TABLE OF CONTENTS

    VI. Early Warning Reporting Information

    The NPRM sought public comment on how the agency should handle the data to be submitted under the new early warning reporting regulation. Although the final rule prescribing the early warning reporting requirements had not yet been issued, the agency received numerous comments with regard to that data.

    Some business interests argued that the TREAD Act itself prohibits the disclosure of any early warning reporting information under Exemption 3 of the Freedom of Information Act (FOIA). Others argued that Exemption 4 of the FOIA, applicable to confidential business information, governs whether the information should be disclosed. All business interests contended that release of the early warning data is likely to cause substantial competitive harm and many pointed out that disclosure is likely to impair the agency’s ability to obtain the material in the future. Public Citizen, while agreeing that Exemption 4 is applicable, argued that all the data should be released because it is summary in nature, is important to the identification of potential defects and is often released in the course of individual defect determinations.

    As the Court of Appeal for the District of Columbia Circuit recently noted, the Freedom of Information Act is premised on public access to information within enumerated bounds ensuring that the government’s proper functions are not impeded:

    "Public access to government documents" is the "fundamental principle" that animates FOIA. John Doe Agency v. John Doe Corp., 493 U.S. 146, 151 (1989). "Congress recognized, however, that public disclosure is not always in the public interest."  CIA v. Sims, 471 U.S. 159, 166-67 (1985). Accordingly, FOIA represents a balance struck by Congress between the public’s right to know and the government’s legitimate interest in keeping certain information confidential. John Doe Agency, 493 U.S. at 152. To that end, FOIA mandates disclosure of government records unless the requested information falls within one of nine enumerated exemptions, see 5 U.S.C. § 552(b). While these exemptions are to be "narrowly construed," FBI v. Abramson, 456 U.S. 615, 630 (1982), courts must not fail to give them a "meaningful reach and application," John Doe Agency, 493 U.S. at 152. The government bears the burden of proving that the withheld information falls within the exemptions it invokes. 5 U.S.C. § 552(a)(4)(b).

    See Center for National Security Studies, et. al. v. U.S. Department of Justice, 331 F.3d 918 (D.C. Cir. 2003).

    We have determined that the confidentiality of the early warning submissions should be reviewed under Exemption 4 of FOIA relating to confidential business information. Below we briefly set forth the early warning reporting requirements and the arguments made in favor and against disclosure. We then apply the principles set forth in National Parks & Conservation Ass'n v. Morton (National Parks), 498 F.2d 765 (D.C. Cir. 1974), and its progeny to each element of the early warning reporting information.


    A. Summary of the Early Warning Reporting Requirements

    The bulk of the early warning reporting requirements apply to larger manufacturers of motor vehicles, and all manufacturers of child restraint systems and tires (see 49 CFR Part 579). In general, vehicle manufacturers must submit quarterly reports with regard to the following categories of vehicles, if they produce 500 or more vehicles of a category annually:  light vehicles, medium-heavy vehicles and all buses, trailers, and motorcycles. The reporting information required of these manufacturers is summarized below:

    In addition, these manufacturers must submit to the agency, on a one-time basis, historical data relating to the number of warranty claims/adjustments and field reports for each calendar quarter during the three-year period from July 1, 2000 through June 30, 2003. [4]  

    Smaller manufacturers (as defined in the early warning rule), and manufacturers of original motor vehicle equipment or replacement equipment other than child restraint systems and tires, are required to submit reports containing information about claims and notices of deaths allegedly caused by their products, but are not required to submit other information.


    B. Application of the FOIA to the Early Warning Reporting Program

    The TREAD Act’s disclosure provision applies to information provided under 49 U.S.C. § 30166(m), which was added to the Vehicle Safety Act in the aftermath of hearings held in connection with NHTSA’s investigation of Firestone ATX and Wilderness AT tires. That statutory section mandates that the agency initiate a rulemaking "to establish early warning reporting requirements for manufacturers of motor vehicles and motor vehicle equipment to enhance the Secretary’s ability to carry out the provisions of this chapter." 49 U.S.C. § 30166(m)(1).

    Section 30166(m)(3) sets forth the type of information Congress expected the rulemaking to include. Congress specifically directed the agency to require the submission of information relating to repair and/or replacement campaigns. The Act provides for the submission of data on claims submitted to the manufacturer for serious injuries (including death) and aggregate statistical data on property damage from alleged defects in a motor vehicle or in motor vehicle equipment that may assist in the identification of defects. 49 U.S.C. § 30166(m)(3)(A). Congress also specifically provided for manufacturers to submit information relating to claims of death or serious injury alleged to be caused by a defect where the manufacturer receives actual notice. 49 U.S.C. § 30166(m)(3)(C).

    Congress recognized that additional types of information may be useful to the agency in carrying out its mission to identify safety related defects. In Section 30166(m)(3)(B), Congress gave the agency the authority to mandate the submission of "other data" in addition to the information described above "to the extent that such information may assist in the identification of defects related to motor vehicle safety in motor vehicles and motor vehicle equipment in the United States."  Pursuant to that authority, NHTSA's early warning reporting rule requires the submission of information relating, among others, to warranty claims, field reports and consumer complaints.

    Congress also considered the extent to which the data submitted as part of the early warning reporting regulation should be subject to public disclosure or, alternatively, the extent to which it should be held confidential to enhance the agency’s ability to identify potential safety defects. The TREAD Act’s disclosure provision, Section 30166(m)(4)(C), reads:

    None of the information collected pursuant to the final rule promulgated under paragraph (1) shall be disclosed pursuant to section 30167(b) unless the Secretary determines the disclosure of such information will assist in carrying out sections 30117(b) and 30118 through 30121. [5]


    1. The TREAD Act and the FOIA Exemptions

    In a letter to Secretary Slater dated October 20, 2000, days after passage of the TREAD Act, but before President Clinton signed the Act into law, Public Citizen objected to the disclosure provision. [6]   Public Citizen was concerned that the provision would be construed to prohibit the disclosure of any early warning reporting data:

    The secrecy provision in sec. 3(b)(4)(c) is imposed upon all safety defect information collected as part of the bill’s "early warning reporting requirements" rulemaking. We believe that the secrecy provision thwarts the clear purpose of the legislation – to protect the public from defect cover-ups – and may drastically reduce public access to safety defect information. Under that section, the Secretary shall not disclose defect and early warning information about lawsuits, consumer complaints, deaths, injuries, component failures or consumer satisfaction campaigns unless you determine that disclosure will assist in carrying out the law. This inverts existing law, as the current presumption of 49 U.S.C. sec. 30167(b) is to favor the disclosure over and above the disclosure requirements of the Freedom of Information Act (FOIA). Indeed, the function of this reversal in presumptions is to create a categorical exemption under FOIA’s exemption three, and thus to keep information submitted under the new rule totally secret, probably indefinitely. (Emphasis in original) [7]

    NHTSA’s Chief Counsel considered and rejected this view of the TREAD Act’s disclosure provision in an internal departmental memo, which was subsequently placed in the public record. That memo stated in part:

    Ms. Claybrook's letter seems to suggest that the variation in language could be interpreted to prevent the disclosure of any early warning information submitted to the agency in the absence of a decision by the Secretary that disclosure of the information "will assist in carrying out" the purposes of the Act. However, the legislation clearly requires that such a decision be made prior to disclosure only when the disclosure is being made under section 30167(b), which by its terms is invoked only when the disclosure involves information that has been determined to be entitled to confidential treatment.

    Moreover, section 30167(b) provides specifically that "A requirement to disclose information under this subsection is in addition to the requirements of [the FOIA]."  Accordingly, neither section 30167(b) nor paragraph (4)(C) would affect the agency's initial decision regarding whether information submitted to the agency is entitled to confidential treatment. Such decisions will continue to be made in accordance with Exemption 4 of [the FOIA], the Trade Secrets Act and the agency's regulations concerning the treatment of confidential business information, 49 CFR Part 512. [8]

    In its comments to this rulemaking, Public Citizen agreed that Section 30166(m)(4)(C) permits the agency to consider the early warning information under Exemption 4 of the FOIA. Public Citizen claimed that the effect of the provision is to alter a preexisting presumption in Section 30167(b) from one of disclosure to nondisclosure in the absence of the specified findings of the Secretary. Public Citizen also clarified that its "statements about the possible meaning of the bill were concerned with its potential for legal manipulation by the industry, i.e., what in the worst case it could mean, rather than any suggestion of what it should or actually does mean in agency practice."

    The RMA argued that the TREAD Act provision falls within Exemption 3(b) of the FOIA, which negates disclosure when Congress has established particular criteria for withholding information or has referred to particular types of matters to be withheld. The RMA asserted that the reference in the disclosure provision to the rulemaking required by Section 30166(m)(1) is sufficient to bring the statute within the purview of Exemption 3. According to the RMA, the analysis prepared by the agency in the October 27, 2000 memorandum would render the statutory provision meaningless and violate a central tenet of statutory construction.

    The RMA, as well as individual tire makers and many other manufacturers, further argued that the information required by the early warning reporting regulation would lead to substantial competitive harm if disclosed. In addition, they suggest that disclosure would lead to less candor from field personnel, resulting in less reliable information, and would discourage marketing efforts that lead to more complete and useful data.

    The Alliance suggested that the provision assumes the confidentiality of the early warning reporting data because information cannot be disclosed under section 30167(b) unless it is otherwise confidential. The Alliance asserted that the information may be found to be confidential under either Exemption 4 or Exemption 7 of the FOIA. The Alliance submitted affidavit evidence to support its claim that disclosure of the early warning reporting information would lead to substantial competitive harm within the automotive industry. General Motors also submitted comments explaining how, in its view, substantial competitive harm is likely to result if the data were disclosed.

    The TREAD Act mandated that NHTSA collect and maintain information in a manner not previously followed by the agency. Historically, the agency has received information relating specifically to a particular alleged defect or noncompliance, including engineering drawings, warranty claim information, customer complaints, field reports and lawsuit information. Manufacturers submitting information in response to the agency’s information requests frequently seek confidential treatment for portions of the information submitted. The agency reviews those requests in accordance with Exemption 4 of the FOIA.

    The early warning reporting regulation requires regular periodic submissions of data that relate not simply to alleged problems, but to all of a manufacturer’s products. These submissions are not necessarily indicative of any problem needing investigation. We do not believe that the language of Section 30166(m)(4)(C), and the colloquy accompanying its enactment (See Appendix A), expresses a Congressional mandate to treat all early warning reporting information confidentially. Instead, we believe that Congress expected the agency to review the confidentiality of early warning reporting information under Exemption 4 of the FOIA, but to apply Section 30167(b) in a more restrictive manner to that data than to other information received by the agency. [9]  

    As many of the commenters pointed out, Section 30167(b) applies only after we have determined that information is entitled to confidential treatment. The provision permits the disclosure of confidential information whenever the Secretary, in his discretion, believes that the information can be useful in carrying out the agency’s defect identification and remediation function. In contrast, the TREAD Act’s disclosure provision does not permit the disclosure of confidential early warning reporting information unless the Secretary specifically finds that disclosure is necessary to carry out the agency’s responsibility to identify potential safety-related defects. Thus, the basis for justifying disclosure of the early warning reporting information is significantly more stringent than that for all other material submitted to the agency and found entitled to confidential treatment under the FOIA.

    Both Public Citizen and the Alliance construed the TREAD Act provision in a manner consistent with our analysis. Public Citizen stated that the provision "inverts existing law, as the current presumption of 49 U.S.C. § 30167(b) is to favor disclosure over and above the disclosure requirements of the Freedom of Information Act (FOIA)." [10]    The Alliance similarly argued that Congress enacted the TREAD Act aware that the Vehicle Safety Act contained a provision generally favoring disclosure of information, even if it is otherwise confidential, when deemed necessary to assist in carrying out the agency’s defect remediation function. According to the Alliance, Congress intended to neutralize that presumption and to disfavor disclosure of the early warning information:

    [U]nder longstanding NHTSA practice, nonconfidential information related to potential defects or noncompliances under investigation by the agency is routinely available in the agency’s public reference reading room, without need for a Secretarial "determination" under § 30167(b), even though NHTSA could lawfully invoke FOIA Exemption Seven (relating to law enforcement investigations) to protect this information. Thus, as a practical matter, information in NHTSA’s possession is not even considered for release under § 30167(b) of the Safety Act, unless and until that information is already entitled to confidential treatment under one of the Freedom of Information Act exemptions. (Emphases in original.)

    As set forth in the October 27, 2000 memo, the agency disagrees with the assertion presented by the RMA and other business interests that the TREAD Act provision categorically prohibits the disclosure of any early warning reporting information pursuant to Exemption 3 of the FOIA. Our analysis of the arguments in favor of the application of FOIA Exemption 3, and our reasons for rejecting those arguments are amplified in Appendix A to this Final Rule. In sum, we believe the TREAD Act provision intended the Secretary initially to determine which information is entitled to confidential treatment as confidential business information, and, if so and only then, to consider whether disclosure is nonetheless necessary for the agency to fulfill its responsibilities to detect and enforce the laws governing the recall of vehicles and equipment containing safety related defects.


    2. The Early Warning Reporting Information and FOIA Exemption 4

    Consistent with the October 27, 2000 memo, we have determined that the confidentiality of the early warning reporting information should be construed under Exemption 4 of the FOIA. Exemption 4 protects information from disclosure that are "trade secrets and commercial or financial information obtained from a person and privileged or confidential."  5 U.S.C. § 552(b)(4). Information is confidential if its disclosure is likely "(1) to impair the Government’s ability to obtain necessary information in the future; or (2) to cause substantial harm to the competitive position of the person from whom the information was obtained."  National Parks, 498 F.2d at 770. See also Center for Auto Safety v. National Highway Traffic Safety Administration (CAS v. NHTSA), 244 F.3d 144, 147-48 (D.C. Cir. 2001)(discussing application of Exemption 4 to mandatory submissions). [11]

    Business interests contended that the early warning reporting information is entitled to protection under both prongs. They argued that early warning submissions would provide insight into the field experience and performance of a submitter's entire product line. Business enterprises were concerned that this information could then be analyzed by competitors to assess various factors, such as a submitter's experience with a particular supplier, production cycles, and the reliability of that submitter's products. Many of the commenters also pointed out that the disclosure of information may deter candor and discourage efforts to obtain reliable information from the field.

    The RMA asserted that disclosure of early warning reporting information would harm individual competitors. The Alliance echoed these concerns and emphasized that the information would be valuable to competitors, particularly within the context of competition among its member companies, aftermarket parts manufacturers, potential new entrants, and franchised dealers. Many commenters pointed out that the early warning reporting information constitutes a unique and comprehensive compilation of information not otherwise available, and, while subject to misinterpretation by the public, is especially valuable to competitors.

    The Alliance submitted affidavit evidence with its comments from an automotive marketing consultant to support its claim that the early warning reporting information relates to issues of importance to new car buyers, and therefore that the material is likely to be used (and potentially misused) in the competitive marketplace. The Alliance pointed out that the most significant factors cited by automobile consumers when choosing a vehicle relate to reliability, quality and dependability – all factors upon which the early warning reporting information is likely to shed some light.

    The Alliance and others expressed concern over the potential misuse of the early warning reporting information, either by competing companies or others who may draw conclusions from the data that, according to the Alliance and others, may be unwarranted. The Alliance stated that in addition to "[t]he unfairness of subjecting the submitting manufacturers to the competitive harm that would flow from the disclosure of [early warning information]," any comparison of this information by the public would not be valid because of the differences in warranty periods among manufacturers.

    GM reiterated this concern. Workhorse similarly wrote that disclosure of early warning information would create "a serious risk that the public will be misled by disclosing such raw, unverified data" and lead to "consumer confusion and manufacturer harm."  The RMA, while arguing that the potential misuse should support a blanket prohibition from disclosure, also asserted that the early warning reporting information is commercially valuable, and that its value is directly related to the extent of its confidentiality.

    The Alliance recognized and did not take issue with NHTSA's current practice of releasing similar types of information submitted during specific defect investigations, but argued that this "does not justify the release of the comprehensive compilations of information" collected under the early warning reporting rule. The Alliance explained that "[a] limited release of information that is relevant to, and specific to, an individual defect investigation is much different from a competitive standpoint than the automatic release of the continually collected, full compendium of quality and customer satisfaction information that is represented by the complete 'early warning' submission each quarter." 

    Because of the comprehensive nature of the early warning information, the Alliance argued that these submissions "should . . . be protected by a class determination presuming their confidentiality and . . . should not have to be accompanied by a traditional Part 512 justification with each quarterly submission."  The Alliance added that NHTSA's "long-standing practice of releasing information limited in terms of scope and timeframe related to consumer complaints, warranty claims, property damage claims, field reports, etc., when this information has been submitted in connection with an individual, specific defect investigation does not defeat the presumptive confidentiality of the comprehensive collection of such information."

    AIAM asserted a similar argument in favor of protecting early warning information, claiming that its main point of contention "lies with a comprehensive disclosure of all, unscreened early warning information."  The AIAM added that "we recognize that, in appropriate instances, portions of the early warning information could still be disclosed to the public."  AIAM explained that such releases could occur "after NHTSA has processed and evaluated early warning information and decided to pursue an investigation about a particular vehicle/component." 

    GM also distinguished between the disclosures that NHTSA currently makes during defect investigations and the disclosures that would occur if the class determinations the agency proposed for warranty information were made. The company explained that its responses to agency information requests "often include warranty data for a limited number of makes, models, and years."

    Public Citizen argued that most of the information to be submitted under the early warning reporting rule is summary in nature and not specific enough to qualify for confidential treatment. Public Citizen also contended that because information to be submitted is similar or identical to the type of information submitted as part of a defect investigation, it should be treated as it currently is in a defect investigation. Public Citizen noted that the agency had speculated early in the development of the early warning reporting regulation that it thought manufacturers may not seek confidential treatment of the early warning reporting information.

    We believe that the information submitted in the course of a defect investigation is qualitatively and quantitatively different from the comprehensive compendium of pre-investigation information to be submitted under the early warning reporting rule, and further that the competitive harm caused by the disclosure of some of the early warning reporting data is substantial. While the early warning reporting information will generally not be as specific as the data submitted during a defect investigation into a defined and particular problem, each company must provide data with regard to each product it manufacturers. The information relating to certain elements of reporting provides specific information that competitors are likely to find valuable and, at the same time, provides comparative data across each manufacturer’s entire product line.

    The U.S. Court of Appeals for the D.C. Circuit has also recognized that a collection of information may be found likely to cause substantial competitive harm even if some of the individual pieces of data are not independently entitled to confidential treatment. See Trans-Pacific Policing Agreement v. United States Customs Service, 177 F.3d 1022 (D.C. Cir. 1999). [12]   See also Center for National Security Studies, et. al. v. U.S. Dept. of Justice, 331 F.3d 918 (D.C. Cir. 2003) (finding that Exemption 7 protects a comprehensive list of names and other personal information even though individual pieces of information have been otherwise revealed). We further note that the D.C. Circuit has acknowledged that potential consumer misuse, with competitive consequences, is a legitimate factor to consider when determining the confidentiality of the information required to be submitted to the agency. See Worthington Compressors v. Costle, 662 F.2d 45, 52 n.43 (D.C. Cir. 1981)(trial court should consider "whether competitors or consumers may misuse the information to the detriment" of the submitters’ competitive positions). [13]

    NHTSA has consistently recognized the importance of providing accurate (and complete) information to the public about motor vehicle safety. The agency issues Consumer Advisories to help instruct consumers on the proper use of automotive products and encourages the public to refer to its New Car Assessment Program (NCAP) when choosing a vehicle to purchase. In developing the NCAP program, the agency expressed its belief that "if consumers have valid comparative information on important motor vehicle characteristics, they will use that information in their vehicle purchase decisions."  See 52 Fed. Reg. 31691 (Aug. 21, 1987). The agency has even rescinded certain aspects of its Consumer Information programs after concluding that the data may mislead consumers and, therefore, will not provide valuable safety information. See 60 Fed. Reg. 32918 (June 26, 1985).

    Some of the commenters also raised the possibility that NHTSA's release of early warning information would impair both the agency's ability to obtain this information in the future and the quality of the information that the agency receives. For example, AIAM noted that "[d]espite the manufacturer's intent to the contrary, individuals who prepare field reports may be less thorough or candid if they know that their reports will be available to the general public and not just to experienced, sophisticated analysts employed by the manufacturer and the government."  Similarly, TIA asserted that, under the proposed presumptive categories, submitters "will produce the bare minimum required."  TIA added that if the information were protected, submitters "will be more likely to provide robust amounts of data."

    The purpose of the TREAD Act’s mandate to develop a regulation requiring the submission of the early warning data to the agency is made clear in the language of the law itself. The purpose of the early warning reporting regulation is "to enhance the Secretary’s ability to carry out the provisions of this chapter," 49 U.S.C. § 30166(m)(1), which includes reducing both the number of traffic accidents and the fatalities and injuries arising from them. (Emphasis added). The Secretary has delegated those responsibilities to NHTSA. See 49 CFR § 501.2. The agency’s ability promptly to identify safety related defects would not be "enhanced" if disclosure of all or part of the data diminishes the volume and/or reliability of the information, nor would the public interest in motor vehicle safety be served if disclosure has the result of discouraging manufacturers from being responsive to consumer concerns that may relate to motor vehicle safety or imposing greater costs on consumers who need to address such concerns. [14]   Therefore, we must consider whether the disclosure of each reporting element has the potential to impair our early detection of possible safety related defects.

    The Alliance argued that all early warning data are entitled to confidential treatment under Exemption 4, although both it and General Motors placed particular emphasis on the confidential nature of warranty information. Conversely, Public Citizen argued that all of the early warning data should be categorically considered public in order to achieve what it perceives to be the purpose of the TREAD Act – that is, to give the public complete access to the data required pursuant to the TREAD Act so that the public can make its own decisions relating to products. Public Citizen contended that some Members of Congress voted for the TREAD Act only because they believed the information required by it would be publicly available, citing unreported conversations between NHTSA’s and Congressional staff. [15]   Public Citizen also argued that business interests failed to establish that early warning reporting submissions qualify for blanket confidential treatment under Exemption 4.  

    We do not believe that Exemption 4 should be applied to the early warning reporting information on a wholesale basis, whether in favor or against disclosure.  Instead, we will consider the application of Exemption 4 to each "reporting element" to be submitted under the early warning reporting regulation. In doing so, we consider whether the disclosure of each element of information is either likely to cause substantial competitive harm or likely to impair the agency’s ability to obtain necessary information in the future (and thereby impair an important government function). An analysis of the case law applying National Parks and its progeny, and discussing the impairment prong in particular, is included as Appendix B.


     C. Specific Types of Information to be Provided Under the Early Warning Regulation

    Congress provided for the agency to collect from manufacturers reports of safety related recalls and campaigns conducted outside the United States, and reports relating to claims for deaths and serious injuries. [16] These mandates grew directly from information arising from the Ford/Firestone tire problem -- reports of foreign safety related service actions and a plethora of lawsuits, neither of which had been reported to the agency. Congress also directed the agency to collect aggregate statistical information on property damage claims and authorized it to collect any other data that would assist the agency in its efforts to identify safety related defects in the field.

    The purpose of the early warning reporting rule is to ensure that the agency has information from which it can detect potential safety problems and investigate them in a timely manner.  We are concerned that our decisions on whether information will be disclosed could discourage manufacturers from collecting the information in the first instance, thereby reducing the information available to the agency to serve this critical function. We are also worried that the public interest in motor vehicle safety will be adversely affected if disclosure has the result of causing manufacturers to be less responsive to consumer safety concerns or to impose greater costs on consumers who need to address problems with their vehicles and equipment, thereby reducing the likelihood of repairing potential safety issues.

    The case law construing Exemption 4 makes clear that, while the functioning of our early warning defect detection program is an appropriate consideration when construing the confidentiality of the data, assertions that the data may be useful in a broader public context is not. (See Appendix B) We must consider whether each element required to be submitted pursuant to the early warning reporting regulation is entitled to confidential treatment either because its disclosure will likely cause substantial competitive harm or because its disclosure will likely impair our ability to obtain in the future information important to our early warning defect detection program.


    1. Production Numbers

    The early warning reporting rule requires certain manufacturers to submit the number of vehicles, tires and child restraint systems, by make, model, and model (or production) year, produced during the model year of the reporting period and the prior nine model years (prior four years for child restraint systems and tires). The agency previously noted in the early warning reporting NPRM that it has generally granted confidential treatment to production data on child restraints and tires submitted to NHTSA, but that light vehicle production numbers are generally available to the public through the automotive press and have generally not been granted confidential status.

    Many business interests discussed their efforts to maintain the confidentiality of their production figures. Harley Davidson and MIC stated that production numbers by model have never been generally available in the motorcycle industry. Cooper Tire submitted an affidavit, further confirmed through RMA’s comments, with regard to the competitive harm that disclosure of otherwise confidential production numbers would have in the tire industry. JPMA argued that disclosure of these data would provide new entrants and competitors in the child restraint industry with information about production capacities, sales and market performance not otherwise available in the absence of considerable investment in market research. Bluebird (buses, school buses and motor homes), Utilimaster (final stage walk-in vans and freight bodies for commercial use) and the AORC (occupant restraint systems and other components) also each stated that production numbers in their segment of the industry are confidential and likely to lead to substantial competitive harm if released.

    The comments substantiate that production numbers in many sectors of the automotive and equipment industries are competitively protected information, revealing otherwise unobtainable data relating to business practices and marketing strategies. Production numbers for manufacturers other than light vehicle manufacturers have been treated confidentially in the past and their disclosure is likely to cause substantial competitive harm to the businesses engaged in these industries. Accordingly, we are establishing a class determination applicable to such information.


    2. Claims and Notices Involving Death, Personal Injury and Property Damage

    The early warning reporting rule requires all vehicle and equipment manufacturers, including those producing less than 500 vehicles annually, to report certain information about each incident involving a death that occurred in the United States that is identified in a claim against and received by the manufacturer. They must also report information about incidents involving a death in the United States that is identified in a notice received by the manufacturer alleging or proving that the death was caused by a possible defect in the manufacturer's product. Finally, they must report on each death occurring in a foreign country that is identified in a claim against and received by the manufacturer involving the manufacturer's product, if it is identical or substantially similar to a product that the manufacturer has offered for sale in the United States.

    Certain manufacturers are also required to report specified information about each incident involving an injury that occurred in the United States that is identified in a claim against and received by the manufacturer, or that is identified in a notice received by the manufacturer alleging or proving that the injury was caused by a possible defect in the manufacturer's product.

    In general, the information that must be reported includes, for each claim or notice: the make, model, model year and Vehicle Identification Number of the vehicle involved, the date of the incident, the number of deaths and/or injuries involved, the state or foreign country in which the incident occurred, and each system or component that is referred to in the claim or notice. In addition, the larger vehicle manufacturers and tire manufacturers must report the numbers of claims for property damage that occurred in the United States that involve certain specified components and systems, regardless of the amount of such claims.

    Industry commenters, such as TMA and MEMA/OESA, alleged that release of death and injury data will result in substantial competitive harm. Public Citizen claimed that such reports do not reveal detailed competitive information, but rather reveal only summary information about the incidents reported.

    The submissions relating to claims and notices of death, personal injury or property damage involve a collection of information, many of the pieces of which are publicly available. While the data are not generally available to the public in this type of compilation, the disclosure of this collected information is not likely to reveal business strategies or other data that can be used competitively. These kinds of claims tend to be more historical than other types of information required by the early warning reporting regulation, with any apparent trends arising over longer periods of time. Given the nature of the data, we consider it unlikely that information about claims of death, personal injury or property damage will lend itself to cross-company comparison. We further note that the claims about a particular issue against a particular manufacturer, and in particular a developing set of claims, often receive media attention and are already in the public domain.

    Nor are we concerned that disclosure will detract from the future availability or reliability of this information. Manufacturers receive claims based on incidents occurring in the field, not as the result of proactive efforts to obtain data or customer feedback. They are required under 49 CFR Part 576 to retain this information and do not have the option to refuse to amass it. Further, the required information relating to these claims does not involve subjective determinations or require companies to make any admissions relating to facts or legal conclusions in dispute. The reports simply reflect the existence of allegations made with regard to events that occurred in the field.

    For these reasons, we have decided not to create a class determination to cover the early warning reporting information relating to claims and notices of death or personal injury, or property damage claims. We have determined that release of that data generally will neither lead to substantial competitive harm nor impair our ability to obtain such information in the future.


    3. Information Regarding Warranty Claims

    Manufacturers of more than 500 vehicles per year and tire manufacturers must report quarterly the number of warranty claims (adjustments for tire manufacturers), including extended warranty and good will, they paid that involved certain specified components and systems and that arose in the United States. Manufacturers of child restraint systems must combine these with the number of reportable consumer complaints. In addition, these manufacturers must provide similar historical information relating to warranty claims paid during each calendar quarter from July 1, 2000 to June 30, 2003. The information is provided on a make/model basis and categorized with reference to the twenty-two categories defined as part of implementation of the early warning regulation.

    Public Citizen argued that the information is summary in nature and typical of that generally provided as part of particularized defect investigations. Conversely, almost all the corporate commenters decried the potential disclosure of warranty data claims as the revelation of vital competitive information. Comments from the Alliance and Cooper Tire included affidavits providing evidence relating to the competitive harm that would be associated with the disclosure of warranty data within the light vehicle and tire industry, respectively.

    As suggested by the affidavit from AutoPacific, Inc., submitted by the Alliance, knowledge of the warranty experience of one of the specified components or systems on a make/model level can provide other manufacturers with information about the reliability of a component or system not otherwise available to them, except perhaps through extensive investment in market research. GM offered the following example:

    If supplier A offers a newly-designed system to OEMs, any OEM can tear it down and test it, but no practical test duplicates the experience that is gained from having the system in hundreds of thousands of vehicles. If OEM1 makes the investment to put the system in some of its vehicles, it would gain that field experience and could use it to make better decisions about the future use of the system. With early warning warranty data disclosure, other OEMs would have access to some of the same information and would be able to make their decisions with less extensive testing and analysis. Through the loss of its confidential information, OEM1 is forced to subsidize the other OEMs, reducing their costs at OEM1's expense.

    General Motors also makes the further point that warranty cost information is critical in the competitive automotive marketplace. While particular warranty information (such as that submitted as part of a particular defect investigation) does not reveal a company’s cost structure, when aggregated by make, model and model year and applied across systems, a cost index is created. As GM notes, cost structure information has consistently been considered data likely to cause substantial competitive harm if released.

    Cooper Tire raised concerns that competitors could mischaracterize the data and use it to their competitive advantage. In an affidavit submitted to the docket, Cooper Tire's expert explained that the release of "a few statistics, such as the warranty adjustment rate, without the complete background behind those statistics could lead to a very misleading picture of tire performance." The company indicated that the differences between warranties among otherwise identical tire lines sold to different types of users "could lead to erroneous inferences about tire safety which, in turn could lead to erroneous and justified competitive harm."  Many other commenters echoed this same concern, asserting that because warranty practices differ and because the raw data do not reflect any technical evaluation, the data can be used and abused competitively.

    In addition to the comments filed in the docket, additional public information illustrates the extent to which the industry as a whole relies on and uses sensitive warranty information. For example, GM uses its warranty data to help it pinpoint problem areas and to help it reduce its warranty costs. See, e.g., Gregory L. White, "GM Takes Tips from CDC to Debug its Fleet of Cars," Wall St. J., April 8, 1999, at B1 (noting GM's adaptation of the epidemiological system used by the Centers for Disease Control and Prevention to warranty issues) and "A Message to Dealers Regarding the Ford Recall of Firestone Wilderness AT Tires and General Motors Continued Use of Firestone Tires on its Vehicles" (May 25, 2001)(stating that GM and Firestone tire engineers "are on site at GM's tire and wheel laboratory two days a week" to "monitor tire warranty data"), published on GM’s website at http://www.gmfleet.com.

    The comments and affidavits submitted support a conclusion that the warranty information required by the early warning reporting rule -- that is, the number of claims associated with specific components and systems broken down by make, model and model year (with slightly different breakouts for tires and child restraint systems) – is likely to provide competing manufacturers with sufficient information about the field experience of those components and systems to provide commercial value to competitors who may be deciding whether to purchase similar components, the price at which to purchase those components and which suppliers to choose.

    While manufacturers are likely to explore the practices and policies of their competitors when reviewing any publicly available warranty claims information, the public is more likely simply to rely on generic cross-company comparisons. The warranty claims information may be used as part of vehicle comparisons, even though the warranty terms and conditions and corporate warranty practices may differ. As a result, the potential for the warranty claims information to give rise to misleading comparisons and cause substantial competitive harm is also strong.

    For the reasons set forth above, we have determined that the early warning reporting of warranty information, both as regards the quarterly reports and the one-time seeding of the system, is entitled to confidential treatment because its disclosure is likely to cause substantial competitive harm. [17]

    The warranty data required by the early warning reporting regulation are also entitled to confidential treatment because their disclosure is likely to impair the agency’s ability in the future to obtain and use reliable warranty information as part of its program to identify potential safety related defects. Warranty claims data – which begin to accumulate as soon as vehicles are sold and continue for the length of any given warranty policy -- will be a significant indicant of potential defects. The quarterly warranty claims reports, combined initially with the historical seeding material, will help the agency to identify trends involving particular equipment and systems or components in a particular make, model and model year of a given product.

    The more warranty information available to the agency, the more useful the warranty data will be in assisting the agency in identifying areas for further investigation. Warranty information is particularly important since it is generated early in the life of the vehicle, thus assisting in the prompt identification of potential defects. The record is replete with comments explaining why disclosure is likely to impair corporate willingness to provide expansive warranty coverage or to apply warranty policy in a more generous and less restrictive way. Longer warranties, and more liberal applications of warranty policy, will increase the number of claims paid by manufacturers and, therefore, the amount of data available to the agency. Moreover, changes in warranty policy caused by a reaction to disclosure of warranty data would likely reduce the ability of the agency to compare current data with historical data and to explore apparent changes in the data.  

    We are aware that, for marketing purposes, manufacturers may choose to make available to their customers warranties of longer duration and broader mileage (e.g., a company may offer a 5 year/50,000 mile warranty or a 3 year/36,000 mile warranty), making more warranty claims information available to the agency. DaimlerChrysler, for example, lengthened its engine warranty period to gain in the competitive market. See, e.g., Jeff Green, "DC Emphasizes Warranty," Bloomberg, Sept. 6, 2002, available at http://www.theautochannel.com. Not only do warranties differ by manufacturer, they also differ based on the targeted market (e.g. luxury v. non-luxury) and on system components. See, 2003 Manufacturers' Warranties, available at http://www.enterprise.com.

    Similarly, companies can choose strictly to adhere to their warranty limitations or, alternatively, they may adopt policies of avoiding customer dissatisfaction by covering repairs arguably no longer covered under warranty, either because they may not fall within the terms of the warranty or because they fall outside their time or mileage parameters.   As pointed out in the comments, the disclosure of early warning warranty data may deter "good will," customer satisfaction, and early dispute resolution efforts since such efforts will increase the number of warranty claims. [18]   If these data were made public, it could lead consumers to assume that the product was of poorer quality than a similar competing product made by a manufacturer with a stricter approach to allowing warranty or "good will" claims.

    The disclosure of early warning warranty information could lead to contraction of current warranty policies, and discourage their expansion, resulting in substantially less information available to NHTSA to screen for signs of early field problems. Thus, the disclosure of the comprehensive compendium of warranty data will likely impair the agency’s defect detection program. Because disclosure of the early warning reporting warranty information is likely to cause substantial competitive harm and will likely impair the ability of the agency to obtain comprehensive warranty information in the future, we have decided to create a class determination covering this information.


    4. Field Reports

    Larger vehicle manufacturers and manufacturers of child restraint systems must report on a quarterly basis the total number of field reports they receive from the manufacturer's employees, representatives, and dealers, and from fleets, that are related to problems with certain specified components and systems, with respect to vehicles and restraints offered for sale, sold or leased in the United States. In addition, these manufacturers must provide copies of certain field reports received from their employees, representatives, and fleets, but are not required to provide copies of reports received from dealers. Like information relating to warranty claims, the agency is requiring the submission of historical field report information from these manufacturers to provide it with a seeding of data it can use immediately to detect any trends within the manufacturers’ product lines.

    The nature, quality and quantity of field reports vary significantly from company to company. Some companies actively pursue field feedback, whether directly from customers or through dealers and manufacturer representatives. Our experience in conducting defect investigations, in which we routinely receive field reports about the specific problem under investigation, shows that companies obtain information from the field in differing ways and with differing degrees of specificity and technical evaluation. Some manufacturers collect field reports that are little more than customer complaints, collected through dealers and field personnel. For others, a field report is more akin to technical investigation into a problem detected through warranty, consumer complaint or other data available to the company.

    Field reports reflect the in-use experience of a manufacturer’s product, collected by the company at its expense and with the intent of identifying problems associated with its products in the field. Such information would be of substantial value to competitors, who could -- if this information were to be made public -- avert similar issues or improve their products without the need to invest in market research, engineering development or actual market experience. Competitors (and others) may also use the field report information competitively, just as with warranty data, to suggest comparisons that may merely result from differing policies and practices.

    Public Citizen maintains that, because field reports are often disclosed as part of individual defect investigations, field reports and/or field report information should also be disclosed in a wholesale fashion when submitted as part of early warning data. On the other hand, manufacturers such as Utilimaster and Enterprise Fleet Services described the harmful competitive effects of disclosing the confidential field reports relating to the performance of their products. As stated by Utilimaster, "public and private parcel delivery operations do not under any circumstances want their competitors (or competitors of their respective customers) to be aware of and exploit delivery vehicle fleet performance, maintenance or durability issues which might impact on the operational capability of the delivery company in a particular region/trading area, or on the operations of particular customer accounts."  

    The same is true for other manufacturers, who collect equally proprietary information about their products that allows them to conform future design and production to field experience. Because they would have access to comprehensive data covering all products, competitors would obtain data revealing which product features, components and systems have met with consumer acceptance (and which have not), as well as what problems may be associated with particular components and systems. The information may also reveal which aspects of a vehicle’s performance (whether potentially safety related or not) a manufacturer deems important in its commercial efforts. As a result, and as commenters have illustrated, the disclosure both of the hard copies of field reports and information about the number of reports associated with the components and systems specified is likely to cause substantial competitive harm. This is true both for the quarterly reports and with regard to the historical seeding field report information.

    The field report data are also entitled to protection because their disclosure is likely to lead to fewer and less reliable field reports available to the agency in its efforts to identify potential safety defects promptly. The agency has required the submission of hard copies of certain field reports, as well as the numbers of all field reports, because the agency believes that this information will be especially helpful in identifying the existence of possible safety-related problems. We recognize that we cannot compel the preparation of field reports, but rather only require that manufacturers submit to the agency information about, and copies of, those field reports that companies choose to prepare and/or obtain. See 49 U.S.C. § 30166(m)(4)(B). Therefore, we do not want to do anything to discourage manufacturers from preparing accurate and comprehensive field reports about problems with their products. Nor do want to detract from the candor and specificity with which field reports are written.

    As made clear throughout the comments, disclosure of field reports is likely to discourage candor on the part of field personnel and could adversely affect corporate policies and practices with respect to their preparation. The available evidence shows that the disclosure of the field reports and the field report data would likely inhibit a significant feature of the agency’s program to encourage the collection and reporting of information and to identify the potential existence of safety defects as soon as they begin to manifest themselves in the field. It would also reduce the amount of valuable information available to the agency during our defect investigations.

    Because disclosure of the field report information required by the early warning reporting rule is likely to cause substantial competitive harm and will likely impair the ability of the agency to obtain comprehensive field report information in the future, we have decided to create a class determination applicable to these data.


    5. Consumer Complaints

    The early warning reporting regulation also requires larger vehicle manufacturers and child restraint manufacturers to submit complaints received each quarter relating to specified components and systems. [19]   Consumer complaints are defined by the regulation as:

    [A] communication of any kind made by a consumer (or other person) to or with a manufacturer addressed to the company, an officer thereof or an entity thereof that handles consumer matters, a manufacturer website that receives consumer complaints, a manufacturer electronic mail system that receives such information at the corporate level, or that are otherwise received by a unit within the manufacturer that receives consumer inquiries or complaints, including telephonic complaints, expressing dissatisfaction with a product, or relating the unsatisfactory performance of a product, or any actual or potential defect in a product, or any event that allegedly was caused by any actual or potential defect in a product, but not including a claim of any kind or a notice involving a fatality or injury. [20]

    The definition recognizes that companies may receive customer input in a variety of ways and may establish differing practices for the receipt of customer complaints. Companies may enhance their ability to receive consumer complaints, for example, by increasing the staff at their toll free telephone numbers or by creating web-based systems through which consumers can make complaints instantly by email. The more consumer inputs a company receives, the more reliable the information available to it, and the agency, to assess its products’ performance in the hands of consumers.

    We are concerned that release of the consumer complaint information will discourage companies from actively pursuing or will restrict their ability to receive consumer feedback. [21]   Consumer complaint information is a critical aspect of the data the agency intends to use to identify potential vehicle problems. Like warranty data and field reports, the aggregate information is likely to be a useful pointer to areas that, after appropriate inquiry, may lead to defect investigations and ultimately to the remedy of safety defects.

    Our experience in defect investigations has been that companies generally receive considerably more consumer inputs than does the agency on any given vehicle problem. Indeed, the importance of this material increases as warranties expire and the availability of warranty claims information correspondingly diminishes. The early warning reporting regulation will make available to the agency information about the volume of complaints received by manufacturers as to each of the specified components or systems, thus considerably enhancing the agency’s ability to review field experience as it arises. The disclosure of this information is likely to discourage manufacturers’ proactive efforts to obtain the data or to expend sums to establish systems to receive more information or to use it more effectively. Consequently, such disclosure could impair the effective and efficient implementation of the agency’s early warning process.

    Manufacturers argued that release of consumer complaint information is likely to cause substantial competitive harm because it will be used by competing manufacturers and potentially others in the public to make cross-company comparisons. If misinterpreted, the information may result in unwarranted product disparagement, leading to substantial competitive harm. As many of the comments pointed out, consumer complaints reveal the raw, unverified perceptions of vehicle owners. They neither reflect a repair that was conducted (which is revealed by warranty claims) nor an evaluation of an event by a manufacturer’s employee or dealer (which is often the source of field reports). Furthermore, the consumer complaint information is not subject to any controls or analytic rigor that we believe are imbedded into the development of public acceptance surveys.  

    Competitors with access to complaint data would obtain, to a certain extent, information revealing which product features, components and systems have met with consumer acceptance (and which have not) and what perceived problems may be associated with particular components and systems. The information may also reveal which aspects of a vehicle’s performance (whether potentially safety related or not) a manufacturer deems important in its commercial efforts. Thus, the public disclosure of complaint data is likely to cause substantial competitive harm.

    Because we have determined that the disclosure of the consumer complaint data required by the early warning reporting rule will likely impair the ability of the agency to obtain comprehensive consumer complaint information in the future and is likely to cause substantial competitive harm, we have decided to create a class determination covering these data.



    [4]   The early warning regulation contains definitions and explanations that provide further context to these requirements and that are not repeated here.

    [5]   Section 30167(b) provides:  "Subject to subsection (a) of this section, the Secretary shall disclose information obtained under this chapter related to a defect or noncompliance that the Secretary decides will assist in carrying out sections 30117(b) and 30118-30121 of this title or that is required to be disclosed under section 30118(a) of this title. A requirement to disclosure information under this subsection is in addition to the requirements of section 552 of title 5."

    [6]   Public Citizen’s letter appears in the docket as an attachment to the comments submitted by the RMA.

    [7]   Exemption 3 applies to material "specifically exempted from disclosure by statute (other than section 552b of this title), provided that such statute (A) requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue, or (B) establishes particular criteria for withholding or refers to particular types of matters to be withheld."  5 U.S.C. § 552(b)(3).

    [8]   Memo from Frank Seales, Chief Counsel, NHTSA, to Rosalind Knapp, Acting General Counsel of the Department of Transportation, at 2 (Oct. 27, 2000) (emphasis in original).

    [9]   We must give meaning to all words and phrases of a statute, and therefore we must give meaning to the reference in Section 30166(m)(4)(C) to the preexisting Section 30167(b). See, e.g., TRW Inc. v. Andrews, 534 U.S. 19, 31 (2001)("It is 'a cardinal principle of statutory construction that a statute ought, upon the whole, to be construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void, or insignificant'") and United States v. Menasche, 348 U.S. 528, 538-539 (1955)("It is our duty ‘to give effect, if possible, to every clause and word of a statute.’" We must also ensure that our construction of the statute does not render the TREAD Act provision meaningless or duplicative of existing law. See, e.g., Dunn v. Commodity Futures Trading Commission, 519 U.S. 465, 472 (1997)("Our reading of the exemption is therefore also consonant with the doctrine that legislative enactments should not be construed to render their provisions mere surplusage").

    [10]   In its comments, Public Citizen expressed its view that the provision is not an Exemption 3 statute, stating that "while the TREAD Act provision may reverse a presumption available for certain information under Section 30167(b), the language of the statute falls far short of creating a withholding statute or exemption from FOIA." (Emphasis in original.)

    [11]   A different standard applies to information that is submitted voluntarily to a government agency. See Critical Mass Energy Project v. Nuclear Regulatory Commission, 975 F.2d 871 (D.C. Cir. 1992) (en banc). Since all the information provided under the early warning reporting regulation is "required," Critical Mass does not apply.

    [12]   We do not agree with Public Citizen’s assertion that the analysis in Trans-Pacific is limited to its facts and has no applicability to other, similar situations. Trans-Pacific neither compels the protection of the information here, nor does it compel its disclosure. The case supports consideration of any substantial competitive harm arising from the disclosure of a comprehensive compendium of information, even if the disclosure of individual pieces of that compendium are not competitively harmful.

    [13]   NHTSA has long maintained that public embarrassment per se (that is, in the absence of substantial competitive harm or a deleterious effect on a government program) is not a basis for confidential treatment. The record here, however, provides support that public disclosure of some of the early warning reporting information may lead to mischaracterizations causing substantial competitive harm and may lead to less, rather than more, reporting.

    [14]   Section 30166(m)(4)(B) provides that "the regulations promulgated by the Secretary under paragraph (1) may not require a manufacturer of a motor vehicle or motor vehicle equipment to maintain or submit records respecting information not in the possession of the manufacturer."

    [15]   Public Citizen neither provided evidence to support this claim, nor identified those Members who might have voted differently. Further, the analysis in the memo was prepared in response to the October 20, 2000 letter and post-dated the Congressional votes. The TREAD Act passed in the House of Representatives on October 10, 2000 and in the Senate on October 11, 2000. The letter to Secretary Slater was dated October 20, 2000, and the memo was dated October 27, 2000. The TREAD Act was signed into law on November 1, 2000. The memo was placed in the public docket in March 2001. There is no reference to the memo in the Congressional record. Nor are we aware of any public dissemination of the memo, or its analysis, prior to its placement in the docket approximately five months after the TREAD Act was passed.

    [16]   The provision requiring the reporting of safety related recalls and other safety campaigns conducted in foreign countries on vehicles that are identical or substantially similar to those offered for sale in the United States is Section 30166(l). The disclosure provision in Section 30166(m)(4)(C) does not apply to this category of information. We mention it, however, because it is a critical element of the information Congress thought important for the agency to obtain. As in the case of information delineating safety recalls in the United States and other widely distributed technical information, we do not consider this category of information confidential and will not protect it from public disclosure.

    [17]   In its comments, the Alliance pointed out the competitive value of warranty information by identifying publications available through sale, including one called the Automotive Industry Status Report. Public Citizen, in turn, points out that the Alliance both claims that warranty claim data are competitively protected and that they are generally available for sale. Having reviewed the website on which that publication is sold, we believe that the report provides certain summary information relating to aftermarket equipment, but that it is not comparable to the compendium of more specific data required to be submitted under the early warning reporting regulation.

    [18]   We recognize that this is not a matter of corporate generosity. Some companies may choose as a matter of marketing or customer relations to apply their warranty policies liberally, thus generating additional numbers of warranty claims. Other companies may make decisions aimed primarily at avoiding potential warranty liability in the context of real or potential disputes. In either event, disclosing early warning warranty claims data may discourage customer satisfaction and early dispute resolution efforts.

    [19]   Child restraint system manufacturers will report consumer complaints and warranty data together. As to those manufacturers, the data are considered warranty data for purposes of this rule.

    [20]   49 CFR 579.4(c).

    [21]   Harley-Davidson noted its proactive efforts to pursue consumer feedback that might not otherwise be brought to the company’s attention. Efforts such as those of Harley-Davidson show that consumer complaint data may be developed by manufacturers at their own expense and for their own proprietary purposes. The record, however, does not indicate that efforts like those described by Harley-Davidson are prevalent among all manufacturers.

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