based on
vehicle cargo space, for others it was sedans, and for others it was
SUVs and minivans.
---------------------------------------------------------------------------

    \164\ These categories are not necessarily related to the
current 14 EPA-designated classes of vehicles. Vehicle classes are
described in 40 CFR 600.315-08.
---------------------------------------------------------------------------

    According to the pre-focus group online survey and the focus groups
themselves, a majority of the participants indicated that price/
affordability was one of the top five factors that influenced their
vehicle choice. Other key factors that influenced participants' vehicle
choice included gas mileage/fuel economy, safety, reliability, size,
interior and exterior appearance, comfort, brand name and performance.
The agencies also reviewed existing literature on the factors that
influence vehicle choice. For example, a 2009 survey of people between
the ages of 18 and 30 (``Generation Y'') found gas mileage to be the
top factor indicated by participants as critical to vehicle purchasing
decisions, followed by affordability/price.\165\ Both demographic and
psychographic factors (e.g., `what a vehicle says about me') also play
a role in the vehicle purchase process.\166\
---------------------------------------------------------------------------

    \165\ Deloitte. ``Connecting with Gen Y: Making the short
list,'' 2010, p.2. Available at http://www.deloitte.com/assets/Dcom-
UnitedStates/Local%20Assets/Documents/us_automotive_
Deloitte%20Automotive%20Gen%20Y%20Executive%20Summary_0107.pdf
(last accessed August 13, 2010).
    \166\ Environmental Protection Agency Fuel Economy Label:
Literature Review, EPA420-R-10-906, August 2010, p. 30-39.
---------------------------------------------------------------------------

    At present however, environmental impacts are not top purchasing
considerations for most consumers. Focus group participants indicated
that environmental impacts were not a consideration in the type of the
vehicle they purchase. Only a small fraction of the participants in the
pre-group online survey considered ``low emissions'' to be key factor
when making a vehicle purchase decision. This finding is also supported
by the literature review. Consumer research indicates that although
consumers have a growing interest in purchasing ``greener'' vehicles,
environmental impact is not sufficient by itself for most consumers to
be willing to pay a premium.\167\
---------------------------------------------------------------------------

    \167\ Ibid., p. 8.
---------------------------------------------------------------------------

    Another important aspect of the vehicle purchase process is how
consumers research vehicles. Two-thirds of the respondents to the pre-
focus group online survey reported they had researched fuel economy
prior to buying their vehicle. Based on the available choices in the
pre-focus group survey, respondents reported gathering fuel economy
information from manufacturer Web sites, Consumer Reports, auto
dealers, vehicle search websites, automobile magazines, others

with similar vehicles, government websites, television advertisements,
and the Fuel Economy label itself. The literature review found that
consumers increasingly research fuel economy information online. For
example, traffic on the DOE and EPA Web site http://www.fueleconomy.gov
increased from 400,000 user sessions in 1999 to more than 30 million in
2008.\168\ Other Internet sources used to research vehicles during the
purchase process include consumer-to-consumer tools such as blogs and
Web forums.\169\
---------------------------------------------------------------------------

    \168\ Greene, D.L., Gibson, R., and Hopson, J., ``Reducing Oil
Use and CO2 Emissions by Informing Consumers' Fuel
Economy Decisions: The Role for Clean Cities,'' prepared by Oak
Ridge National Laboratory, Oak Ridge, TN, August 2009, p. 1.
Available at http://www1.eere.energy.gov/cleancities/pdfs/fuel_
economy_strat_paper.pdf (last accessed August 13, 2010).
    \169\ Environmental Protection Agency Fuel Economy Label:
Literature Review, EPA420-R-10-906, August 2010, p. 23.
---------------------------------------------------------------------------

    Another finding from the literature review is that consumers are
likely to be closer to purchasing a vehicle by the time they visit the
dealership than they were in the past.\170\ This highlights the value
of educational tools beyond the label to provide consumers with
information on a vehicle's fuel economy and environmental impact.
Online tools may be particularly important. In addition to the Internet
being a source of information for consumers, online sales of cars have
been steadily increasing in the U.S. in recent years (although they
still represent a small percentage of total car sales).\171\
---------------------------------------------------------------------------

    \170\ Ibid., p.18-19.
    \171\ Deloitte. ``A new era: Accelerating toward 2020--An
automotive industry transformed,'' 2009, p. 12. Available at http://
www.deloitte.com/assets/Dcom-India/Local%20Assets/Documents/
A%20New%20Era%20-%20Auto%20Transformation%20Report_Online.pdf (last
accessed August 13, 2010).
---------------------------------------------------------------------------

b. Consumer Education
    As described above, the vehicle purchase decision is not based
entirely on the fuel economy label information, but is complex and
iterative, and messages presented in contexts beyond the label may be
even more helpful in getting consumers the information they need about
fuel economy, fuel cost, GHGs, and other emissions. Several resources
maintained by EPA and DOE are already available to help consumers
obtain information about comparative vehicle fuel economy and
environmental information, including http://www.fueleconomy.gov,\172\
the Fuel Economy Guide,\173\ and the Green Vehicle Guide.\174\ In
addition to the information sources and tools already available, under
EISA, Congress requires NHTSA, in consultation with EPA and DOE, to
develop a consumer education program to improve consumer understanding
of automobile performance with regard to fuel economy, greenhouse gas
and other emissions.
---------------------------------------------------------------------------

    \172\ http://www.fueleconomy.gov/.
    \173\ http://www.fueleconomy.gov/feg/feg2000.htm.
    \174\ http://www.epa.gov/greenvehicles/Index.do.
---------------------------------------------------------------------------

    While this campaign is still in its very early stages and is not
the subject of this rulemaking, it will be investigating modifications
to existing tools, new collaborations for information dissemination
and, potentially, new forms of media utilization in communicating the
relationship of automobile performance to fuel economy and emissions.
Particularly given the changes to the label that we anticipate will
result from this rulemaking, introducing consumers to the new
information available to them and how it can be used as they consider
their next vehicle purchase will be very important.
    Since the vehicle purchase process is multifaceted, EPA and NHTSA
would like to better understand how various information tools beyond
the label can provide critical fuel economy information to consumers.
EPA and NHTSA especially seek to understand what additional types of
consumer information and tools are most important and what level of
individualized information is needed by consumers in the future.
    There are a variety of existing education campaigns and resources
to help enable consumers to make more fuel efficient and
environmentally friendly transportation choices. These include the
Federal Highway Administration's initiative ``It All Adds Up to Cleaner
Air,'' \175\ the ``Cleaner Cars for Maine'' \176\ program, and the
``Drive Smarter Challenge'' campaign.\177\ Brief descriptions of these
and other education campaigns are available in the literature review
report.\178\ Such campaigns may inform the agencies' development of
educational tools to help consumers make more informed vehicle
purchasing decisions.
---------------------------------------------------------------------------

    \175\ See http://www.italladdsup.gov (last accessed August 13,
2010).
    \176\ See http://www.maine.gov/dep/air/lev4me/index.html (last
accessed August 13, 2010).
    \177\ See http://drivesmarterchallenge.org/ (last accessed
August 13, 2010).
    \178\ Environmental Protection Agency Fuel Economy Label:
Literature Review, EPA420-R-10-906, August 2010.
---------------------------------------------------------------------------

    The agencies request comment on ideas for the most effective means
to educate consumers about the new elements and metrics being proposed
on the label. In addition, EPA and NHTSA request specific comment on
what additional tools we could provide to increase consumer
comprehension about complex advanced technology vehicles and automobile
performance related to fuel economy and emissions. We are proposing
that this campaign potentially include both traditional marketing
mechanisms, such as brochures, public service advertisements, media
placements, and dealership-distributed checklists, along with more
innovative approaches, which may include crowdsourcing with social
media, interactive web site displays at dealerships that would allow
consumers to ``personalize'' their fuel economy label, smartphone
applications. In addition, per the recommendation of the expert panel,
we are proposing to 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, along
with access to the tools, applications, social media, and materials
mentioned above.
    All messages and materials will be tailored according to the method
of communication and the target audience. EPA is requesting comment on
effective messaging, materials, and methods of communication.

V. Implementation of the New Label

A. Timing

    As previously noted, the agencies are proposing that the new label
requirements initially take effect with the 2012 model year. This
regulatory action is scheduled to be finalized in late December of 2010
or January of 2011 with a final rule effective 30 days after
publication. This timing is similar to what was provided in the 2006
label rule.\179\
---------------------------------------------------------------------------

    \179\ See 40 CFR 600.301-08 and 71 FR 77879 (December 27, 2006).
---------------------------------------------------------------------------

    Model year 2012 vehicles can be introduced as early as January
2011, and in fact EPA has already heard from at least one manufacturer
that plans such an early introduction, Given that this regulatory
action is not scheduled to be finalized until December of 2010 or
January of 2011 and that it is possible, based on when the final rule
is published in the Federal Register for the effective date of the new
regulations to be a date in March of 2011 it is clear that not all 2012
model year vehicles can be captured by the proposed regulations. There
may also be cases where a manufacturer prints label ``blanks'' early in
the model year, even if they plan to introduce vehicles in the more
typical time frame of late summer and early fall. Although the proposed

regulations do not presume anything regarding the date of finalization
of the new label and only specify applicability to the 2012 model year,
we expect that the final rule will have to take these issues into
account.
    The final rule will likely specify a date of applicability of the
new regulations that is some date certain after publication of the
final rule that would allow manufacturers adequate time to plan for and
implement the new designs. We believe that a date on the order of 30
days after publication would be appropriate, where vehicles produced
after that date would have to use the new label format. We would of
course encourage the voluntary use of the new label to the greatest
extent possible from the date of signature to the specified effective
date. The agencies request comments on the appropriate timeframe for
implementing these new label requirements.
    The agencies recognize that some of the potential changes in label
design, including color graphics that would be printed at production
run-time and differing footprints that necessitate redesign of the
overall Monroney label may impact the amount of lead time required by
manufacturers. While we believe that it is extremely important for the
final label changes to take effect as soon as possible, we seek comment
on these specific potential lead time issues.
    To introduce the new label and ensure that the public understands
the new information and format, the agencies plan to conduct extensive
public outreach concurrent with the implementation of a final rule. We
will provide information about the new label and how to use it via web-
based information, fact sheets, and other communication methods. This
information will be designed to explain all aspects of the new label.

B. Labels for 2011 Model Year Advanced Technology Vehicles

    The new fuel economy label will address advanced technology
vehicles, such as EVs and PHEVs, which some manufacturers are planning
to introduce into the U.S. market prior to the 2012 model year. EPA
issued regulations in 2009 that provided EPA discretion to authorize
appropriate changes to the current fuel economy label with individual
manufacturers, specifically with respect to advanced technology.\180\
These regulations are applicable until this rule is finalized.
---------------------------------------------------------------------------

    \180\ 74 FR 61537, Nov 25, 2009.
---------------------------------------------------------------------------

    To address labels for advanced technology vehicles introduced
before this rule is finalized; EPA may allow any manufacturer of such
vehicles that will be introduced prior to the 2012 model year to use
one of the co-proposed labels, or an alternative label that meets EPA's
approval. For example, EPA could evaluate whether a manufacturer could
use a table that compares various metrics (e.g., fuel economy (mpg),
electricity consumed (kWh), miles per gallon equivalent (mpg-e), and
total energy cost) for different mileages the vehicle is driven between
a full charge of the battery. This approach would provide the most
complete amount of information for the vehicle's performance as a
function of distance travelled. The broad range of metrics could also
make it easier for the consumer to understand the energy consumption of
the vehicle. The down side to including a table is that it provides a
lot of information and could be potentially confusing for some
consumers.
    Manufacturers intending to introduce an advanced technology vehicle
as a 2011 model year vehicle should meet with EPA to discuss the
details of actual implementation. For example, EPA would discuss with
the manufacturer the fact that the label format and information may
only be used for the 2011 model year and may change for 2012 depending
on the outcome of the final label regulations. EPA would also discuss
in conjunction with the Federal Trade Commission (FTC) what aspects of
the label information could be advertised and would also discuss with
the manufacturer the details of specific test values used, such as mile
per gallon equivalent, kW-hr per 100 miles, blended mode operation for
a PHEV, etc.

C. Implementation of Label Content

    Although much of the information presented on the label is
determined from test data specific to the labeled vehicle or can be
codified in the regulations, there are elements that will require
annual (or in some cases, possibly less frequent) information provided
by EPA. This is no different from today's label and the annual guidance
letter published by EPA that includes the fuel economy ranges for each
class of automobile, the fuel price information to be used to calculate
costs, and other relevant information. This information will have to
continue to be provided by EPA on an annual basis, but the new ratings
proposed for the new labels will also require that EPA provide annually
the range of fuel economy of all vehicles as well as the range of
CO2 emissions of all vehicles.

VI. Additional Related EPA Proposals

A. Electric and Plug-In Hybrid Electric Vehicle Test Procedures

1. Electric Vehicles
    There currently is no federal test procedure for measuring fuel
economy for electric vehicles. EPA has periodically performed fuel
economy testing for electric vehicles utilizing test procedures and
protocols developed by the Society of Automotive Engineers (SAE),
specifically J1634. Manufacturers may continue to use SAEJ1634 test
protocols, as cancelled in October 2002 until EPA can comment on a
reissued SAE1634 that is in draft, with the exception of not using the
C coefficient adjustment in paragraph 4.4.2. The C coefficient
adjustment was intended to reflect air conditioning loads. Air
conditioning usage is not considered in CAF[Eacute] testing and is
accounted for via the 5-cycle or derived 5-cycle equations for
labeling. Until recently, there have been very few electric vehicles
sold in the U.S. market. The few exceptions, such as the EV1 from
General Motors (GM), were only made available to a select few customers
for a limited time. As such, there was not a pressing need for an
electric vehicle test procedure. However, with the imminent release of
several new battery electric vehicles from manufacturers such as Ford
and Nissan, the need for a Federal test procedure for measuring fuel
economy or fuel consumption for electric vehicles is apparent.
    Fuel economy estimates are measured for ``city'' and ``highway''
operation. Prior to the 2008 model year, all vehicles were fuel economy
tested over just two test cycles: The Federal Test Procedure (FTP or
``city'' test) and the Highway Fuel Economy Test (HFET or ``highway''
test). In December, 2006, EPA published revisions to improve the
calculation of fuel economy estimates to better reflect real world fuel
economy performance.\181\ These revisions included three additional
chassis dynamometer test cycles to the current FTP and HFET for fuel
economy testing purposes. The three additional cycles were the US06,
SC03, and the Cold Temperature FTP. Prior to the 2008 model year, all
three test cycles were used for emissions purposes for either the
Supplemental Federal Test Procedure (SFTP) emissions standards (US06
and SC03) or the cold temperature (20 [deg]F) emission standards.
Beginning in the 2008 model year, all vehicles tested for fuel economy
labeling purposes had to use the new ``5-

cycle'' fuel economy methodology which either required testing all
vehicles over the five test cycles discussed above or apply an
equivalent 5-cycle correction referred to as the derived MPG- based
approach. For alternative fueled vehicles, including electric vehicles,
manufacturers have the option for fuel economy testing to test their
vehicle over all five test cycles or use a derived MPG-based approach
---------------------------------------------------------------------------

    \181\ 71 FR 77931, Dec. 27, 2006.
---------------------------------------------------------------------------

a. FTP or ``City'' Test
    The procedure for testing and measuring fuel economy and vehicle
driving range for electric vehicles is similar to the process used by
the average consumer to calculate the fuel economy of their personal
vehicle. The distance the vehicle can operate until the battery is
discharged to the point where it can no longer provide sufficient
propulsive energy to maintain the speed tolerances as expressed in 40
CFR 86.115-78 is measured and divided by the total amount of electrical
energy necessary to fully recharge the battery, similar to refueling
the gas tank of a gasoline powered vehicle.
    The first step of the procedure is to determine the distance the
vehicle operates before the battery becomes discharged to the point
where the vehicle can no longer provide sufficient propulsive energy to
maintain the speed tolerances as expressed in 40 CFR 86.115-78. This
begins with the preconditioning of the vehicle. The electric vehicle is
preconditioned per 40 CFR part 86, section 132. Following
preconditioning, the Rechargeable Energy Storage System (RESS) will be
brought to full charge. The RESS will remain plugged into the
electrical source for a minimum of 12 hours. For the FTP or city test
cycles, the chassis dynamometer procedures will be conducted pursuant
to 40 CFR 86.135 with the exception that the vehicle will run
consecutive test cycles until the vehicle is unable to maintain the FTP
speed tolerances as expressed in 40 CFR 86.115-78. To clarify, an FTP
historically consisted of two Urban Dynamometer Driving Schedules. The
FTP was later shortened to one full UDDS and only the first bag or
phase of the second UDDS. The second phase of the second UDDS was
considered just a repeat of the second phase of the first UDDS. In the
context of electric vehicles, an FTP is two full consecutive UDDS's.
The second UDDS of any FTP cycle will be started 10 minutes after the
cold start as per Sec.  86.135. Subsequent FTP cycles may require up to
30 minutes between starts due to test facility limitations. Between
starts, the RESS is not to be charged. During the 10 minute or other
longer soaks, the vehicle should have the hood closed and the cooling
fans shut off.
    If an electric vehicle cannot reach the FTP top speed, then the
test will terminate once the vehicle speeds cannot be maintained within
2 mph as described in 40 CFR 86.115-78 up to the maximum speed. For low
powered electric vehicles that cannot reach the FTP top speed, the
vehicle top speed is the maximum speed the vehicle reached during the
first FTP. The Administrator may approve alternate end of test
criteria. For low powered electric vehicles that by design cannot
maintain the speed tolerances as expressed in 40 CFR 86.115-78, low
powered vehicles, the vehicle will continue testing if the vehicle is
operated at maximum power. This provision is intended to apply
uniformly throughout all the consecutive FTP cycles. A vehicle that can
maintain trace speed on the first FTP cannot then be declared a low
powered vehicle for subsequent FTP cycles. Upon reaching the end of
test criteria, the distance driven shall be recorded and the vehicle
decelerated to a stop. The end of test criteria is when the vehicle can
no longer maintain the drive cycle per 40 CFR 86.115-78 or, for a low
powered EV, can no longer maintain the speed tolerances per 40 CFR
86.115-78 up to the vehicle maximum speed as defined above. Similarly,
low powered vehicles that cannot maintain the drive cycle due to
insufficient acceleration will use the trace driven on first UDDS as
the tolerance for end of test.
    The final stage of the electric vehicle test procedure is the
measurement of the electrical energy used to operate the vehicle. The
end of test recharging procedure is intended to return the RESS to the
full charge equivalent of the pre test conditions. The recharging
procedure must start within three hours after completing the EV
testing. The vehicle will remain on charge for a minimum of 12 hours to
a maximum of 36 hours. After reaching full charge and the minimum soak
time of 12 hours has been reached, the manufacturer may physically
disconnect the RESS from the grid. The alternating current (AC) watt-
hours must be recorded throughout the charge time. It is important that
the vehicle soak conditions must not be violated. The measured AC watt-
hours must include the efficiency of the charger system. The measured
AC watt hours are intended to reflect all applicable electricity
consumption including charger losses, battery and vehicle conditioning
during the recharge and soak, and the electricity consumption during
the drive cycles. Finally, the raw electricity consumption is
calculated by dividing the recharge AC watt-hours by the distance
traveled before the end of the test criteria is reached.
b. HFET or ``Highway'' Test
    Similar to the FTP test procedure, the first step of the procedure
is to determine the distance the vehicle operates before the battery
becomes fully discharged. This begins with the preconditioning of the
vehicle. Vehicle preconditioning is to be conducted as per 40 CFR part
86, section 132. Following preconditioning, the RESS will be brought to
full charge. The RESS will remain plugged into the electrical source
for a minimum of 12 hours. The vehicle may remain plugged into the
electrical source up to 36 hours.
    Dynamometer procedures will be conducted pursuant to 40 CFR 600.111
with the exceptions that electric vehicles will run consecutive cycles
of the HFET until the end of test criteria is reached. Subsequent HFET
cycle pairs may require up to 30 minutes of soak time between HFET
cycle pairs due to facility limitations. Between cycle pairs, the
vehicle hood is to be closed and the cooling fans shut off. Between
starts, the RESS is not to be charged.
    If an electric vehicle cannot reach the HFET top speed, then the
test will terminate once the vehicle speeds cannot be maintained, up to
the maximum speed. For low powered electric vehicles that cannot reach
the HFET top speed, the vehicle top speed is the maximum speed the
vehicle reached during the first HFET. The Administrator may approve
alternate end of test criteria. For low powered electric vehicles that
by design cannot maintain the speed tolerances as expressed in 40 CFR
86.115-78, the vehicle will continue testing if the vehicle is operated
at maximum power. This provision is intended to apply uniformly
throughout all the consecutive HFET cycles. Similarly, low powered
vehicles that cannot maintain the drive cycle due to insufficient
acceleration will use the trace driven on first UDDS as the tolerance
for end of test. A vehicle that can maintain trace speed on the first
HFET cannot then be declared a low powered vehicle for proceeding HFET
cycles.
    Similar to the FTP test procedure, the final stage of the HFET test
procedure is the measurement of the electrical energy used to operate
the vehicle. The end of test recharging procedure is intended to return
the RESS to the full charge equivalent of the pre test conditions. The
recharging procedure must start within three hours after completing the

EV testing. The vehicle will remain on charge for a minimum of 12 hours
to a maximum of 36 hours. After reaching full charge and the minimum
soak time of 12 hours has been reached, the manufacturer may physically
disconnect the RESS from the grid. The alternating current (AC) watt-
hours must be recorded throughout the charge time. It is important that
the vehicle soak conditions must not be violated. The measured AC watt-
hours must include the efficiency of the charger system. The measured
AC watt hours are intended to reflect all applicable electricity
consumption including charger losses, battery and vehicle conditioning
during the recharge and soak, and the electricity consumption during
the drive cycles. Finally, the raw electricity consumption is
calculated by dividing the recharge AC watt-hours by the distance
traveled before the end of the test criteria is reached.
c. Other EV Test Procedures
    The Administrator may approve or require equivalent or additional
EV test procedures including incorporating via reference SAEJ1634
published after this notice.
2. Plug-in Hybrid Electric Vehicles
a. PHEV Test Procedure Rationale
    Test procedures for plug-in hybrid electric vehicles (PHEV) are
required to quantify some operation unique to plug-in hybrids. The
intent in developing new PHEV test procedures is to use existing test
cycles and test procedures where applicable. PHEV operation can be
generally classified into two modes of operation, charge depleting and
charge sustaining operation. Charge depleting operation can be
described as vehicle operation where the rechargeable energy storage
system (RESS), commonly batteries, is being depleted of its ``wall''
charge. Charge sustaining operation can best be described as
conventional hybrid operation.
    New procedures for charge depleting operation would consist of
existing test cycles repeated until the PHEV RESS is depleted to charge
sustaining operation. Whereas in the past a conventional vehicle would
be expected to consume fuel and emit emissions over repetitive
identical test cycles consistently, the same cannot be said of PHEVs.
PHEV fuel consumption, fuel mix, and emissions may change as the RESS
is depleted. In order to accurately assess the emissions and fuel
efficiency of a PHEV, the PHEV requires testing over the entire charge
depleting range. Testing over the entire charge depleting range
requires new test provisions to address vehicle setup and prep,
measuring and charging the RESS, operation over repetitive test cycles,
and calculating any new values that are now measured over repetitive
test cycle.
    As described above, charge sustaining operation can best be
described as conventional hybrid operation. EPA would continue to use
existing hybrid electric vehicle test procedures. The primary
differences between HEV and other conventional vehicle testing are the
need to monitor RESS state of charge and the extra drive time required
to insure vehicle warm operation during the Federal Test Procedure. The
RESS is measured and subject to the state of charge tolerances, below,
to insure all energy is accurately accounted. The fully warm operation
is satisfied by running a full 4 phase Ftp instead of the abbreviated 3
phase Ftp as traditionally used for conventional vehicle testing.
    For the purposes of fuel economy label testing, PHEVs would be
subject to the same test cycles as other light duty vehicles with a few
exceptions. While operating in charge depleting mode, a PHEV is using
electricity originally from an off board source. This is to say that a
PHEV is operating at least partially on an alternative fuel while
operating in charge depleting mode. For the purposes of fuel economy,
PHEVs could continue to use the derived 5-cycle adjustment while in
charge depleting mode. The derived 5-cycle adjustment would be applied
to the total city and total highway fuel economies separately. For the
purposes of applying the 5-cycle correction, the total fuel economies
in charge depleting mode include both of the fuels consumed, typically
gas and electricity, as expressed in a miles per gallon of gasoline
equivalent unit. The 5-cycle correction is to be applied to the
combined energy of each mode of operation even if the energy
consumption is ultimately fuel specific. Applying a correction to the
gasoline and electricity consumption separately could lead to a smaller
adjustment than other vehicles since the 5-cycle correction is not
linear. While in charge sustain mode, PHEVs would be subject to the
same test procedures as conventional hybrid electric vehicles.
    PHEVs must meet all applicable emissions standards regardless of
RESS state of charge. EPA will consider a RESS as an adjustable
parameter for the sake of emissions testing. It is the manufacturer's
responsibility to insure vehicles are emissions compliant. EPA
typically allows good engineering judgment in applying worse case
emission testing criteria. For the purposes of certification
compliance, EPA will consider charge sustain operation as worse case.
EPA may confirmatory test or request the manufacturer to provide test
data for any test cycle at any state of charge. Evaluation of fuel
economy testing emissions may be used to change worse case emissions
assumptions.
b. PHEV Test Procedure and Calculations
    The EPA proposes to incorporate by reference SAEJ1711, in part, for
PHEV test procedures.
Charge Depleting Operation--FTP or ``City'' Test and HFET or
``Highway'' Test
    The EPA proposes to incorporate by reference SAEJ1711 chapters 3
and 4 for definitions and test procedures, respectively, where
appropriate, with the following exceptions and clarifications. UF
weighting is not intended for use with criteria pollutants.
    Test cycles will continue until the end of the phase in which
charge sustain operation is confirmed. Charge sustain operation is
confirmed when one or more phases or cycles satisfy the Net Energy
Change requirements below. EPA seeks comment on manufacturers
optionally terminating charge deplete testing before charge sustain
operation is confirmed with state of charge provided that the RESS has
a higher SOC at charge deplete testing termination than in charge
sustain operation. In the case of Plug In Hybrid Electric Vehicles with
an all electric range, engine start time will be recorded but the test
does not necessarily terminate with engine start. PHEVs with all
electric operation follow the same test termination criteria as blended
mode PHEVs. Testing can only be terminated at the end of a test cycle.
The Administrator may approve alternate end of test criteria.
    For the purposes of charge depleting CO2 and fuel
economy testing, manufacturers may elect to report one measurement per
phase (one bag per UDDS). Exhaust emissions need not be reported or
measured in phases the engine does not operate.
    End of test recharging procedure is intended to return the RESS to
a full charge equivalent to pre test conditions. The recharge AC watt
hours must be recorded throughout the charge time. Vehicle soak
conditions must not be violated. The AC watt hours must include the
charger efficiency. The measured AC watt hours are intended to reflect
all applicable electricity consumption including charger losses,
battery and vehicle conditioning during the recharge and soak, and the

electricity consumption during the drive cycles.
    Net Energy Change Tolerance, NEC, is to be applied to the RESS to
confirm charge sustaining operation. The EPA is proposing to adopt the
1% of fuel energy NEC state of charge criteria as expressed in
SAEJ1711. The Administrator may approve alternate NEC tolerances and
state of charge correction factors if the 1% criteria is insufficient
or inappropriate.
    Preconditioning special procedures are optional for traditional
``warm'' test cycles that are now required to test starting at full
RESS charge due to charge depleting range testing. If the vehicle is
equipped with a charge sustain switch, the preconditioning cycle may be
conducted per 600.111 provided that the RESS is not charged. Exhaust
emissions are not taken in preconditioning drives. Alternate vehicle
warm up strategies may be approved by the Administrator. This will
allow a method for starting ``warm'' test cycles with a fully charged
battery.
Hybrid Charge Sustaining Operation--FTP or ``City'' Test and HFET or
``Highway'' Test
    The EPA proposes to incorporate by reference SAEJ1711 chapters 3
and 4 for definitions and test procedures. The EPA proposes to adopt
the 1% of fuel energy NEC state of charge criteria as expressed in
SAEJ1711. The Administrator may approve alternate NEC tolerances and
state of charge correction factors if the 1% criteria is insufficient
or inappropriate.
    Preconditioning special procedures are optional for traditional
``warm'' test cycles that are now required to test starting at full
RESS charge due to charge depleting range testing. If the vehicle is
equipped with a charge sustain switch, the preconditioning cycle may be
conducted per 600.111 provided that the RESS is not charged. Exhaust
emissions are not taken in preconditioning drives. Alternate vehicle
warm up strategies may be approved by the Administrator.
Charge Depleting Range Determination
    Actual Charge Depleting Range (RCDA) will be a
calculated value that uses the charge sustaining state of charge of the
RESS to define the RCDA endpoint. Due to the nature of
PHEVs, RCDA will require calculation and is not necessarily
when the engine first starts. Defining RCDA using only
engine on could leave PHEVs with three modes of operation. These three
modes would be charge depletion, charge regeneration, and charge
sustaining. If the regeneration of the RESS from the engine is not
accounted for in the charge depleting mode, the RESS could be deep
cycled beyond the CS SOC to gain range while the increase in
CO2 emissions due to the RESS regeneration would not be
captured in the charge sustaining testing.
    Calculation of RCDA will require monitoring the RESS SOC
throughout charge depleting testing. The RCDA for each cycle
would be the driven cycle distance from start of CD testing until the
charge sustaining SOC is ``crossed''. The EPA is proposing to
incorporate by reference the SAEJ1711 calculation for Actual Charge
Depleting Range.
c. Other Test Cycles
    PHEV and Electric vehicle testing over the SC03, US06, or Cold CO
test cycles would follow the same general procedure as the FTP and
HFED. EPA would consider the use of alternate or equivalent PHEV test
procedures and may incorporate by reference SAEJ1711.
d. Test Tolerances
    State of Charge tolerance correction factors may be approved by the
Administrator. RESS state of charge tolerances beyond the 1% of fuel
energy may be approved by the Administrator.
e. Mileage and Service Accumulation