[Federal Register Volume 60, Number 216 (Wednesday, November 8, 1995)]
[Rules and Regulations]
[Pages 56229-56232]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-27686]



=======================================================================
-----------------------------------------------------------------------

[[Page 56230]]


FEDERAL TRADE COMMISSION

16 CFR Part 259


Guide Concerning Fuel Economy Advertising of New Automobiles

AGENCY: Federal Trade Commission.

ACTION: Final Amendment of the Guide.

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

SUMMARY: The Federal Trade Commission (FTC) is amending the ``Guide 
Concerning Fuel Economy Advertising for New Automobiles'' to conform to 
the Environmental Protection Agency's (EPA) rule regarding fuel economy 
labeling of new automobiles. In particular, the amendments are intended 
to conform the Guide to those portions of EPA's rule that now require 
disclosure of certain fuel economy information, including adjusted city 
and adjusted highway miles-per-gallon (mpg) numbers, rather than the 
one ``estimated mpg'' number previously required.

EFFECTIVE DATE: December 8, 1995.

FOR FURTHER INFORMATION CONTACT:
Brinley H. Williams, Attorney, or Gerald C. Zeman, Attorney, Cleveland 
Regional Office, Federal Trade Commission, 668 Euclid Avenue, Suite 
520-A, Cleveland, Ohio 44114. Telephone (216) 522-4210.

SUPPLEMENTARY INFORMATION:

I. Background

    The FTC's ``Guide Concerning Fuel Economy Advertising for New 
Automobiles'' was first promulgated in 1975.\1\ The Guide was issued in 
response to a dramatic increase in advertising fuel economy claims 
based on a proliferation of different test procedures. The record of 
that proceeding showed both the importance of fuel economy to consumers 
in their automobile purchasing decisions and the need for meaningful 
fuel economy information based on a standard testing procedure. The 
original Guide adopted in 1975 by the Commission stated that fuel 
economy representations in advertising should be accompanied by 
disclosure of estimated city and highway mpg figures based on EPA test 
procedures.

    \1\ 40 FR 42003 (September 10, 1975).
---------------------------------------------------------------------------

    In 1978 the FTC Guide was amended to make advertising disclosures 
consistent with changed EPA requirements for fuel economy labels on new 
automobiles.\2\ At that time, the EPA mandated disclosure of a single 
number, designated ``estimated mpg,'' and the FTC Guide was amended to 
require that fuel economy advertising representations be accompanied by 
disclosure of this figure.

    \2\ 43 FR 55757 (November 29, 1978).
---------------------------------------------------------------------------

    Subsequently, in 1984, the EPA again amended its rule to require 
that adjusted city and highway mpg estimates, as well as certain other 
fuel economy information, appear on labels for new automobiles. By 
Federal Register notice of March 21, 1985 (50 FR 11378) (comment period 
reopened November 7, 1985, 50 FR 46300), the FTC proposed amendments to 
conform its Guide to the revised EPA rule. In publishing its request 
for comments, the Commission stated that because the revised EPA rule 
was already in effect, automobile manufacturers and dealers could make 
fuel economy claims consistent with the proposal pending final 
amendment of the Guide. Thus, the proposal has been in effect 
informally since its date of original publication. The Commission now 
takes the final step of formally adopting the changes to its 
advertising Guide.

II. Public Comments

    In the preamble to the 1985 Federal Register notice, the FTC 
discussed the history of the Guide and the changes in the EPA fuel 
economy labeling rule which led to the proposed changes in the 
advertising Guide. The preamble also described the changes to the Guide 
that the FTC proposed to make based on the changes to the EPA rule and 
the FTC's own experience with the advertising Guide. Additionally, in 
the preamble, the FTC requested comments regarding the cost of 
providing the information, the effect the Guide has on fuel economy 
advertising, and the utility of the information to consumers.
    Comments were received from: the American Automobile Association; 
CBS, Inc.; the Center for Auto Safety; Dancer Fitzgerald Sample; the 
Department of Energy; the Environmental Protection Agency; General 
Motors Corporation; the Leo Burnett Advertising Agency; the National 
Association of Broadcasters; and the National Automobiles Dealers 
Association. Three comments were also received from individuals: Arthur 
and Louise Britton; Ralph Williams; and Walt and Cathy Zimmerman.

A. General Comments

    Some comments received from the automobile industry, the 
broadcasting industry, and one advertising agency either opposed 
retention of fuel economy disclosure requirements, or proposed that the 
disclosure requirements be limited to specific circumstances, such as 
advertisements making quantitative or comparative fuel economy claims. 
The comments opposing retention contended that the requirements are 
burdensome, costly, and do not provide useful information to consumers. 
On the other hand, comments from individuals, public interest groups, 
the Department of Energy, EPA, and another advertising agency generally 
favored retention of the disclosure requirements. These comments 
contended that disclosure of the EPA mpg figures provides consumers 
with useful comparative fuel economy information, while adding little 
to advertising costs. One comment contended that elimination of these 
requirements would precipitate a variety of confusing fuel economy 
claims.
    The FTC continues to believe that disclosure of EPA mpg numbers 
provides to consumers useful and understandable comparative fuel 
economy information. (See 40 FR 42003, September 10, 1975.) While there 
is undoubtedly a cost to providing this information, the FTC believes 
that the cost is relatively small \3\ and is more than offset by the 
value of the information, which enables consumers to judge the relative 
fuel economy of comparative automobile models. Moreover, the 1985 
proposed amendments to the Guide substantially shortened the 
disclosures that must accompany advertised EPA estimates, thereby 
reducing costs. Furthermore, as discussed below, the FTC is allowing 
certain fuel economy advertisements to disclose only one EPA estimate--
either the highway estimate or the city estimate--without simultaneous 
disclosure of the other number. Thus, advertisers now have both a 
shorter disclosure requirement and more flexibility when advertising 
fuel economy of new automobiles than was the case under the previously 
existing Guide.

    \3\ General Motors was the only commenting party to submit 
specific cost data. Its figures were disputed by the Center for Auto 
Safety. Dancer Fitzgerald Sample, an advertising agency, stated that 
it believed the cost of providing EPA estimates in fuel economy 
advertising to be minimal.
---------------------------------------------------------------------------

B. EPA Estimates

    Some commenters contended that both the city and highway estimates 
should be disclosed in all fuel economy advertisements in order to 
maintain consistency with the EPA labeling rule. Other comments 
suggested that disclosure of the EPA estimate should be required only 
when explicit mileage claims are made.
    The FTC has determined to adhere to the 1985 proposal, requiring 
disclosure of the EPA number corresponding to the claim that is made. 
For example, if only a highway mileage claim is made in the 

[[Page 56231]]
ad, then only the EPA highway estimate must be disclosed. If a general 
(i.e., nonspecific) mileage claim is made, only the city estimate must 
be disclosed. However, if the advertising claim addresses both city and 
highway driving, then both figures must be disclosed.
    The FTC is adopting these disclosure requirements because the 
current EPA city and highway numbers more accurately predict actual in-
use mileage. As a result, the FTC believes that disclosure of the city 
estimate may not be necessary in advertisements directed only to 
highway driving. Of course, advertisers are always free to disclose 
both city and highway numbers in their advertising.
    Based on the reliability of the EPA city and highway numbers, the 
FTC's 1985 proposal did not include the lengthy disclosure, required 
under the previous Guide, warning that the consumer's actual mileage 
probably will be less and will depend upon factors such as weather 
conditions and driving speed.
    The FTC, however, continues to believe that it is important that 
the EPA estimate accompany implicit as well as explicit mileage claims. 
Any mileage claim inherently involves a comparison to other vehicles. 
The EPA estimates provide consumers with a meaningful method of 
comparing competing claims.
    The 1985 proposal, which has been in effect informally during the 
intervening years, is now time-tested. It appears that the proposal has 
worked well, and the Commission has not seen evidence of deceptive or 
misleading claims because of the changed disclosures. Therefore, formal 
adoption of the proposed Guide is warranted.

C. Non-EPA Test Results

    The greatest number of comments addressed use of non-EPA test 
results. The comments ranged from advocating a prohibition on the use 
of such test results to espousing elimination of all disclosure of EPA 
estimates in ads using non-EPA results. Some comments also objected to 
the specific proposal that would allow the EPA estimates to be 
disclosed in ``equal prominence'' to the non-EPA results, in the audio 
portion of broadcast ads, instead of requiring ``greater prominence'' 
than the non-EPA results.
    The FTC believes that if a non-EPA test is advertised, the 
appropriate EPA estimate should be disclosed with greater prominence, 
except in audio portions of advertisements. In the prior version of the 
Guide, the requirement had been that the EPA estimate had to be given 
before and after the non-EPA estimate in audio broadcast ads. As a 
result, advertisers had less flexibility in developing broadcast ads 
than they did print ads. Unlike a printed disclosure, which may not be 
seen among other textual material unless it is more prominently 
displayed, however, an audio disclosure of the EPA estimate will be as 
likely to be heard as the non-EPA estimate. Accordingly, the FTC 
believes that adopting an ``equal prominence'' provision for audio 
portions of advertisements will reasonably ensure that the EPA 
estimates are conveyed to the listener without unduly burdening the 
advertiser.

List of Subjects in 16 CFR Part 259

    Advertising, Fuel economy, Trade practices.

    For the reasons set forth in the preamble, 16 CFR Part 259 is 
amended to read as follows:

PART 259--GUIDE CONCERNING FUEL ECONOMY ADVERTISING FOR NEW 
AUTOMOBILES

Sec.
259.1  Definitions.
259.2  Advertising disclosures.

    Authority: 15 U.S.C. 41-58.


Sec. 259.1  Definitions.

    For the purposes of this part, the following definitions shall 
apply:
    (a) New automobile. Any passenger automobile or light truck for 
which a fuel economy label is required under the Energy Policy and 
Conservation Act (42 U.S.C. 6201 et seq.) or rules promulgated 
thereunder, the equitable or legal title to which has never been 
transferred by a manufacturer, distributor, or dealer to an ultimate 
purchaser. The term ``manufacturer'' shall mean any person engaged in 
the manufacturing or assembling of new automobiles, including any 
person importing new automobiles for resale and any person who acts for 
and is under control of such manufacturer, assembler, or importer in 
connection with the distribution of new automobiles. The term 
``dealer'' shall mean any person, resident or located in the United 
States or any territory thereof, engaged in the sale or distribution of 
new automobiles to the ultimate purchaser. The term ``ultimate 
purchaser'' means, for purposes of this part, the first person, other 
than a dealer purchasing in his or her capacity as a dealer, who in 
good faith purchases such new automobile for purposes other than 
resale, including a person who leases such vehicle for his or her 
personal use.
    (b) Estimated city mpg. The gasoline consumption or mileage of new 
automobiles as determined in accordance with the city test procedure 
employed and published by the U.S. Environmental Protection Agency as 
described in 40 CFR 600.209-85 and expressed in miles-per-gallon, to 
the nearest whole mile-per-gallon, as measured, reported, published, or 
accepted by the U.S. Environmental Protection Agency.
    (c) Estimated highway mpg. The gasoline consumption or mileage of 
new automobiles as determined in accordance with the highway test 
procedure employed and published by the U.S. Environmental Protection 
Agency as described in 40 CFR 600.209-85 and expressed in miles-per-
gallon, to the nearest whole mile-per-gallon, as measured, reported, 
published, or accepted by the U.S. Environmental Protection Agency.
    (d) Vehicle configuration. The unique combination of automobile 
features, as defined in 40 CFR 600.002-85(24).
    (e) Estimated in-use fuel economy range. The estimated range of 
city and highway fuel economy of the particular new automobile on which 
the label is affixed, as determined in accordance with procedures 
employed by the U.S. Environmental Protection Agency as described in 40 
CFR 600.311 (for the appropriate model year), and expressed in miles-
per-gallon, to the nearest whole mile-per-gallon, as measured, reported 
or accepted by the U.S. Environment Protection Agency.
    (f) Range of estimated fuel economy values for the class of new 
automobiles. The estimated city and highway fuel economy values of the 
class of automobile (e.g., compact) as determined by the U.S. 
Environmental Protection Agency pursuant to 40 CFR 600.315 (for the 
appropriate model year) and expressed in miles-per-gallon, to the 
nearest whole mile-per-gallon.


Sec. 259.2  Advertising disclosures.

    (a) No manufacturer or dealer shall make any express or implied 
representation in advertising concerning the fuel economy of any new 
automobile \1\ unless such representation is accompanied by the 
following clear and conspicuous disclosures:

    \1\ The Commission will regard as an express or implied fuel 
economy representation one which a reasonable consumer, upon 
considering the representation in the context of the entire 
advertisement, would understand as referring to the fuel economy 
performance of the vehicle or vehicles advertised.
---------------------------------------------------------------------------

    (1) If the advertisement makes:
    (i) Both a city and a highway fuel economy representation, both the 


[[Page 56232]]
``estimated city mpg'' and the ``estimated highway mpg'' of such new 
automobile,\2\ must be disclosed;

    \2\ For purposes of Sec. 259.2(a), the ``estimated city mpg'' 
and the ``estimated highway mpg'' must be those applicable to the 
specific nameplate being advertised. Fuel economy estimates assigned 
to ``unique nameplates'' (see 40 CFR 600.207-86(a)(2)) apply only to 
such unique car lines. For example, if a manufacturer has a model 
named the ``XZA'' that has fuel economy estimates assigned to it and 
a derivative model named the ``Econo-XZA'' that has separate, higher 
fuel economy estimates assigned to it, these higher numbers assigned 
to the ``Econo-XZA'' cannot be used in advertisements for the 
``XZA.''
---------------------------------------------------------------------------

    (ii) A representation regarding only city or only highway fuel 
economy, only the corresponding EPA estimate must be disclosed; \3\

    \3\ For example, if the representation clearly refers only to 
highway fuel economy, only the ``estimated highway mpg'' need be 
disclosed.
---------------------------------------------------------------------------

    (iii) A general fuel economy claim without reference to either city 
or highway, or if the representation refers to any combined fuel 
economy number, the ``estimated city mpg'' must be disclosed; \4\ and

    \4\ Nothing in this section should be construed as prohibiting 
disclosure of both the city and highway estimates.
---------------------------------------------------------------------------

    (2) That the U.S. Environmental Protection Agency is the source of 
the ``estimated city mpg'' and ``estimated highway mpg'' and that the 
numbers are estimates.\5\

    \5\ The Commission will regard the following as the minimum 
disclosure necessary to comply with Sec. 259.2(a)(2), regardless of 
the media in which the advertisement appears: ``EPA estimate(s).''
    For television, if the estimated mpg appears in the video, the 
disclosure must appear in the video; if the estimated mpg is audio, 
the disclosure must be audio.
---------------------------------------------------------------------------

    (b) If an advertisement for a new automobile cites:
    (1) The ``estimated in-use fuel economy range,'' the advertisement 
must state with equal prominence both the upper and lower number of the 
range, an explanation of the meaning of the numbers (i.e., city mpg 
range or highway mpg range or both), and that the U.S. Environmental 
Protection Agency is the source of the figures.
    (2) The ``range of estimated fuel economy values for the class of 
new automobiles'' as a basis for comparing the fuel economy of two or 
more automobiles, such comparison must be made to the same type of 
range (i.e., city or highway).\6\

    \6\ For example, an advertisement could not state that 
``according to EPA estimates new automobiles in this class get as 
little as X mpg (citing a figure from the city range) while EPA 
estimates that this automobile gets X + mpg (citing the EPA highway 
estimates or a number from the EPA estimated in-use fuel economy 
highway range for the automobile).
---------------------------------------------------------------------------

    (c) Fuel economy estimates derived from a non-EPA test may be 
disclosed provided that:
    (1) The advertisement also discloses the ``estimated city mpg'' 
and/or the ``estimated highway mpg,'' as required by Sec. 259.2(a), and 
the disclosure required by Sec. 259.2(a), and gives the ``estimated 
city mpg'' and/or the ``estimated highway mpg'' figure(s) substantially 
more prominence than any other estimate; \7\ provided, however, for 
radio and television advertisements in which any other estimate is used 
only in the audio, equal prominence must be given the ``estimated city 
mpg'' and/or the ``estimated highway mpg'' figure(s); \8\

    \7\ The Commission will regard the following as constituting 
``substantially more prominence:''
    For television only: If the estimated city and/or highway mpg 
and any other mileage estimate(s) appear only in the visual portion, 
the estimated city and/or highway mpg must appear in numbers twice 
as large as those used for any other estimate, and must remain on 
the screen at least as long as any other estimate. If the estimated 
city and highway mpg appear in the audio portion, visual broadcast 
of any other estimate must be accompanied by the simultaneous, at 
least equally prominent, visual broadcast of the estimated city and/
or highway mpg. Each visual estimated city and highway mpg must be 
broadcast against a solid color background that contrasts easily 
with the color used for the numbers when viewed on both color and 
black and white television.
    For print only: The estimated city and/or highway mpg must 
appear in clearly legible type at least twice as large as that used 
for any other estimate. Alternatively, if the estimated city and 
highway mpg appear in type of the same size as such other estimate, 
they must be clearly legible and conspicuously circled. The 
estimated city and highway mpg must appear against a solid color, 
contrasting background. They may not appear in a footnote unless all 
references to fuel economy appear in a footnote.
    \8\ The Commission will regard the following as constituting 
equal prominence. For radio and television when any other estimate 
is used in the audio: The estimated city and/or highway mpg must be 
stated, either before or after each disclosure of such other 
estimate at least as audibly as such other estimate.
---------------------------------------------------------------------------

    (2) The source of the non-EPA test is clearly and conspicuously 
identified;
    (3) The driving conditions and variables simulated by the test 
which differ from those used to measure the ``estimated city mpg'' and/
or the ``estimated highway mpg,'' and which result in a change in fuel 
economy, are clearly and conspicuously disclosed.\9\ Such conditions 
and variables may include, but are not limited to, road or dynamometer 
test, average speed, range of speed, hot or cold start, and 
temperature; and

    \9\ For dynamometer tests any difference between the EPA and 
non-EPA tests must be disclosed. For in-use tests, the Commission 
realizes that it is impossible to duplicate the EPA test conditions, 
and that in-use tests may be designed to simulate a particular 
driving situation. It must be clear from the context of the 
advertisement what driving situation is being simulated (e.g., cold 
weather driving, highway driving, heavy load conditions). 
Furthermore, any driving or vehicle condition must be disclosed if 
it is significantly different from that which an appreciable number 
of consumers (whose driving condition is being simulated) would 
expect to encounter.
---------------------------------------------------------------------------

    (4) The advertisement clearly and conspicuously discloses any 
distinctions in ``vehicle configuration'' and other equipment affecting 
mileage performance (e.g., design or equipment differences which 
distinguish subconfigurations as defined by EPA) between the 
automobiles tested in the non-EPA test and the EPA tests.

    By direction of the Commission.
Donald S. Clark,
Secretary.

Concurring Statement of Commissioner Mary L. Azcuenaga, New Automobile 
Mileage Guide, Matter No. P844508

    Today, the Commission issues amendments to the Fuel Economy 
Advertising Guide. I join the Commission in issuing the amended 
Guide because the amendments are needed to conform the Guide to the 
Environmental Protection Agency's rules concerning fuel economy and 
because the amendments otherwise appear to be improvements. The 
Commission proposed these amendments to the Guide and received 
comments on them in 1985. Given that the record on which the 
amendments are based closed a decade ago, I would have preferred, 
before finalizing the amendments, to reopen the comment period for 
thirty days to ascertain whether the amendments should be issued as 
is or should be revised to reflect any new information.\1\

    \1\ Reopening the comment period would have been consistent with 
the Commission's ongoing regulatory review program under which its 
rules and guides are reviewed at least once every ten years.
---------------------------------------------------------------------------

    When the proposed amendments were published for comment, the 
Commission stated that it would not consider advertising that 
complied with the amendments to violate Section 5 of the FTC Act. It 
is my understanding that most fuel economy advertising since 1985 
has been consistent with the proposed amendments to the Guide. It is 
also my understanding that fuel economy advertising has become less 
prevalent since 1985. The decrease in fuel economy advertising may 
be due to changes in the relative importance that consumers attach 
to fuel economy information when making a new automobile purchase. 
In the alternative, fuel economy advertising may have become less 
prevalent because the standards contained in the amended Guide are 
overly regulatory and have deterred truthful as well as deceptive 
advertising. The record supporting the amendments, having closed a 
decade ago, sheds no light on why fuel economy advertising has 
decreased during the ensuing years. Given the potential value of 
truthful fuel economy advertising, it would have been worthwhile to 
seek public comment again before issuing the amended Guide to ensure 
that it not only helps to prevent deception but also does not deter 
truthful advertising.

[FR Doc. 95-27686 Filed 11-7-95; 8:45 am]
BILLING CODE 6750-01-M