Summary of Interagency Working Comments Received on Draft Rule under EO 12866 Review. Subject to

Further Policy Review

1 Below is a summary of interagency comments received during EO 12866 review of the draft rule

“Revisions to Motor Vehicle Fuel Economy Label.” They are for your consideration and subject to further

policy review.

Suggested Preamble edits in highlighted red text:

1)

A/C Leakage

Aside from tailpipe CO 2 , the agencies are not proposing, but seek comment on the inclusion of

an additional factor in the GHG performance used for labeling: air conditioning (A/C) credits

generated by a manufacturer under the light duty vehicle GHG requirements. Air conditioning (A/C)

systems contribute to GHG emissions in two ways. Hydrofluorocarbon (HFC) refrigerants, which are

powerful GHGs, can leak from the A/C system (direct A/C emissions). Operation of the A/C system

also places an additional load on the engine, which results in additional CO 2 tailpipe emissions

(indirect A/C related emissions). The efficiency

‐ related A/C impacts are accounted for in the five

‐

cycle tests utilized for fuel economy labeling and proposed as the basis for GHG labeling purposes.

However, EPA and NHTSA are considering whether allowing manufacturers that generate credits

towards their GHG compliance obligation by reducing A/C leakage

‐ related GHGs should be allowed

to factor these credits into the CO 2 value displayed on the label and used as the basis for the GHG

rating. Allowing manufacturers to factor A/C credits into the GHG performance metric on the label

would reward them for making A/C leakage improvements, but it would also cause the GHG

performance value and the fuel economy performance value to diverge, and would impact the

methodology for any rating system that combines GHGs and fuel economy. Because A/C related

reductions are not “tail

‐ pipe”, including leakage improvements in the tailpipe emissions could be

misleading and inaccurate. If the final label includes other non

‐ tailpipe emissions, the agencies will

consider incorporating A/C leakage improvements. EPA and NHTSA seek comment on a number of

issues: whether including A/C leakage adjustments would lead to widening the gap between what is

on the label and what consumers get in the real world; whether and, if so, how, to allow the use of

A/C credits for the purposes of labeling, with specific focus on the methodology and how the labels

might display the inclusion of A/C leakage credits if the agencies decided to allow their use.

2)

Table VII.A.1

‐ 1

Testing Costs (Labor And O&M Costs For Running The Tests)Summary of Interagency Working Comments Received on Draft Rule under EO 12866 Review. Subject to

Further Policy Review

2 

### Facility Costs

In addition to new equipment (treated as a startup cost, below), the new testing requirements

for EVs and PHEVs will in theory require expanded testing facilities for those manufacturers choosing to

produce and sell them in the U.S. Because the cost of new facility capacity is highly dependent on

manufacturer

‐ specific factors (the costs of capital, the availability of land, the structure of work shifts, Vehicle Type/Test

Cycle Increase In Number of Tests Increase in Hours

Min Tests Min Cost

Increase Max Tests Max Cost

Increase Min Max

EV

Prep 5.0 $18,065 8.0 $28,904 150 240

FTP 5.0 $43,691 8.0 $349,530 705 5,638

HFET 5.0 $13,544 8.0 $108,350 218 1,748

EV Total $75,300 $486,784 1,073 7,625

PHEV

FTP 5.0 $6,510 8.0 $50,563 105 705

HFET 5.0 $2,018 8.0 $30,001 33 218

PHEV Total $8,528 $80,564 138 923

Total $83,828 $567,348 1,211 8,548

PRINTING COSTS

Number Vehicles Min@$0.03 Number Vehicles Max@$0.08

Color Labels 9, 832,000 $294,690 15,932,920 $1,274,634

TOTAL O&M $378,518 $1,841,981 Comment [A1]: Why are vehicle numbers

different depending on the cost?Summary of Interagency Working Comments Received on Draft Rule under EO 12866 Review. Subject to

Further Policy Review

3 the existing excess capacity, etc.), we use the approximation of unitizing increased test costs by

assuming that a facility capable of performing 750 FTP/HFET pairs would cost $4 million.



### 3)

VII. Projected Impacts Of The Proposed Requirements

Vehicle manufacturers have been required to provide fuel economy labels on vehicles since

1977. The costs and benefits of label revisions would be those associated with changes to the current

label, not the costs and benefits associated with production of the label itself. The change in cost from

this proposed rule comes in the physical revisions to the label itself and the possible efficiencies

achieved by meeting EPCA and EISA labeling requirements in one label, as well as proposed modified

vehicle testing procedures, and any displacement of currently provided information that consumers find

useful in informing their purchase decisions. The benefits of the rule come from providing labels for

mass

‐ market advanced technology vehicles for the first time, and from any improvements in the

effectiveness of labels for conventional vehicles in providing accurate and useful consumer information

on fuel consumption and environmental performance.

4) The O&M costs and labor hours discussed above can be summarized as follows:

Table VII.A.1

‐ 1



### Facility Costs Testing Costs (PRINTING COSTS

Number Vehicles Min@$0.03 Number Vehicles Max@$0.08

Color Labels 9, 832,000 $294,690 15,932,920 $1,274,634

TOTAL O&M $378,518 $1,841,981 Comment [A2]: Provide citation for this

information

Comment [A3]: Why are vehicle numbers

different depending on the cost?Summary of Interagency Working Comments Received on Draft Rule under EO 12866 Review. Subject to

Further Policy Review

4 In addition to new equipment (treated as a startup cost, below), the new testing requirements

for EVs and PHEVs will in theory require expanded testing facilities for those manufacturers

choosing to produce and sell them in the U.S. Because the cost of new facility capacity is highly

dependent on manufacturer

‐ specific factors (the costs of capital, the availability of land, the

structure of work shifts, the existing excess capacity, etc.), we use the approximation of unitizing

increased test costs by assuming that a facility capable of performing 750 FTP/HFET pairs would

cost $4 million.



### 5) C. Benefits of Label Changes

The benefits of this rule would come from improved provision of information to vehicle buyers,

and more informed consumer decisions resulting from the changes. These benefits are difficult

to estimate. Doing so would require predictions of changes in consumer behavior as a result of

the label modifications. The internet survey discussed in Section IV.A.2 is intended to provide

some insights into the comprehensibility and usefulness of the labels, but the results are not

available at this time. We caution that insights into comprehensibility and usefulness may be

limited in predicting changes in consumer behavior due to the proposed label change.

Improved fuel economy reduces costs of driving a mile, but the technology to improve fuel

economy may increase the cost of a vehicle. Evaluating this tradeoff requires comparing future

fuel savings based on expectations of future fuel prices and driving patterns with known and

immediate increases in vehicle purchase price

. Some evidence suggests that consumers may

focus on the up

‐ front costs of fuel

‐ saving technology when buying vehicles instead of giving

equal weights to the upfront cost as well as the future fuel savings. 1



### 6) 5. California Environmental Performance Label

California requires each new and used vehicle offered for sale in the state to affix a “Smog Index

Number” and “Global Warming Index” decal to the car window which indicates the pollution standard

that applies to that particular car, and its exhaust emissions. 2 This proposal would not impact

California’s regulations. The Global Warming index on California’s label includes emissions from fuel

production (http://www.driveclean.ca.gov/images/ep_label_large.jpg )

1 Turrentine, Thomas S., and Kenneth S. Kurani, “Car buyers and fuel economy?” Energy Policy 35 (2007): 1213-

1223.

2 SB 2050 (Presley), Chapter 1192, Statutes of 1994, and AB 1229 (2005). Comment [A4]: Provide citation for this

informationSummary of Interagency Working Comments Received on Draft Rule under EO 12866 Review. Subject to

Further Policy Review

5 . We seek comment on whether there will be any confusion if California’s label captures fuel production

emissions but the proposed label in this rule, which could be found side by side, only includes tailpipe

emissions.