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back to index backAMERItalk May,  2005

TREAD Act Reporting and Rule 512 Confidentiality

On April 21, 2004, the National Highway Traffic Safety Administration released a final rule on confidential business information that allows automotive manufacturers to keep confidential certain sensitive business information submitted to NHTSA pursuant to the TREAD Act.

"Even though NHTSA's 512 final rule on confidentiality is embroiled in judicial review, every automotive manufacturer should familiarize themselves with this final rule," said Daniel P. Malone, Director of Global Automotive Practice for the Detroit-based law firm Butzel Long P.C. "For the moment, until the courts rule, it is my understanding that all TREAD Act EWR information is being held as confidential by NHTSA. That may not be until the end of 2005, later if an appeal is taken."

The TREAD Act, signed into law in November 2000, gave NHTSA the authority to establish an Early Warning Reporting System that requires automakers and suppliers to periodically provide information and documentation on potential safety hazards. The law was a consequence of the Firestone tire safety recall, and is designed to catch safety-related defects at an earlier stage. But automotive firms and tire manufacturers have been concerned about forced disclosures of competitive information under the EWRS. Prior to NHTSA's publication of Rule 512, the auto industry and consumers groups had been lobbying NHTSA intensely on the confidentiality question. They have squared off over this final rule in court.

In the Summer 2003, NHTSA extended automatic confidential status protection to reports of production numbers for child restraint systems, tires, and vehicles other than light vehicles. For other reasons, NHTSA also had granted confidential status to the following categories: reports and data relating to warranty claim information; reports and data relating to field reports, including dealer reports and hard copy reports; and reports and data relating to consumer complaints.

NHTSA reasoned that this type of information, if disclosed, would reveal to competitors a manufacturer's production and marketing strategies, and future product design plans, among other things. For essentially the same reasons, NHTSA subsequently extended confidential classification status to common green tire lists -- which cover basic tire construction information -- as well as a portion of the vehicle identification (VIN) number.

According to Rule 512, "if there are other types of information that a manufacturer wants treated as confidential, the manufacturer must file a request," Malone said. If the agency denies the request, the manufacturer has 20 business days to challenge the decision in court before the information will be released.

The TREAD Act divides the reporting requirements for the industry into Group 1 and Group 2. Group 1 consists of manufacturers of vehicles (who sell more than 500 per year in the U.S.), tire and child restraint manufacturers. "From a TREAD Act EWR standpoint, Rule 512, also seems of more significance to Group I manufacturers," Malone said.

Group 2 manufacturers are vehicle manufacturers who sell or lease less than 500 vehicles in a category annually, plus all manufacturers of vehicle equipment - original and replacement - other than tires and child restraint systems. NHTSA has refused to apply any confidential protection to the only kind of direct Early Warning reports that Group 2 manufactures must submit. These are notices or claims of domestic fatalities or claims of foreign fatalities involving products that are identical or substantially similar to those sold in the United States.

"From a TREAD Act standpoint, Rule 512 can also affect Group 2 manufacturers indirectly in at least two ways," Malone cautioned. A Group 1 manufacturer may ask its Group 2 supplier to supply confidential information to be included as part of a required TREAD Act report. In that case, a supplier would have to forward to the Group 1 manufacturer information that supports why NHTSA should extend it confidential status. Secondly, if a dispute exists between the Group 1 and Group 2 manufacturers, then the Group 2 manufacturer may have to file a request for confidentiality directly with NHTSA (even though NHTSA would be considering the information as part of the Group 1 manufacturer's report).

"Rule 512 confidentiality requirements may not necessarily protect information from disclosure in litigation and in disputes between, for example, an OEM and a supplier," Malone said.

Source: Butzel Long - GAI

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