manner in which these programs are conducted based on a variety of
internal considerations, benefits, and costs. The Alliance cited a
purpose of the TREAD Act, which is to enhance the ability to carry out
the Safety Act, a purpose of which is to reduce the number of accidents
and the fatalities and injuries arising from them. The Alliance
reiterated an earlier statement by NHTSA (which is of continuing
validity) that the agency's ability promptly to identify safety related
defects would not be enhanced if disclosure of EWR data diminishes the
volume or reliability of the information. Nor would the public interest
in 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. Confidential treatment of
those data is necessary to avoid creating a disincentive to the
continued voluntary creation of the information, since there is no
requirement to collect the information in the first instance. The
Alliance concluded that NHTSA's ability to collect comprehensive EWR
information and, thus, its ability to address defect trends indicated
by EWR data, will be impaired if the data are released. The Alliance
also noted that apart from the early warning context, a reduction in
consumer complaint data would have a deleterious effect on NHTSA's
ability to conduct the defect investigations that it has opened.
    Utility emphasized that the quality and quantity of information
relating to consumer feedback that NHTSA receives depends largely on a
manufacturer's willingness to expend financial and administrative
efforts to collect such information. It advised that manufacturers who
currently collect and organize this information would be less inclined
to do so if the information were disclosed and ended up generating
frivolous lawsuits, the defense of which further raises the cost of
doing business.
    AIAM stated that the public disclosure of the complaint information
would impair NHTSA's interests in promoting safety. If less complete
information relating to safety issues is provided to the agency faulty
decisions could follow.
    In contrast, Public Citizen asserted that NHTSA has not shown that
making the data public would hinder its ability to collect this
information in the future. In Public Citizen's view, in light of the
extreme value of consumer complaints to manufacturers, they are
unlikely to stop collecting this information and unlikely to alter
their practices in collecting complaints. It added that companies could
not cease receiving complaints. Public Citizen also asserted that past
events, such as the Ford/Firestone problems, illustrate the interest of
the public in EWR data. Public Citizen further stated, without
citation, that Congress intended for the public to use the data to
monitor whether NHTSA is fulfilling its obligation to investigate
significant safety issues. Finally, Public Citizen contended that the
standard for withholding information under the impairment prong has not
been met.
    Public Citizen has maintained that the impairment prong of FOIA
Exemption 4 requires a rough balancing of the importance of the
information and the extent of the impairment against the public
interest in disclosure, citing Washington Post v. HHS, 690 F.2d 252,
269 (D.C. Cir. 1982); Washington Post v. HHS, 865 F.2d 320, 326-27
(D.C. Cir. 1989). However, in Public Citizen Health Research Group v.
FDA, 185 F.3d 898, 904-05 (D.C. Cir. 1999), the

Court rejected ``a consequentialist approach to the public interest in
disclosure'' as ``inconsistent with the ``[balan[ce of] private and
public interests' th[at] Congress struck in Exemption 4.'' The Court
went on to state that ``[t]hat balance is accurately reflected in the
test of confidentiality'' established by National Parks and that a
requester cannot ``bolster the case for disclosure by claiming an
additional public benefit'' in release. Id. at 904. In other words,
``the public interest side of the balance is not a function of'' among
others ``any collateral benefits of disclosure.'' Id. Accordingly, an
Exemption 4 case may not be bolstered by claiming an additional public
benefit from disclosure of data is beyond the test of National
Parks.\43\ In the following discussion, we will address the impairment
that would result from disclosure. While we do not accept the balancing
test under Exemption 4 advanced by Public Citizen, in the alternative,
we will address a rough balance between the importance of the
information and the extent of the impairment against the public
interest in disclosure.
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    \43\ Public Citizen asserted that a guiding tenet of both FOIA
and the TREAD Act's early warning system is to ensure that the
public has the ability to monitor government institutions and
protect themselves by being informed of potential defects. This is
unsupported. This is not the guiding tenet of FOIA Exemption 4 and
this was not the purpose of the early warning rule. The purposes
were to enhance the Secretary's ability to carry out the Safety Act
and assist in the identification of defects related to motor vehicle
safety. 49 U.S.C. 30166(m)(1), (3)(A).
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    NHTSA's Office of Defects Investigations (ODI) has long viewed
consumer complaints as a critical aspect of the data the agency
considers to identify potential vehicle and equipment problems. 67 FR
at 45847 (July 10, 2002). For this reason, NHTSA included consumer
complaints in EWR reports. 67 FR at 45847-51. Consumer complaint
information is a useful pointer to areas that, after appropriate
assessment, may lead to defect investigations and ultimately to the
remedy of safety defects. The importance of consumer complaints
increases as warranties expire and the availability of warranty claims
information correspondingly diminishes. The EWR regulation assures that
the agency receives information about the amount of complaints received
by manufacturers as to each of the specified components or systems.
    Our experience in defect investigations has been that companies
generally receive considerably more consumer inputs than does the
agency on any actual or potential vehicle problem. 67 FR at 45848.
Because manufacturers ordinarily receive more complaints than consumers
send to the agency, the agency must rely on manufacturer efforts to
continue to amass as much information as possible. Companies may
receive customer input and feedback on product performance in a variety
of ways and establish differing practices for the receipt of
complaints. The EWR definition takes this possibility into account.
Companies may increase available staff at their toll-free telephone
numbers or create web-based systems to accept complaints via electronic
mail. Additional input sources increase the robustness of available
data, which can be valuable both to the company collecting it and to
NHTSA in identifying problems--including problems that may point to the
presence (or absence) of a safety-related defect.
    The disclosure of consumer complaint information would be likely to
discourage manufacturers' proactive efforts to obtain these data or to
expend sums to receive more information or to use it more effectively.
The release of the EWR information would not eliminate manufacturers'
collection of consumer complaints, but they likely would take steps to
reduce the collection of complaint data in order to improve their
numbers. As a direct result, NHTSA would collect considerably less data
in the future. The agency would be faced with attempting to conduct
analyses with less robust reporting from manufacturers. NHTSA's ability
to identify potential safety defect trends would be impaired. Such a
result would affect the agency's ability to carry out the early warning
program.\44\ In sum, the disclosure of the information would be likely
to impair NHTSA's ability to obtain necessary information in the
future.
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    \44\ Limited disclosure of consumer complaint data collected by
manufacturers during ODI investigations is different from the
disclosure of EWR data sought by Public Citizen and others. The
consumer complaint data released in the course of agency
investigations is limited. It involves limited models and model
years and specific alleged problems. EWR data amount to full
compendiums, across makes, models and model years involving numerous
systems. The release of consumer complaint data in investigations
does not negate the competitive value of the EWR data or the likely
impact that wholesale (rather than piecemeal) disclosure would have
on submitters. We also note that there are benefits of releasing
information in investigations, such as providing for public input
which could enhance the agency's understanding of an issue. Also,
data collections on consumer assessments by third parties are not
comparable to the volume and depth of information received under the
EWR rule.
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    On the other hand, the public would not receive significant, if
any, safety benefits from the release of EWR consumer complaint
information. The EWR data cover a wide range of consumer satisfaction
issues. As explained in the preamble to the EWR rule, we sought to
obtain complaint information beyond that which would be likely to
involve safety issues:

    The agency is unwilling to adopt the recommendation that the
complaint must allege a safety-related defect, as this would unduly
limit the reporting of consumer complaint information that NHTSA is
seeking to collect through the early warning reporting rule. As
stated in the NPRM, based on its past experience with defect
investigations, the agency does not ``believe that [it] would be
appropriate to simply require reporting of `safety-related'
problems, since manufacturers often have a much more narrow view of
what constitutes a safety-related problem tha[n] we do.'' [66 FR] at
66202. If the term ``consumer complaint'' were limited to complaints
specifically alleging a safety-related defect, communications
expressing dissatisfaction with a product or relating that the
product did not perform in a satisfactory manner would not
necessarily be reported to the agency. 67 FR at 45849.

The agency included this category of information in the early warning
program to ensure the collection of a comprehensive amount of data for
it to use in its analysis. This has proven true. The vast majority of
this information has not been indicative of defect trends.

    NHTSA also has balanced the importance of consumer complaints and
the extent of the impairment to the government against the public
interest in disclosure. The importance of complaints is well-
established. The magnitude of the numbers of complaints is important to
us, as in our screening we will look for trends based in part on
relatively high rates. We believe that, given manufacturers'
substantial control over information collection, if the numbers of
consumer complaints were disclosed to the public, it is likely that the
numbers of consumer complaints would be reduced considerably and, as a
consequence, our ability to detect potential safety problems would be
substantially diminished.
    On the other hand, the public interest in disclosure of consumer
complaints is limited. If the data were released, the public would have
a generalized awareness of consumer dissatisfaction or a perception of
a potential or actual problem broken out by the elements provided in 49
CFR Part 579. But based on EWR complaint data alone, it is not possible
to identify a safety defect in a particular product. And, unlike ODI
investigations, a specific potential defect is not identified in EWR
data. Thus, to the extent balancing is required, the impairment prong

balancing weighs in favor of nondisclosure of consumer complaint data.
3. Warranty Claims
    The EWR rule requires larger volume manufacturers of light
vehicles, medium-heavy vehicles and buses, motorcycles, and trailers to
submit the number of warranty claims, without regard to whether they
are safety-related, that they have paid, broken out, for each make and
model, by numerous specific categories of vehicle systems (e.g.,
steering, brakes), fires and for certain categories rollovers--all of
which are binned by code. See 49 CFR 579.21(c), 579.22(c), 579.23(c),
579.24(c). In addition, the rule requires manufacturers of tires to
report warranty adjustments they paid, other than for relatively low
volume tire lines, on a number of categories of tire failures, such as
the tread and sidewall. 49 CFR 579.26(c). In the child restraint
category, warranty claims are combined with consumer complaints. 49 CFR
579.25(c). Repairs made outside of warranties that are covered by
``good will'' are also reported under warranty claims and warranty
adjustments.\45\ 49 CFR 579.4.
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    \45\ These data include ``good will'' repairs that are conducted
and paid for by the manufacturer outside of the warranty. ``Good
will'' means ``the repair or replacement of a motor vehicle or item
of motor vehicle equipment, including labor, paid for by the
manufacturer, at least in part, when the repair or replacement is
not covered under warranty, or under a safety recall reported to
NHTSA under part 573 of this chapter.'' 49 CFR 579.4.
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    The EWR warranty data reflect the costs that manufacturers have
incurred in satisfying claims for payments arising from problems with
their products. Ordinarily, those costs are the costs of repairs of
vehicles or the repair or replacement of equipment. The early warning
data on warranty claims involve a wide range of issues. For the most
part they do not reflect defect trends.
    In the NPRM, the agency proposed to make a class determination that
warranty claims (warranty adjustments in the tire industry) in EWR data
would not be released to the public. 71 FR at 63743. The agency based
this proposed class determination on both the competitive harm and
impairment prongs of National Parks. We first address the competitive
harm from the release of EWR warranty claims data, then we discuss the
impairment to the agency's ability to obtain as complete warranty
information that would follow the release of the information.

Competitive Harm

    Numerous commenters have provided information to the agency on
whether the disclosure of EWR warranty claims and warranty adjustment
data (collectively warranty claims) would be likely to cause the
submitting manufacturer to suffer competitive harm. This includes both
industry and non-industry groups.
    Commenters from various sectors of the automotive industry
explained the competitive value and use of EWR warranty claims data as
well as the competitive harm that the release of the data likely would
cause. As noted in the discussion of consumer complaints above, at the
outset of its comments, the Alliance showed manufacturers compete
vigorously for sales of new vehicles. Similarly, there is substantial
competition for tire sales. The manufacturers expend substantial
amounts of research money annually related to quality and consumer
satisfaction in the market for new sales.
    The EWR warranty data are a comprehensive compendium of warranty
claims. They cover numerous systems and components (e.g., 18 for light
vehicles and 22 for medium heavy vehicles), as well as fires and
rollovers for many reporting industry sectors. They cover makes and
models going back many years and are updated quarterly. As noted by the
Alliance, their value is enhanced by their continuing content, which
permits a model-to-model comparison on the numerous systems and
components in EWR reports. The data are proprietary and are not
publicly available.
    Manufacturers have submitted a significant volume of warranty
claims data to NHTSA under the EWR program. According to comments, the
manufacturers have expended tens of millions of dollars in reporting
under the program. The release of EWR warranty data would permit
wholesale industry-wide comparisons of the quality or durability of all
significant systems or components on models chosen for comparison.
Disclosure of this information, as the Alliance explained, would
financially benefit others who obtain and use the data for purposes
that would be contrary to the competitive interests of the submitting
manufacturers.
    The Alliance's discussion of EWR warranty data addressed the
competitive aspects of those data including the competitive
consequences of the release of warranty information in a context that
also addressed consumer complaints and field reports. The Alliance
explained that the EWR data provide valuable information on quality and
consumer satisfaction of vehicle owners on a make/model/model-year
basis.\46\ The Alliance emphasized that warranty claims information is
particularly sensitive from a competitive standpoint. Additionally, the
Alliance noted that EWR data provide valuable insights into a given
manufacturer's business practices and decisionmaking, including the
application of warranty terms and conditions, the coverage of products
and systems by a given warranty, and the manufacturer's willingness to
provide good will adjustments after the end of an official warranty
period.
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    \46\ The Alliance asserted that the comprehensive nature of
these submissions--covering all makes and models over a multi-year
timeframe--makes them a valuable compendium of quality and consumer
satisfaction information that could not be replicated easily at any
price and could be used by competitors to follow warranty trends
that provide a window into submitters' warranty costs. The Alliance,
citing Worthington Compressors, pointed out that the release of
information collected at considerable cost by an entity that
submitted information to the Government could easily have
competitive consequences. The submitters expend considerable sums to
gather large volumes of EWR data and the release of it would be
contrary to the competitive interests of entities that submit the
information and to the benefit of competitors.
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    The Alliance referred to a report from a consultant, AutoPacific,
which made several observations regarding the value and use of warranty
data. Under a competitive harm analysis heading, AutoPacific stated
that it is well-known that automobile and component manufacturers
closely guard their warranty data for competitive product design and
pricing reasons. Comparative component warranty, reliability, and
durability experiences strongly influence component pricing and
sourcing decisions. If an original equipment manufacturer (OEM) \47\
purchases a component and obtains field experience with that component,
it can be expected to use that information to make decisions about
purchases and the prices it will pay. Providing that field experience
to other manufacturers gives them a free ride at the submitter's
expense. Auto Pacific also observed that component manufacturers can
use vehicle manufacturer warranty data in preparing bids for new
business, planning new business marketing strategies, and estimating
the likely costs and pricing positions of vehicle manufacturers, with
whom they may compete for sales in the aftermarket. The warranty claim
experience at the component level could be useful to them, to the
detriment of the vehicle manufacturers.
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    \47\ OEMs may be contrasted to aftermarket equipment
manufacturers that produce replacement equipment.
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    The Alliance pointed out two aspects of warranty claims data that
are

particularly sensitive from a competitive standpoint and explained that
vehicle manufacturers and their dealers would be placed at a particular
competitive disadvantage should EWR warranty claims information be
released. Vehicle manufacturers, often through their franchised
dealers, compete with independent aftermarket parts manufacturers for
sales of parts used in repairs. Those independent aftermarket parts
manufacturers would gain a significant competitive advantage from
having routine access to warranty claims experience on the detailed
level of EWR reporting. As an example, they would know the trends in
warranty experience on brakes of various makes and models. The value of
such information to aftermarket parts manufacturers is evidenced by
publications sold by the Motor and Equipment Manufacturers Association/
Original Equipment Suppliers Association (MEMA/OESA) that include
forecasts and historical trend data where available. Aftermarket sales
in the light duty market, the Alliance estimated, were $197 billion in
2005.\48\ The sale of these data by aftermarket parts manufacturers
illustrates the value of the data and the associated competitive harm
from the release of a comprehensive collection of warranty claims
experience. With this information, the Alliance explained, aftermarket
parts manufacturers would know where to target their marketing efforts
when vehicles come off warranty and benefit from this information at
the direct expense of the vehicle manufacturers' competitive positions
and their franchised dealers.\49 \
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    \48\ The Alliance stated that this figure was based on estimates
from the Automotive Aftermarket Industry Association. However, the
Association estimates that the amount of business in this area is
much larger--nearly $270 billion. See http://www.aftermarket.org/

(Press Release No. AAIA-26-06 (June 15, 2006) (reporting that
aftermarket business related to light vehicles for 2006-2007
increased to $267 billion).
    \49\ Comments by the MEMA/OESA lend further support to the value
of the data. MEMA/OESA pointed out that the warranty data of
original equipment manufacturer (OEM) suppliers are of particular
value to replacement parts and equipment manufacturers and that
their wholesale disclosure would likely cause these suppliers to
suffer serious competitive injury if the data are disclosed. It
explained that this information is highly sought and competitively
sensitive marketing intelligence. Suppliers would undoubtedly
benefit from the disclosure of this information.
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    The Alliance also stated that warranty claims should be withheld
from public release on grounds of the existence of competition from new
and potential new entrants to the U.S. market. In particular, it noted
several Korean-based companies and the possibility of Chinese, Russian
and European companies entering or reentering the United States market.
Release of EWR information, it argued, would provide these potential
competitors with access to an otherwise unavailable collection of
comprehensive data about manufacturers' experiences with various
components. These new entrants could benefit by reviewing EWR warranty
data to estimate the probable ranges of warranty claims rates (and by
inference, the associated costs), without having to expend resources to
try to obtain this information privately, such as by paying for market
research, or to take the risk of entering the market without the
benefit of this information. Providing this field experience, the
Alliance stated, would provide them with a free ride at the expense of
the first manufacturer. The Alliance asserted that this is a
competitive harm within the meaning of Worthington Compressors, 662
F.2d at 51-52.
    GM, a manufacturer of both light vehicles and medium-heavy
vehicles, pointed out it maintains the confidentiality of warranty
data. It views the data as proprietary and does not disclose
voluntarily warranty data of the type and scope submitted under the EWR
rule.\50\ GM explained that manufacturers will be harmed by the
competitive use of EWR warranty data. Because the EWR warranty claims
represent costs incurred by manufacturers, counts of warranty claims
provide an index of a manufacturer's costs. Cost information is
competitively sensitive.\51 \
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    \50\ GM also explains that its own suppliers do not have full
access to its warranty data and that any data that GM shares must be
treated by those suppliers as proprietary information.
    \51\ GM supported the statements in its comments with several
examples of the manner in which competitors could use the
information to their benefit and the detriment of the entity
submitting the data, including reduced testing and analysis, and
performance issues in the field:
     A supplier offers a newly designed system to OEMs.
While reverse engineering and testing by multiple OEMs is possible,
those approaches do not duplicate field experience in numerous
vehicles. If one OEM (OEM1) installs the system in vehicles, it
would gain field experience and could use it to make better
decisions about the future use of the system. If the EWR warranty
claims data were disclosed, 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.
     Two OEMs may purchase systems with similar designs from
the same supplier, but the OEM with a greater sales/production
volume may learn something about its performance first and use its
knowledge to improve its product. If the other OEM has access to
this company's information, it may be able to respond sooner and
offset OEM1's competitive advantage.
     If two OEMs are using the same systems/components from
the same supplier, differences in performance of those systems may
be exposed in the field due to differences in how each of those OEMs
integrated those systems/components into its vehicle designs. After
reviewing its competitor's EWR warranty data, an OEM ``may be able
to alter its vehicle design integration sooner based on differences
in field performance, which would offset the other OEM's competitive
advantage.
     Warranty claims information on newly released vehicles
can be used by competitors to decide what to emulate and what not to
emulate without the expense of implementing those systems and
processes.
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    GM stated that since vehicle manufacturers increasingly purchase
entire systems (i.e. all components used to perform a specific function
such as steering, suspension, heating and cooling, occupant restraints,
or seats) from suppliers, the disclosure of these data would provide
competitor vehicle manufacturers with the warranty claims experience of
systems made by various potential suppliers (e.g., for GM) that would
give these competitors an advantage in selecting suppliers, at the
expense of the manufacturer whose experience underlies the data.
    Also, competitors could use these data to assess the effectiveness
of a particular OEM's systems and processes to identify and resolve
quality and lead time issues. As GM explained, the loss of confidential
information would force it or another OEM to subsidize other OEMs,
reducing their costs at GM's expense and destroying GM's competitive
advantage. GM also pointed out that OEMs compete for replacement part
sales with other companies and that the release of warranty claims data
can be used by these aftermarket competitors to make decisions on what
parts to produce, in what quantities and at what price. This, GM noted,
is a source of competitive harm.
    AIAM focused on the totality and comprehensive nature of the EWR
data. AIAM's comments, which were discussed above in the context of
consumer complaints, applied with at least equal force to warranty
claims. AIAM stated that EWR warranty data would provide competitors
useful information about the quality levels and the cost structure of
the submitter. It would enable one company to use the experience of
another to select an optimal design, production process and pricing
strategy, while avoiding the cost and risk that would otherwise be
encountered. We refer by reference to the discussion of AIAM's comments
above.\52\
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    \52\ AIAM stated, for example, that a knowledgeable competitor
can view this mosaic of information and reach valuable conclusions.
The comprehensive body of EWR information facilitates manufacturer-
to-manufacturer comparisons. EWR warranty data would provide
competitors useful information about the quality levels achieved by
the submitting manufacturer or its suppliers, both for technologies
used in vehicles and in their accompanying production processes,
which permits competitors to evaluate a particular technology,
process or supplier, at a risk and cost that is lower than otherwise
attainable. Using this information, AIAM explained, competitors
might be able to base decisions and reach conclusions to pursue
certain technologies to a substantial degree on their reviewing a
submitter's EWR warranty information. The submitter may have
expended substantial resources to help it decide whether to pursue a
particular technology, while the competitor would gain a real world
evaluation free of cost or the effort of a real world evaluation.
This would impair the competitive position of the submitter. The EWR
information would also provide a competitor with information about
the submitters' cost structure. Claims are an important factor in
the costs of various technologies. Competitors could evaluate this
cost information and make decisions about whether to pursue various
products or marketing strategies based on the submitter's costs
without undertaking the risks of producing a vehicle with the
particular technology.

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    Nissan stated that, in addition to their role as an accounting
system between manufacturers and their dealers that is designed to
maintain customer satisfaction, a purpose of warranty systems is to
quickly identify issues. Warranty data assist manufacturers in
implementing production adjustments or service actions to ensure that
products are operating as intended and meeting consumer expectations.
Nissan pointed out, for example, that warranty claims help the company
identify areas where the field experience information suggests further
investigation. The vast majority of these issues, it added, are not
safety related.
    Nissan discussed the competitive consequences of the release of EWR
warranty information together with consumer complaints and field
reports.\53\ Of particular note, warranty data would be valuable in the
context of vehicle manufacturers' changes of suppliers. Competitors
could, for instance, learn that the aggregate number of warranty claims
in a category rose with a change of suppliers. Warranty data also
provide insight into a company's warranty practices, particularly
``good will'' after a warranty expires.
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    \53\ Nissan pointed out the competitive aspects of EWR warranty
data. EWR warranty claims data help identify areas where field
experience is showing an issue. The data can reveal market trends in
both company costs and consumer reaction. Competitors could consider
the data before deploying new technologies. They would rely on
Nissan's information in making critical decisions on which
technology or suppliers to use and when to enter the market and how
best to market the technology to consumers. Competitors can use this
information to determine market reactions, supplier or product
changes, and new marketing efforts. Nissan further noted that this
information is competitively valuable irrespective of whether the
specifics of each claim are accessed by competitors because
competitors can use these data to focus on a particular factor that
can then be readily identified through reverse engineering.
    Nissan explained that it develops warranty information only
after significant investment in engineering and/or market research.
Competitors, including suppliers, could use the information created
by the significant investment of the manufacturer that submitted the
data. These data could be used competitively against a submitter.
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    TMA addressed warranty information as part of its overall comments
on the competitive harm from disclosure of EWR information. It stated
that public availability of detailed, comprehensive warranty data for
each model and model year across numerous components and systems will
provide significant market intelligence to competitors. TMA pointed out
that the release of the information would provide competitors with
valuable information to evaluate the performance, reliability and
durability of various components, without the expense and risk
associated with product development that would normally occur with
field-testing efforts, while shortening the amount of time competitors
need to market competing products, to the competitive disadvantage of
the submitting manufacturer.\54\
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    \54\ TMA stated that the EWR data that medium-heavy vehicle
manufacturers report are comprehensive as they involve numerous
vehicle systems as well as fires and rollovers. This compendium of
EWR warranty data, model-by-model and system-by-system, has
significant competitive value. TMA stated that the disclosure of EWR
data would provide competitors with valuable and previously
unavailable insight into the field experience and performance of a
submitter's entire product line and individual systems and
components. There are numerous uses that competitors could make of
these data to their competitive advantage. TMA characterized the EWR
information as a data bank of quality control information that
competitors could use to assess the in-use performance of parts and
systems. A competitor could use the reporting manufacturer's field
experience, good or bad, while avoiding the costs, effort and risks
that the reporting manufacturer has incurred. It would be used in
purchasing, pricing, and sourcing decisions, all of which would have
competitive impacts. TMA also cited a discussion by GM of EWR
warranty data as a competitively valuable cost index and explained
how EWR warranty data can be used.
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    Blue Bird asserted that EWR warranty data are highly proprietary
and have a high level of competitive sensitivity. If these data were
available, competitors would have a free ride in learning about
warranty experiences for various vehicle systems, components, and
parts. It also stated that their wholesale disclosure would result in
competitive harm.
    Harley-Davidson stated that warranty data are generally not
disclosed by individual motorcycle companies. Warranty claims are part
of continuous improvement, training programs and efforts to satisfy
customers. The Motorcycle Industry Council echoed this concern, in
light of the reservoir of information about customer satisfaction and
quality concerns, and urged against the disclosure of warranty data.
    Utility explained that it uses warranty claims to help identify
potential problems early in the life of a trailer and spot trends
associated with potential problems. By analyzing such data, with its
suppliers, Utility is able to update components, incorporate new
technologies and achieve cost savings. Such information in the hands of
competitors would enable them to assess the in-use performance of
component parts, which in turn could be integral components of its
purchasing, pricing and sourcing decisions.
    RMA, on behalf of tire manufacturers, asserted that NHTSA has
treated tire manufacturer warranty adjustment data as confidential
business information in the past. RMA asserted that because tire
manufacturers use warranties as a marketing tool, adjustments are not
necessarily an indication of tire performance.\55\ It argued in favor
of a class determination to cover all tire warranty adjustment
data.\56\ It further contended that since warranty data have been held
confidential in the context of some investigations, the broader EWR
warranty data base should be held confidential. As RMA observed, the
tire industry competes tire line-by-tire line and even size-by-size.
Tires are marketed by size in a given line.
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    \55\ RMA stated that it is a party to a consent order with the
Federal Trade Commission prohibiting the association from collecting
or disseminating competitively sensitive information, including
warranty information. It submitted a copy of the order with its
comments. The order reflects a concern about tire company
competitors sharing information.
    \56\ RMA suggested that this rulemaking should apply to warranty
claim data submitted during defect investigations. Such a proposal
is clearly outside the scope of this rulemaking, which applies to
EWR data. As RMA has maintained (correctly) in legal proceedings,
the vast majority of EWR data are not indicative of defect trends.
Brief at 5-6 and 22; Reply Brief at 1 in Public Citizen v. Peters,
No. 06-5403 (D.C. Cir.). We are declining RMA's suggestion.
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    Several manufacturers advanced another consequence of disclosure:
Misleading and unfair comparisons of the data. The Alliance explained
that the disclosure of the comprehensive compendiums of EWR information
would be misleading to consumers and unfair to the submitting
manufacturers because consumers would attempt to make comparisons of
the performance of one model to another, across multiple model years,
on a quarterly basis, which, as the Alliance observed, can not be done.
Similarly, AIAM stated that public disclosure of the data would create
a great potential for misunderstanding and mischaracterization. AIAM
pointed out that automotive warranties vary in

length and scope of coverage. A model having a higher claims rate may
simply have a more comprehensive warranty than the second model, rather
than inferior quality. Reports with simple comparisons could, in AIAM's
view, affect the competitive positions of manufacturers in a way that
was unfair. Also, TMA stated, with supporting explanation, that
manufacturers and consumers could misuse the data to draw unfair and
unsubstantiated and misleading comparisons regarding competitors'
products.
    JPMA added that the release of the encyclopedia of quality
information encompassed in EWR data would cause submitters unwarranted
competitive harm because the reports will include activities that are
not safety related. This, JPMA said, will result in unwarranted
disparagement.
    RMA noted that warranty policies differ among tire manufacturers,
and from tire to tire. Both consumers and the marketplace influence the
terms of these warranties. TIA noted that the disclosure of warranty
data can provide a misleading picture of a tire model's performance
that would competitively harm the manufacturer. Workhorse Custom
Chassis also asserted that the wholesale disclosure of these numbers
would competitively harm EWR submitters in part because of perceived
problems by potential customers.
    Several entities acknowledged the limited releases of warranty
information submitted by the manufacturers during investigations by
NHTSA's ODI. The Alliance stated that the release of this limited
information on specific models in a limited number of model years in
investigations conducted by NHTSA does not support the release of the
comprehensive compendium of information in EWR submissions. A limited
release 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 quarterly EWR submissions. Unlike EWR data, the release of data
from investigations does not permit industry-wide comparisons of the
quality or durability of all significant components across entire
product lines and they are not a compendium of quality and customer
satisfaction information developed over time. Thus, the Alliance
concluded that the confidentiality of EWR warranty information should
be maintained.
    GM added that the limited disclosure of warranty information in
other contexts, such as during defect investigations, typically
involves a limited number of makes, models, and model years of vehicles
and are limited to a narrow group of warranty codes. GM concluded that
the effects of disclosing all EWR warranty data, are, therefore, much
different from the effects accompanying the disclosure of the more
limited warranty data the agency currently discloses.
    Similarly, Nissan distinguished the EWR warranty claims data from
those provided during ODI investigations, noting that the latter have
limited competitive value compared to EWR warranty data because they do
not offer the same market-oriented base of information as the
comprehensive collection of trend data provided under the EWR rule.
    By contrast, non-industry commenters argued in favor of disclosing
all EWR warranty data. Quality Control and Public Citizen argued that
the disclosure of this information would permit the public to make
educated decisions regarding products. Quality Control stated that the
EWR warranty data should be disclosed because they would be useful to
the public in spotting potential defect issues. Public Citizen stated
that the EWR rule requires no unnecessary details about manufacturer
business operations or future plans. Quality Control and Public Citizen
did not provide any facts disputing the competitive value of the data
or the harms of disclosure explained by the industry commenters.
    The literature also refers to the value of warranty claims data. At
its core, warranty data are commercially valuable because of the myriad
ways they can be used. See Tom Gelinas, We Got You Covered, Fleet
Equipment, July 1, 2005, at 36 (noting ArvinMeritor's use of warranty
data to perform many tasks, such as in the company's OnTrac Call
Center's early warning system reports, which are used to help engineers
``determine corrective actions on new or emerging product problems'')
and Huaiqing Wu, Early Detection of Reliability Problems Using
Information from Warranty Databases, TECHNOMETRICS, May 31, 2002, at
120 (explaining the value of using warranty data ``to detect
potentially serious field reliability problems).
    After carefully considering the comments and other information of
record, NHTSA has determined that the release of EWR warranty claims
numbers on light vehicles, medium-heavy vehicles and buses,
motorcycles, and trailers, and EWR warranty adjustment data on tires is
likely to cause substantial harm to the competitive positions of the
manufacturers that submit the data.
    The EWR warranty data are a comprehensive compendium of warranty
claims paid by manufacturers, for a broad range of products, generally
by make, model year, going back for years and updated quarterly. They
address numerous components and systems of vehicles and equipment and
for certain vehicles include rollovers and fires. See, e.g., 49 CFR
579.21(b)(2); 49 CFR 579.22(b)(2). The comprehensive nature of the
compendiums of EWR data on warranty data is enhanced by their
continuing content, which is updated by quarterly reports, and by their
standardized reporting format. In general, these data reflect a repair
or the replacement of an item. They can be used for industry-wide
comparisons on these numerous systems and components. The amount of EWR
warranty data is substantial. For the first 15 quarters of EWR data, an
average of 65 light vehicle manufacturers per quarter reported 204
million warranty claims; an average of 87 medium--heavy and bus vehicle
manufacturers per quarter reported nearly 11 million warranty claims;
an average of 18 motorcycle manufacturers per quarter reported over 1.1
million warranty claims; an average of 285 trailer manufacturers per
quarter reported 1.6 million warranty claims and an average of 27 tire
manufacturers per quarter reported over 1.6 million warranty adjustment
claims.
    These warranty data are not publicly available. Automobile, system,
component and equipment manufacturers closely guard their warranty
data. The compendiums of EWR warranty data submitted by manufacturers
could not be replicated at all or at least not easily at any price.
    The EWR warranty data are a valuable indicator of the field
experience of parts and systems in vehicles and tires.\57\ The warranty
data indicate the reliability and durability of various systems and
components.
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    \57\ While this discussion applies to child restraints, they are
covered under the aggregated submission of consumer complaints and
warranty claims.
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    EWR warranty data are a valuable source of information about the
quality of the range of products, system-by-system, over time sold by a
manufacturer or its supplier. Warranty information is useful in
assessing performance, reliability and durability issues. These data
can be used to select an optimal design and production process.
    Warranty claims help to identify potential problems early in the
life of a vehicle. By analyzing such data, a

company is able to update components, incorporate new technologies and
achieve cost savings. Warranty data assist manufacturers in
implementing production adjustments or service actions to ensure that
products are operating as intended and meeting consumer expectations.
Such information in the hands of competitors would enable them to
assess the in-use performance of components, identify issues and avoid
mistakes.
    If EWR warranty data were released, competitors would likely review
the data to evaluate a particular product, technology or process. The
EWR data have great bearing on the selection of a design or production
process. The data are particularly valuable on future design decisions.
While the manufacturer submitting the data would have borne expenses
associated with the introduction of the product and the collection of
the data, competitors would benefit from reduced development costs,
including costs of testing and analysis. Competitors would also face a
risk of performance issues in the field that is lower than would
otherwise be attainable. Wholesale disclosure of EWR warranty data
eliminates the expense and risk of obtaining this information through
field testing and trial and error. Using this information, competitors
could base decisions to pursue certain technologies to a substantial
degree on their reviewing a submitter's EWR warranty information. The
competitor would gain a real world evaluation free of the risk or the
effort and associated cost of a real world evaluation. Thus, the public
availability of detailed, comprehensive warranty data for each model
and model year across numerous components and systems will provide
significant market intelligence to competitors. In short, the release
of the EWR warranty data would enable one company to use the experience
of another. The loss of confidential information would force the OEM
that submitted the EWR data to subsidize other OEMs, reducing their
costs at the submitter's expense and undercutting its competitive
advantage. This would impair the competitive position of the
manufacturer that submitted the EWR data.
    The EWR data have a substantial bearing on purchasing decisions.
EWR warranty information is useful in making decisions about purchases
and the prices to be paid. Comparative component warranty, reliability,
and durability experiences strongly influence component sourcing and
pricing decisions. Since vehicle manufacturers increasingly purchase
entire systems (i.e., all components used to perform a specific
function such as steering, suspension, heating and cooling, occupant
restraints, or seats) from suppliers, the disclosure of these data
would provide vehicle manufacturing competitors with the warranty
claims experience of systems made by various potential suppliers that
would give these competitors valuable information at the expense of the
EWR data submitter. Similarly, tire manufacturers have acquired
complete tires from producers in China. An important question is the
relative quality of the suppliers' products in the field. Some will be
more reliable and the subject of fewer warranty claims. Providing that
field experience to other vehicle manufacturers gives them a free ride
at the expense of the submitting manufacturer. EWR warranty data would
provide significant intelligence to a manufacturer making a decision as
to which supplier to choose and what price to pay. Competitors could
also learn for instance that the aggregate number of warranty claims in
a category rose with a change of suppliers.
    Competitors would use the EWR data to follow warranty trends, which
would provide a window into those competitors' costs and cost
structure. Because the EWR warranty claims represent costs incurred by
manufacturers, counts of warranty claims provide an index of a
manufacturer's costs. Knowing whether costs for various systems are
relatively high is useful and important information, because
controlling costs is critical to the success of a business.
    The fact that an owner returned to a dealer for service, further,
is indicative of customer satisfaction, or the lack thereof. As one
commenter put it, the EWR information is a reservoir of information
about customer satisfaction and on the company's efforts to satisfy
customers.
    Warranty claims data would be valuable to competitors that produce,
supply or sell aftermarket parts. Aftermarket parts are replacement
parts for vehicles that have been sold to first purchasers. After the
warranty on a vehicle expires, owners often have the vehicle repaired
at shops other than dealerships. While franchised dealers generally
must use service parts sold to them by vehicle manufacturers,
independent repair shops have the option of using OEM parts or
aftermarket parts made by independent manufacturers.
    Vehicle manufacturers, often through parts sales by their dealers,
compete with independent component manufacturers for sales of
aftermarket parts used in repairs. Independent aftermarket parts
manufacturers could use vehicle manufacturer warranty data in targeting
their marketing effort when vehicles come off warranty. The
independents could use the EWR warranty data to make decisions on what
parts to produce, in what quantities and at what price. They could use
the data in planning marketing strategies, preparing bids for new
business and estimating the likely costs and pricing positions of
vehicle manufacturers, with whom they compete for sales in the
aftermarket. The warranty claim experience at the component level would
be very useful to them, to the direct expense and detriment of the
vehicle manufacturers' competitive positions.
    The warranty data also provide insight into a company's warranty
practices, particularly good will repairs after a warranty expires.
    The EWR data would be especially valuable to new entrants. Several
manufacturers are currently considering entering or reentering the U.S.
market. These potential new entrants would be likely to benefit
competitively from the substantial amount of information contained in
EWR data by reviewing the warranty history of vehicle manufacturers
currently in the U.S. market. These data would provide these potential
entrants with valuable insight into the likely warranty costs and
issues they would face if they decide to enter the U.S. market.
    Quality Control and Public Citizen provided no facts disputing the
competitive value of the data or the harms of disclosure raised by the
industry commenters.\58\
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    \58\ NHTSA disagrees with the analogy that they attempt to draw
to the release of warranty data in ODI investigations of problems in
particular vehicles. See the discussion above regarding the
different impacts of the release of consumer complaint data in ODI
investigations and EWR consumer complaint data. The same applies to
EWR warranty data.
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    The release of EWR warranty claims and warranty adjustment claims
information submitted by manufacturers would have competitive
consequences, as recognized in Worthington Compressors, 662 F.2d at 51-
52. The large volumes of EWR warranty data are valuable and likely
would be used by competitors. For the reasons discussed above, the
release of this information would be to the significant benefit of the
competitors of the submitters and to the significant detriment of the
competitive position of the manufacturers that submitted the
information.\59\
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    \59\ As an alternative basis for confidentiality, the disclosure
the comprehensive compendiums of EWR warranty information would
likely result in consumer misuse. In Worthington Compressors, 662
F.2d at 53 n.43, the court permitted the consideration of consumer
misuse of commercial information that is otherwise unavailable. The
disclosure of the EWR information would be misleading to consumers
and unfair to the submitting manufacturers. Consumers would attempt
to make comparisons of the performance of one model to another
across multiple model years, on a quarterly basis, which is
problematic. The underlying foundations for the data are not the
same. Different manufacturers have different warranty coverage, in
terms of scope of coverage. Some have longer and more extensive
coverage than others. The net result would be unfair and
unsubstantiated and misleading comparisons. These comparisons would
adversely affect the competitive positions of manufacturers in a way
that would be unfair.
    Public Citizen has asserted that this analysis amounts to an
unwarranted product disparagement theory, and contends that the harm
occurring from the disclosure of these data amounts to adverse
public reaction, which is not a cognizable harm under Exemption 4.
The agency disagrees with this attempt to recharacterize the harm.
Since the EWR data are competitively sensitive for a valid reason
under Exemption 4, other potential consequences such as adverse
public reaction, do not dictate that we treat the information as
non-confidential. Occidental Petroleum Corp. v. SEC, 873 F.2d 325,
341 (D.C. Cir. 1989).

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Impairment

    In addition to proposing to hold EWR warranty claims data
confidential on grounds of competitive harm from their release, the
NPRM proposed to hold these data confidential under the impairment
prong of FOIA Exemption 4. As reflected in that notice, manufacturers
have considerable latitude in establishing the scopes and durations of
their warranties. They have largely unfettered discretion in providing
good will repairs outside of warranties, which are counted under the
EWR rule as warranty claims. It is beneficial to NHTSA if a
manufacturer has broad warranty coverage. More input channels increase
the robustness of the available data. Warranties have historically
provided feedback on product performance that can be valuable to NHTSA
in identifying problems, including potential defects that may point to
the presence (or absence) of a safety problem. The agency seeks to
ensure that it receives as much information as possible to identify
possible defect trends.
    As noted above, under the early warning reporting provisions of the
Safety Act, NHTSA requires manufacturers of certain motor vehicles and
motor vehicle equipment to provide reports on only the warranty claims
that they pay, which are dependent in part on the scope of warranty
coverage. See 49 U.S.C. 30166(m)(4)(B). NHTSA does not exercise control
over the warranty coverage provided by manufacturers. In view of the
fact that the quantity and comprehensiveness of the EWR warranty data
depend in substantial part on the willingness of manufacturers to
provide warranty coverage, NHTSA does not want to take steps that
discourage extensive warranties, including good will.
    Both industry and non-industry commenters addressed the agency's
proposal. Industry commenters stated that a class determination for
warranty claims was justified on the basis that disclosure would impair
the agency's ability to obtain this information in the future. These
commenters noted that in light of the limitations in 49 U.S.C.
30166(m)(4)(B), manufacturers could adjust their warranty programs,
which would affect the amount of data NHTSA receives.
    The Alliance explained that there is wide variation in
manufacturers' programs. As to warranties, disclosure could cause
manufacturers to reduce coverage. Manufacturers who offer longer or
more generous warranty programs may curtail those programs, since
generous warranty programs can generate a greater number of warranty
claims and hence may cause a manufacturer's products to appear to be
less reliable, even if they are not. As a result, the government's
ability to obtain necessary information in the future will be impaired.
    TMA stated that the release of warranty claims data will likely
lead to the strict application of manufacturer warranty programs that
would deny good will and customer accommodation claims falling outside
of their terms. Also, because manufacturers offer warranty programs
that vary in length and scope, Utility asserted that manufacturers with
longer and broader warranty programs will inevitably have more
information in their possession. If the data were disclosed,
manufacturers with generous warranty programs will have an incentive to
curtail their programs in length and scope thereby decreasing the
volume of information submitted to NHTSA. This would impair NHTSA's
ability to obtain such information in the future.
    Blue Bird observed that the agency can reasonably anticipate that
the quality and specificity of this information will be reduced if it
is disclosed. It asserted that manufacturers would take measures to
minimize their respective exposures.
    AIAM asserted that the quality of the EWR information, including
warranty claims information, provided to NHTSA would suffer in part
because of the generation of additional claims accompanying the
publicity of warranty data received and disclosed by the agency. These
additional claims, AIAM asserted, would distort the quality of EWR
warranty data NHTSA collects.
    TIA argued that if EWR warranty information is not protected,
companies will produce the bare minimum required. Protecting this
information, it asserted, would ensure that the agency receives robust
amounts of data.\60\
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    \60\ TIA also noted that smaller tire dealers, in response to
the disclosure of the number of claims honored, will be inclined not
to make any adjustments.
---------------------------------------------------------------------------

    Public Citizen disputed the statements that if warranty data were
disclosed manufacturers would alter their warranty and good will
policies in order to report fewer claims. It asserted that
manufacturers are under market pressures to offer good services and
competitive warranties. In its view, the proposition that warranty
practices would be altered was speculative and insufficient
justification. It stated that the practice would only apply to
potentially unsafe products.
    In the discussion that follows, we will address the impairment that
likely would result from the disclosure of EWR warranty data. As
discussed above in the context of consumer complaints, Public Citizen
believes that under the impairment prong of National Parks, the
confidentiality of information is determined by a balancing test. While
we do not accept Public Citizen's view of Exemption 4, in the
alternative we will address a rough balance between the importance of
the information and the extent of the impairment against the public
interest in disclosure.
    Warranty claims data have been and are a critical aspect of the
data the agency considers to identify trends involving particular
equipment and systems or components in a particular make, model and
model year of a product. For this reason, in the EWR rule, NHTSA
included warranty claims and adjustments in the reporting requirements.
67 FR at 45852-53. In fact, to obtain as much data as possible, the
agency defined warranty claims to include not only warranty programs,
but also extended warranties and good will. Id; see also 49 CFR 579.4
(definition of warranty claim). Warranty information is a valuable and
useful pointer to areas that, after appropriate inquiry, may lead to
defect investigations and ultimately to the remedy of safety defects.
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 disclosure of EWR warranty claims and adjustments would be
likely to significantly reduce manufacturers' willingness to provide
expansive warranty coverage or to apply warranty policies in a more
generous and less restrictive way. Longer warranties, extended
warranties, good will, 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.
    Manufacturers have discretion in providing warranty coverage. For
example, for marketing purposes, manufacturers may choose to make
available to their customers warranties of longer duration and broader
coverage (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. Hyundai, for example, provides what it calls
America's Best Warranty: 10 years/100,000 miles powertrain protection
and 5 years/60,000 limited miles warranty covering nearly every new
vehicle component. Toyota provides a 5 years/60,000 miles powertrain
warranty and a 3 years/36,000 miles warranty covering all components
other than normal wear and maintenance items. General Motors' limited
warranty generally is for 3 years/36,000 miles, but its powertrain
protection is for up to 5 years/100,000 miles, although some makes and
models have different warranties. Ford's warranty generally is for 3
years/36,000 miles. Chrysler has a lifetime (for as long as you own
your vehicle) limited powertrain warranty on some models. Extended
warranties may be purchased for varying time periods. Some are not
transferable. Thus, not only do warranties differ by manufacturer, they
also differ based on the targeted market (e.g. luxury v. non-luxury),
on system components and on the purchaser.
    Similarly, companies can choose strictly to adhere to their
warranty policy limits 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. The disclosure of early warning warranty data is
likely to reduce good will and customer accommodation since such
efforts will increase the number of warranty claims.\61\ Manufacturers
would do this because if these data were made public, they 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.
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    \61\ 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.
---------------------------------------------------------------------------

    The disclosure of warranty claims and adjustment information is
likely to limit manufacturers' offerings in extensive and extended
warranties and good will. While the release of the information would
not eliminate manufacturers' warranty programs, the disclosure of EWR
warranty information likely would lead substantially to the contraction
of current warranty policies. Less warranty data would be reported to
NHTSA. This would result in substantially less robust data bases
provided to NHTSA to screen for signs of early field problems. NHTSA's
ability to identify potential safety defect trends would be impaired.
Such a result would affect the agency's ability to carry out the early
warning program.\62\ Non-industry commenters provided no information
countering the comments in the record pointing to the likelihood of
this risk. In sum, the disclosure of EWR warranty claims, including
warranty adjustment information, would be likely to impair NHTSA's
ability to obtain necessary information in the future.
---------------------------------------------------------------------------

    \62\ Limited disclosure of a manufacturer's warranty claims data
in an investigation does not negate the competitive value of the
data or the likely impact that wholesale (rather than piecemeal)
disclosure would have on submitters.
---------------------------------------------------------------------------

    Such a response by manufacturers would also adversely impact
consumers, who would be less likely to benefit from more generous
warranty and good will policies as manufacturers impose restrictions in
how they honor these policies. A class determination of confidentiality
avoids these consequences.
    On the other hand, the public would not receive significant, if
any, safety benefits from the release of EWR warranty information. The
non-industry commenters raised a safety argument. But they did not
provide facts to support the argument. The EWR warranty data are not
safety data. The vast majority of the data are not indicative of a
safety defect trend. Thus, to the extent that a balancing is required,
non-release of the warranty data would have very little impact on the
public. It is outweighed by the benefit to the EWR program.
4. Field Reports
    Field reports are communications from a manufacturer's
representative or dealer about a malfunction or performance problem.
See 49 CFR 579.4. The EWR rule requires larger volume manufacturers of
light vehicles, medium-heavy vehicles and buses, motorcycles and
trailers, and all manufacturers of child restraints to submit the
number of field reports that they have received broken out, for each
make and model, by specific component categories (e.g., steering,
brakes), and for certain reporting sectors, fire and rollover--all of
which are binned by code. See 49 CFR 579.21(c), 579.22(c), 579.23(c),
579.24(c), 579.25(c). Above and beyond the reports of the binned
numbers of field reports, these manufacturers must also provide copies
of field reports other than dealer field reports and product evaluation
field reports. Id.
    The early warning field report data include field reports that are
not safety-related and those that may involve safety-related defects.
As noted above, when NHTSA published the EWR rule, the agency expressly
contemplated that the manufacturers would report a large volume of data
and that the agency would then screen it for possible defects. NHTSA's
experience with EWR data has shown that the vast bulk of EWR field
report information has not been indicative of defect trends.
    In the NPRM, the agency proposed to make a class determination that
field report information in EWR data would not be released to the
public. 71 FR at 63744. The agency based this proposed class
determination on both the competitive harm and impairment prongs of
National Parks. We first address the likely competitive harm from the
release of EWR field report information, then we discuss the impairment
to the agency's ability to obtain as complete field report information
that would follow the release of the information.

Competitive Harm

    Numerous parties have provided information to NHTSA on the question
whether the disclosure of EWR field report information would be likely
to cause the submitting manufacturer to suffer competitive harm. This
includes comments from the motor vehicle and

equipment industry and non-industry commenters.
    Commenters from various sectors of the automotive and automotive
equipment industry addressed the competitive value and use of field
report data. As noted above, there is competition in the auto industry.
Manufacturers compete vigorously for sales. They compete in areas that
include quality and consumer satisfaction, and expend substantial
amounts of research money on quality and consumer satisfaction in the
market for sales.
    As noted in comments, the EWR information is a comprehensive
compendium of field reports. Manufacturers have submitted a significant
volume of field report data and copies of field reports to NHTSA under
the EWR program. They cover numerous systems and components, as well as
fires and rollovers for many reporting industry sectors (e.g., 18 for
light vehicles and 22 for medium heavy vehicles). They cover makes and
models going back a number of years and are updated quarterly. As noted
by the Alliance, their value is enhanced by their continuing content,
which permits a model-to-model comparison on the numerous systems and
components in EWR reports. The release of EWR field report information
would permit wholesale industry-wide comparisons of the quality or
durability of all significant systems or components on models chosen
for comparison. The data are not publicly available.
    The Alliance pointed out that the EWR field report data are a
comprehensive collection of information on the field experience of a
manufacturer's vehicles on a make/model/model-year and component/system
basis, pertaining to quality and customer satisfaction. The information
is treated as proprietary.\63\
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    \63\ The Alliance addressed the competitive consequences of
disclosing EWR field reports as part of its comments on the
disclosure of EWR data on consumer complaints, warranty claims and
field reports. The Alliance emphasized that the comprehensive nature
of these submissions--covering all makes and models over a multi-
year timeframe that is updated quarterly--makes them a valuable
compendium of quality and consumer satisfaction information that
could not be replicated easily at any price and could be used by
competitors. The Alliance added that the EWR data provide valuable
insights into a given manufacturer's business practices and
decisionmaking.
    Citing Worthington Compressors, the Alliance pointed out that
the release of information collected at considerable cost by an
entity that submitted information to the Government could easily
have competitive consequences. The submitters expend considerable
sums to gather large volumes of EWR data and the release of it would
be contrary to the competitive interests of entities that submit the
information. The financial benefit resulting from this effort flows
to those who obtain the data without significant cost or effort and
use the data for their own purposes is contrary to the competitive
interests of the manufacturers who submit the EWR information.
---------------------------------------------------------------------------

    The Alliance observed that although the volume of field report
information submitted is smaller than the volume of warranty claims,
the information in the copies of field reports contains a great deal of
detail. The field reports reveal the protocols used to identify,
evaluate and remedy performance issues and would, in many cases,
provide a detailed roadmap for performance issues with particular
components and subsystems. The release of the information would allow
competitors to improve on components and systems experiencing these
performance issues, without incurring the full costs of doing so. This
would cause competitive injury.
    AIAM, as discussed above, stated that the competitive value of the
EWR data results from the totality and comprehensive nature of the
information, which gives it value. The information would enable one
company to use the experience of another to select optimal product
design, production process and pricing strategies, while avoiding the
cost and risk that otherwise would be encountered through trial and
error.
    Similarly, Nissan explained that field reports serve as a useful
means through which technical staff in the field can communicate with
those who design, engineer, and manufacture the product. Through field
reports, the company can discover and address issues, identify supplier
successes or failures, and obtain useful information in developing
future products. As with consumer complaints, field reports identify
areas where field experience is showing an issue warranting further
investigation.
    TMA addressed field report information as part of its comments on
the range of EWR information. TMA pointed out that the release of the
information would provide competitors valuable information to evaluate
the performance, reliability and durability of various components
without the expense and risk associated with product development that
would normally occur with field-testing efforts, while shortening the
amount of time competitors need to market competing products, to the
competitive disadvantage of the submitting manufacturer.\64\
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    \64\ TMA stated that the EWR data that medium-heavy vehicle
manufacturers report are comprehensive; they involve 22 vehicle
systems as well as fires and rollovers. This compendium of field
report and other EWR data, laid out model-by-model and system-by-
system has significant competitive value. There are numerous ways in
which competitors could use these data to their competitive
advantage. TMA characterized the data as a data bank of quality
control information that competitors can use to evaluate the
performance, reliability and durability of various components
without the expense and risk associated with product development
that would normally occur with field-testing and ``trial and error''
efforts, while shortening the amount of time competitors need to
market competing products. TMA cited an example on the benefits of
field testing that a competitor would receive. Also, a competitor
could use the reporting manufacturer's field experience, good or
bad, while avoiding the costs, effort and risks that the reporting
manufacturer has incurred.
    TMA stated that the disclosure of EWR field report data would
provide competitors with valuable and previously unavailable insight
into the field experience and performance of a submitter's entire
product line and individual systems and components. TMA stated that
competitors could use this information to assess the in-use
performance of parts and systems. It would be used in purchasing,
pricing, and sourcing decisions, all of which would have competitive
impacts.
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    Utilimaster explained that field reports contain performance,
maintenance or durability issues. Blue Bird stated that EWR field
report information has a very high level of competitive sensitivity. It
expressed concern about competitor usage of it to the detriment of its
competitive position.
    Utility explained that field reports contain valuable ``in-use''
information about a manufacturer's product. The reports are used to
identify and correct potential performance problems, with the intent of
improving overall field performance. In the hands of competitors, it
asserted, this information would enable them to avoid similar issues in
their own products and eliminate the need to invest in research and
development in improving their own products. This would result in a
significant competitive advantage. Competitors could also incorporate
field report information into their marketing strategies.
    Harley-Davidson addressed its field reports as part of its fully
developed contact system with its dealer network that enables it to do
what is right and obtain a competitive advantage over its competitors.
As a result, Harley-Davidson urged that this information not be
released as a matter of course. The Motorcycle Industry Council
similarly urged the agency not to disclose EWR field report
information.
    Equipment suppliers supported the vehicle manufacturers'
statements. MEMA/OESA stated that field reports are often an invaluable
source of information for companies in their efforts to improve product
quality and performance. WABCO also expressed concern over the
competitive impacts of

disclosure. It explained that field reports can be used by skilled and
experienced engineers to spot trends in product reliability and trigger
follow-up actions.
    Industry commenters raised other concerns related to EWR field
report disclosure. Although field report information can be useful in
quickly finding possible problems, not all of this information is
safety-related. As a result, the information primarily serves
independent business purposes and merited protection from competitors.
    The Alliance, TMA and others stated that the release of EWR field
report data would result in misuse, as they had stated with respect to
consumer complaints and warranty data. More particularly, they raised
concerns that the disclosure of EWR field report data would lead to
erroneous conclusions that would cause submitters competitive harm.
Manufacturers and consumers could misuse it to draw unfair and
unsubstantiated and misleading comparisons regarding competitors'
products. See discussion above under consumer complaints.
    The Alliance and others added that the release of limited field
report information regarding particular concerns on specific models in
a limited number of model years in investigations by NHTSA's Office of
Defects Investigations does not support the release of the
comprehensive compendium of information in EWR submissions. A limited
release is much different from a competitive standpoint than the
automatic release of the continually collected, full compendium of EWR
information across virtually all makes and models, as is represented by
the quarterly EWR submissions.
    In contrast to industry commenters, the three non-industry groups
advocated that field report data be released by the agency. In its
comments, Public Citizen recognized that manufacturers place importance
on field reports for staying informed about their products' performance
and dealers' handling of problems. It added that, as with consumer
complaints, field reports offer vital real world information for a
company. Like industry groups, its comments addressed consumer
complaints, warranty data and field reports together. As noted above,
it contended that NHTSA did not explore the extent to which information
is available publicly and it emphasized the value of the information to
the public.\65\ It noted that field reports vary in nature and quality.
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    \65\ Public Citizen's Litigation Group, like some industry
commenters, had addressed field reports with other EWR data. In its
view, field reports are materials prepared for a defect
investigation and are safety related and should be routinely
disclosable because safety problems cannot provide a basis for
finding substantial competitive injury. It added field reports vary
in their quality and quantity, and should not be uniformly withheld.
It also disputed that product disparagement is a basis for
protection under Exemption 4. The group also stated that the agency
has historically determined that this type of information is not
covered by Exemption 4. Field reports are not prepared for defect
investigations. They are prepared for business purposes as
recognized in the EWR definition of field report and in industry
comments. The statement that they routinely disclose safety problems
is an unsupported assertion that is not correct. While they vary,
they all meet the definition of field report and are commercially
valuable to competitors. The allegations on product disparagement
are addressed elsewhere.
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    Quality Control cited the statement in the NPRM that competitors
could use EWR field report information to help them avoid potential
problems or improve their products without the need to invest in
research, development or actual market experience. It did not dispute
this but stated that if true, consumers would not necessarily suffer
injuries or economic losses. It claimed, however, that this is the
agency's safety mission. Accordingly, in its view, field reports should
be disclosed.
    AAJ asserted that the disclosure of EWR field report data is vital
to the public interest. It stated that disclosing this information
would allow the public to be fully informed of all potential issues
affecting a particular vehicle or piece of equipment and could lead to
necessary safety enhancements. The non-industry groups did not refute
the numerous specific competitive consequences that would result from
the release of field report data stated by industry commenters.
    After carefully considering the comments and other information of
record, NHTSA has determined that the release of EWR field report data
and copies of field reports on light vehicles, medium-heavy vehicles
and buses, motorcycles, trailers, and child restraint systems is likely
to cause substantial harm to the competitive positions of the
manufacturers that submit the information.
    The EWR field report data amount to compendiums of comprehensive
information on field reports, both in terms of numbers, binned by make,
model, model year and specified system or component, and in terms of
field reports themselves. These cover an extensive range of makes and
models of motor vehicles, for the reporting period and going back to
the previous 10 years. They address numerous components and systems of
vehicles and equipment and for certain vehicles include rollovers and
fires. The comprehensive nature of the compendiums of EWR data on field
reports is enhanced by their continuing content, which is updated by
quarterly reports, and by their standardized reporting format. They can
be used to compare numerous aspects of vehicles and equipment across
industry sectors. The amount of field report information is
substantial. For the first 15 quarters of EWR data, an average of 65
light vehicle manufacturers per quarter reported nearly 7.6 million
field reports and submitted over 580,000 field reports; an average of
87 medium-heavy vehicle and bus manufacturers per quarter reported over
385,000 field reports and submitted over 26,000 field reports; an
average of 18 motorcycle manufacturers per quarter reported over
134,000 field reports and submitted over 26,000 field reports; an
average of 285 trailer manufacturers per quarter reported over 22,000
field reports and submitted nearly 500 field reports; and an average of
20 child restraint manufacturers per quarter reported over 11,000 field
reports and submitted over 7,500 field reports.
    The manufacturers that submit field report information expend
considerable sums to initiate and review field reports. The data are
not publicly available and are highly proprietary. The data could not
be replicated.
    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. Because of the depth
of coverage required by the EWR rule, the field report numbers reveal a
manufacturer's experience across its entire product line with respect
to particular components and systems. These reports reflect a company's
pursuit of feedback on a particular aspect of a product and can involve
technical investigations into a problem detected through warranty,
consumer complaint or other information available to the company. The
field reports themselves often contain a great deal of detail and even
those of lesser quality are valuable as an integral part of the whole
compendium and for their identification of concerns.
    The disclosure of EWR field report information would provide
competitors with valuable and previously unavailable insight into the
field experience and performance, including at times reliability and
durability, of individual systems and components in a submitter's
entire product line. Field reports reveal aspects of the performance of
components and materials that appear to be problematic. Competitors
could use EWR field report

information in assessing systems and parts with apparent shortcomings
and identifying technological and engineering improvements that might
better satisfy customers. If the information were released, competitors
would gain product and component performance information, both in terms
of numbers and from information in copies of field reports, developed
at the cost of the submitting manufacturer, that they could implement.
Thus, competitors would benefit, while the submitting manufacturer bore
the cost.
    In addition, the EWR field report data are a compendium of quality
information of a manufacturer's products, model-by-model, system-by-
system. These data provide in-use information on technologies.
Competitors can study and run lab tests on a competitor's products. But
these efforts do not inform the competition of the quality of a product
based on operation in the field.
    Competitors would use this information to evaluate particular
technologies, including both technologies that have penetrated
considerably numerous segments and newly introduced technologies, at a
risk and cost that is lower than otherwise attainable, because the
competitor would not have to develop that information. Using this
information, competitors could base decisions to a substantial degree
on their reviewing a submitter's EWR field report information. The EWR
field report information would enable one company to use the experience
of another in the selection of a design. It could also be used in the
selection of a production process. The release of the data would permit
broad comparisons of the quality or durability of components on vehicle
models chosen for comparison. It would enable the person reviewing the
materials to substantially avoid similar issues that gave rise to the
field report. While the manufacturer submitting the information would
have expended substantial resources in deciding whether to install a
particular technology and associated design and testing as well as
follow-up, the competitor would gain a real world evaluation without
the time, expense and risk associated with product development that
would normally occur with field-testing.
    The generation of a field report has an associated cost and the
fact that a manufacturer has completed a field report on a particular
issue indicates that a manufacturer has made an investment of resources
to discover and understand that issue. The competitor could use the
information while avoiding the cost and risk that would otherwise be
encountered. This would have competitive impacts.
    Competitors can use the field report information to assist in their
future purchasing (sourcing) decisions, including the technological
approach, supplier and price. This information provides insights into
whether a particular supplier has built durable and reliable systems
and components.
    Additionally, the EWR data provide valuable insights into a given
manufacturer's business practices and decisionmaking, including, the
methods used to collect field reports. Field reports, by their nature,
reveal the process by which a manufacturer examines an issue of
interest. Further, a field report comprises the protocols a
manufacturer follows when examining a particular problem and helps
identify whether a problem (safety or non-safety related) is present in
its products. Such information is commercially valuable to competitors
because it provides them with additional insight on how to improve
their own processes in identifying potential problems.
    EWR field report data are a valuable source of information related
to customer satisfaction of vehicles. This data base provides
information on perceived problems with the company's product, which
gave rise to the field report. This is valuable to companies, which
depend on satisfying customers. If the field report information were
publicly available, competitors could and likely would use it to learn
whether there is a market reaction to any new technology, supplier or
product changes. The information would be valuable to competitors who
may be considering deploying similar or competing technology.
Competitors could rely on EWR information in making critical decision
such as which technology or suppliers to use.\66\
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    \66\ Also, the EWR data are different from investigation data in
scope and competitive impact. As discussed above, as for example in
the context of consumer complaint data, data released in the course
of agency investigations are limited. The release involves limited
models and model years and specific alleged problems. EWR data
amount to full compendiums, across makes, models and model years
involving numerous systems. Thus the release of field report numbers
in ODI investigations has no real bearing on release of EWR field
report data. We note that NHTSA has withheld field reports obtained
in investigations. See discussion above regarding the release of
information obgtained in investigations under consumer complaints.
---------------------------------------------------------------------------

    Public Citizen recognized the value of the information. It did not,
however, provide facts to refute comments by industry sources. AAJ and
Quality Control recognized that other manufacturers can benefit from
the disclosure of these reports by using them to mitigate similar
problems they are encountering or by deferring or changing purchasing
decisions of particular components or technology. They thought that the
release of the data would benefit the public. However, they did not
demonstrate how. Also, the benefit to the public is not a factor in
assessing confidentiality under Exemption 4 of the FOIA.
    The release of EWR field report data and the field reports
submitted by manufacturers would have competitive consequences, as
recognized in Worthington Compressors, 662 F.2d at 51-52. The volumes
of EWR field report information are valuable and could be used by
competitors. For the reasons discussed above, the release of it would
be to the significant benefit of the competitors of the submitters and
to the detriment of the competitive position of the manufacturers that
submitted the information.\67\
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    \67\ As an alternative basis for confidentiality, the disclosure
of the comprehensive compendiums of EWR field report information
would likely result in consumer misuse. In Worthington Compressors,
662 F.2d at 53 n.43, the court permitted the consideration of
consumer misuse of commercial information that is otherwise
unavailable. The disclosure of the EWR information would be
misleading to consumers and unfair to the submitting manufacturers.
Consumers would attempt to make comparisons of the performance of
one model to another across multiple model years, on a quarterly
basis, which can not be done. The underlying foundations for the
data are not the same. Different manufacturers have different
approaches to field reports, in terms of procedures and numbers of
field reports generated. The net result would be unfair and
unsubstantiated and misleading comparisons. These comparisons would
adversely affect the competitive positions of manufacturers in a way
that was unfair.
    Public Citizen has asserted that this analysis amounts to an
unwarranted product disparagement theory, and contends that the harm
occurring from the disclosure of these data amounts to adverse
public reaction, which is not a cognizable harm under Exemption 4.
The agency disagrees with this attempt to recharacterize the harm.
Since the EWR data are competitively sensitive for a valid reason
under Exemption 4, other potential consequences such as adverse
public reaction, do not dictate that we treat the information as
non-confidential. Occidental Petroleum Corp. v. SEC, 873 F.2d 325,
341 (D.C. Cir. 1989).
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Impairment

    In addition to proposing to hold EWR field report information data
confidential on grounds of competitive harm from their release, the
NPRM proposed to hold this information confidential under the
impairment prong of FOIA Exemption 4. As reflected in that notice,
manufacturers may obtain and receive feedback on product performance in
a variety of ways, and establish differing practices for field reports.
The nature and level of effort expended by a company is

discretionary. It is beneficial to NHTSA if a company expends
considerable effort. More inputs increase the robustness of the
available data. Field reports provide feedback on product performance
that can be valuable to NHTSA in identifying problems, including
potential defects that may point to the presence (or absence) of a
safety problem. The reports themselves, which are submitted under the
EWR program, contain valuable technical information. The agency seeks
to ensure that it receives as much information as possible to identify
possible defect trends.
    As discussed above, under the early warning reporting provisions of
the Safety Act, NHTSA 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. 49 U.S.C.
30166(m)(4)(B). In view of the fact that the quantity and
comprehensiveness of the EWR field report data depend in substantial
part on the willingness of manufacturers to collect this information,
NHTSA does not want to take steps that discourage the collection
efforts.
    Both industry and non-industry commenters addressed the agency's
proposal. Industry commenters stated that a class determination for
field reports was justified on the basis that disclosure would impair
the agency's ability to obtain this information in the future, citing
49 U.S.C. 30166(m)(4)(B). This limitation permitted submitters to
expand or contract the scope of their programs generating field
reports.
    The Alliance explained that there is wide variation in
manufacturers' programs that generate field reports. The Alliance
stated that the potential for impairment is particularly significant in
the context of field report information. By protecting field reports,
NHTSA creates an incentive to encourage free text descriptions or other
candid analysis in field reports. On the other hand, if the information
were disclosed, NHTSA could reasonably anticipate that field reports
would be less thorough or candid. As a result, the government's ability
to obtain necessary information in the future will be impaired. The
Alliance added that this would impact ODI defect investigations, which
consider field reports.
    AIAM stated that disclosure of this information would impair the
agency's EWR program. It asserted that the quality of the information
provided to NHTSA would suffer. The natural reaction of the individual
who writes a field report would be to consider its appearance in the
press or a contact by an investigator. This would affect the
thoroughness and candor of the reports.
    TMA explained that field reports play an important role in the
medium-heavy truck segment. Manufacturers receive frequent reports from
field personnel, fleet owners and dealers regarding vehicle issues,
both safety and non-safety. Field reports often contain the drafter's
evaluations or assessments of a possible system, component or
performance problem. TMA verified the flexibility that manufacturers
have in preparation of field reports. It added that the routine
dissemination of this information would lead to fewer and less reliable
reports available to the agency in the future to identify promptly
potential safety defects promptly.
    Blue Bird observed that the agency can reasonably anticipate that
the quality and specificity of this information will be reduced if it
is disclosed. It asserted that manufacturers would take measures to
minimize their respective exposures to competitive harm.
    Utility explained that manufacturers take the initiative to
generate field reports in an effort to identify product defects and
analyze possible defect trends. This information is generated and
studied to improve product quality. But it could be used by plaintiffs
to help file lawsuits against the submitting manufacturer. Utility
asserted that manufacturers would react to this situation by generating
fewer and less comprehensive field reports. This would hamper the
agency's ability to obtain substantive field reports in the future.
    Other commenters expressed similar concerns and recognized this
impairment risk. Workhorse Custom Chassis explained that it relies
extensively on reports from fleets to identify and correct problems but
was concerned that the accuracy of those reports would be reduced if
they are routinely disclosed. MEMA/OESA also asserted that the routine
disclosure of field reports would impact the quality of these reports
in future submissions.
    On the other hand, Public Citizen disputed the assertion that if
field report information were disclosed manufacturers would alter their
field reporting practices. It asserted that manufacturers place
importance on field reports for staying informed about the performance
of their products and dealers' handling of problems. Field reports
offer vital real-world information for a company. In its view, NHTSA
had not undertaken an adequate investigation relating to manufacturers'
field reports and had not made an adequate showing of the impairment
from disclosure of field reports.
    In the discussion that follows, we will address the impairment that
would result from the disclosure of EWR field report data. As discussed
above in the context of consumer complaints and warranty claims, Public
Citizen believes that under the impairment prong of National Parks, the
confidentiality of information is determined by a balancing test. While
we do not accept Public Citizen's view of Exemption 4, in the
alternative, we will address a rough balance between the importance of
the information and the extent of the impairment against the public
interest in disclosure.
    Under the EWR reporting program, manufacturers report the numbers
of field reports, separately, by model and model year, and by system
and component, to NHTSA. They also provide field reports, except dealer
field reports and product evaluation field reports. The significance of
field reports is indicated in part by the EWR definition of field
report. Under the definition, an alleged failure, malfunction, lack of
durability or other performance problem has been identified in a
written communication to the manufacturer from one of its employees,
representatives, dealers, or a fleet. 49 CFR 579.4(c). Both before and
after the promulgation of the EWR rule, ODI has reviewed numerous field
reports over the years and has often found them to be technically rich.
See 67 FR at 45856.
    The magnitude of the numbers of field reports is important to NHTSA
because our screening will look for trends based in part on relatively
high numbers. These trends may result in inquiries to the
manufacturers. In addition, field reports themselves generally contain
information that provides insights.
    As with other EWR data (complaint and warranty claims data), the
agency cannot compel the creation of field reports. Their continued
creation depends on whether a manufacturer chooses to create them. In
light of the value of the reports and the discretion that manufacturers
have in not generating them or in including less detail and fewer
insights in them, the agency does not want to do anything to discourage
manufacturers from preparing accurate and comprehensive field reports
about apparent problems with their products. Nor do we want to detract
from the candor and specificity with which field reports are written.
    As noted in the comments, if these reports were disclosed,
manufacturers likely would decide to generate fewer and less
informative (less candid) field

reports. Manufacturers would be reluctant to have negative information
appear in documents that are subject to routine disclosure. As a
consequence, less information would be 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 defect trends. Thus, the availability of less information
would be inconsistent with our goals.
    As made clear throughout the comments, disclosure of field reports
would be likely to discourage candor on the part of field personnel and
could adversely affect corporate policies and practices with respect to
their preparation. One association was concerned about appearances of
the documents in the media. This would have a chilling effect on
candor. 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.
    The field reports themselves are very important to the government.
The numbers of reports are indicative of potential problems in numerous
systems and components. Many of the reports provide text that is not
conveyed by the numerical reports. The views of manufacturers'
engineers and technicians in reports are often helpful to us. If they
were disclosed, manufacturers would react by decreasing both the number
of reports generated and the level of detail contained in these
reports. Without them, we often would not gain a full understanding of
the issues, at least not without a steep and time-consuming learning
curve. The agency would be faced with attempting to conduct analyses
with considerably less information from manufacturers. NHTSA's ability
to identify potential safety defect trends would be impaired. Such a
result would affect the agency's ability to carry out the early warning
program.\68\ In sum, the disclosure of the field information would be
likely to impair NHTSA's ability to obtain necessary information in the
future.
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    \68\ Limited disclosure of field report numbers during agency
investigations does not negate the value of the data or the likely
impact that wholesale (rather than piecemeal) disclosure would have
on submitters. Moreover, NHTSA has granted confidentiality to the
field reports themselves.
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    We recognize that some of the field reports would be of interest to
some members of the public. But the public would not receive
significant, if any, safety benefits from the release of EWR field
report information. The non-industry commenters raised a safety
argument. But they did not provide facts to support the argument. The
EWR field report data are not safety data. The vast majority of the
data are not indicative of a defect trend. And, standing alone, the EWR
field report numbers simply indicate that there was a reported problem,
by system or component. Thus, to the extent that a balancing is
required, non-release of the data would have very little impact on the
public. It is outweighed by the benefit to the EWR program. On balance,
we are in a better position to address potential defects with as robust
a set of field reports as possible, which benefit the public at large.
5. Common Green Tire Identifiers
    The EWR rule requires reporting tire manufacturers to provide a
list of common green tire data, including all relevant tire lines, tire
type codes, stock keeping unit (SKU) number, brand names and brand name
owners. 49 CFR 579.26(d). ``Common greens'' are tires ``that are
produced to the same internal specifications but that have, or may
have, different external characteristics and may be sold under
different tire, line names.'' 49 CFR 579.4(c). A green tire is an
assembly of the components of a tire formed in a machine. The green
tire is placed in a mold where the tire is given its final shape,
including the tread pattern and information on the sidewall such as the
tire brand, size and tire identification number. In the mold, the tire
is cured; it is exposed to high pressure and heat (i.e.,
vulcanization). Tires made from a common green tire have the same
fundamental construction and composition. Based on the mold, the
finished tires may and often do have different outward appearances,
such as different treads and markings to differentiate them from one
other and, importantly, the tires receive different brand names. Tire
manufacturers use the term ``common green'' to describe a family of
tires that are produced from the same ``before cure'' specification but
are cured in different molds. The practice of using ``common greens''
allows maximization of economies of scale in manufacturing tires. The
common green tire information submitted by individual manufacturers
reveals which tire lines share the same internal structural and rubber
compound specifications and the relationships between manufacturers and
private brand name owners (e.g., tires with names commonly owned by
large tire retailers).
    In the NPRM, NHTSA proposed to make a class determination that tire
manufacturers' submissions of EWR common green data would not be
released to the public. 71 FR at 63744 and 63749. This was based on the
competitive harm prong of FOIA Exemption 4, as interpreted in National
Parks.
    Several submissions from RMA and a submission from Cooper Tire
described the nature of the common green EWR data and explained the
manner in which competitors can use the data and the competitive
consequences of their disclosure. RMA stated that the information on
common green tires in EWR data is not available to the public and can
not be derived from any public source. It explained that the disclosure
of this information would cause substantial competitive harm since it
would allow competitors to know with exact certainty which tires have
the same specifications even though many are sold under different tire
brand names. Manufacturers would have insight into their competitors'
marketing strategies, business plans, pricing data, and future product
plans. RMA added that substantial competitive harm would result to the
manufacturer from disclosing the specific business relationships
between tire manufacturers and private tire brand name owners.
    Cooper Tire's comments, which RMA re-submitted, included a study
that detailed the nature of common green data. The study asserted that
common green lists are confidential. The study indicated that tire
manufacturers are required under the EWR rule to produce information on
more than 24,000 tire lines. This information includes not only each
green tire group produced, but each tire line originating from each
green tire group. The study explained that green tires serve as the
platform for the production of all tire lines and each individual tire
SKU. It stated that the release of green tire groups and the
identification of the green tire source for each finished tire would
provide a complete and comprehensive road map to a tire manufacturer's
production and marketing strategy. The study likened the release of
this information as equivalent to the release of a tire manufacturer's
business plan.

    RMA also noted that it has been NHTSA's practice to grant requests
for confidentiality for common green information. RMA provided copies
of relatively recent letters that responded to particular requests from
tire manufacturers covering categories of information that granted
confidential treatment to common green information submitted to the
agency.
    Apart from RMA and Cooper Tire, only Quality Control specifically
addressed common green tires. Quality Control opposed confidential
treatment for common green tires. But it did not contradict the tire
industry's repeated statements regarding the use of common green tires
in the tire industry, the unavailability of information on common green
tires to the public sector, the competitive value of common green tires
or the competitive harm that would result from releasing the
information. Instead, Quality Control asserted that a consideration of
how to treat common green tire information should include an evaluation
of its usefulness to researchers and the general public of this
information in the avoidance of deaths, injuries, and economic losses.
    NHTSA has fully considered the comments and has reached the
following conclusions. Green tires serve as the basic envelope of tire
production. Common green tire lists identify the tires that share the
same internal specifications and construction characteristics. Tire
manufacturers treat their lists of common green tires as proprietary
and competitively sensitive information. The EWR common green
information is not publicly available and broadly applies across
manufacturers' tire lines.
    The release of common green tire information would identify the
tires made from the range of common greens. The disclosure of this
information would allow competitors to know which tires have the same
specifications and construction. The release of green tire groups and
the identification of the green tire source for each finished tire
would provide a complete and comprehensive road map to a tire
manufacturer's production strategy. It would inform competitors of a
tire manufacturer's basic economies of scale in tire production.
Precise insights from another manufacturer's approach would enable a
competitor to adjust its own production to more effectively compete
against a competitor's particular tire line.
    Competitors would know which tires, sold under different tire brand
names, are basically the same. The release of information linking green
tires and finished tires, often of different labels, would inform
competitors of a tire manufacturer's marketing approach. Manufacturers
would, thus, have insight into their competitor's business plans and,
with additions to and deletions from common green lists reported each
quarter, future product plans. This information on tires that are
basically the same can be used selectively by a manufacturer to compete
against a particular tire line of another manufacturer and can harm the
company that submitted EWR information by revealing less expensive but
similarly constructed alternatives to more expensive tire lines. The
release of common green information would also disclose the specific
business relationships between tire manufacturers and private tire
brand name owners. The foregoing demonstrates that the release of EWR
common green tire information is likely to cause substantial harm to
the competitive positions of the tire manufacturers that submit EWR
information.
    As noted above, Quality Control's comments did not contradict the
tire industry's statements. Quality Control suggested the further
consideration of an evaluation of the usefulness of the information for
safety and economic reasons, but it did not provide any information in
these regards. Nor did it demonstrate the relevance of such
considerations under FOIA Exemption 4. As discussed above, Exemption 4
does not involve a balancing of competitive harm to the party that
provided the information to an agency against possible societal
interests such as research or provision of information to the public.
Accordingly, we are adopting a class determination on EWR information
on common green tires.

D. Class Determination Based on FOIA Exemption 6

    The EWR rule requires larger vehicle manufacturers to submit the
number of reports alleging that deaths or injuries occurred. These
reports must contain the vehicle identification number (VIN) of the
vehicle(s) allegedly involved in these incidents. See 49 CFR
579.21(b)(2), 579.22(b)(2), 579.23(b)(2), 579.24(b)(2). The agency's
October 2006 NPRM proposed creating a limited class determination that
would redact the last six characters of VINs from EWR death and injury
reports, based on Exemption 6 of the FOIA. 71 FR at 63745 and 63749.
    Each VIN consists of 17 characters. In general, the first eight of
these characters denote the manufacturer and attributes of the vehicle
including the make and type of vehicle (e.g., the relevant line,
series, body, type, model year, engine type and weight rating). The
ninth digit is a check digit. In the last eight characters, the first
two represent the vehicle model year and plant of production, and the
last six are the number sequentially assigned by the manufacturer in
the production process. See 49 CFR 565.6 (detailing elements of the VIN
code), SAE Standards J218 (passenger car identification terminology)
and J272 (vehicle identification number systems).
    VINs can readily be used to track down personal information on an
individual who owns, or at one point owned, a particular vehicle. Such
information can include not only the name and address of an individual
but other information as well.
    Exemption 6 of the FOIA addresses the withholding of ``personnel
and medical files and similar files the disclosure of which would
constitute a clearly unwarranted invasion of personal privacy'' to the
subject of those files. 5 U.S.C. 552(b)(6). Several entities have
addressed the privacy implications of release of the full VIN.
    Both NHTSA and the Alliance documented their efforts in using VINs
to obtain personal information on individuals.\69\ When coupled with a
fatality--or injury--producing incident, VINs can be used to identify
the owner of the vehicle. The Alliance explained that VINs can be used
to track down information on individuals. Specifically, it stated that
it is relatively easy to determine the name, address, social security
number, home telephone number and other personal identification
information from a VIN. Because of the relative ease in obtaining this
information from a VIN, the Alliance urged the agency to consider
protecting VIN information contained in EWR submissions involving
fatalities or injuries. The Alliance supported the Agency's proposal,
with an analysis that addressed the elements for withholding
information from disclosure under Exemption 6. After pointing out that
both the Alliance and NHTSA had been able to employ widely available

databases to access personal information about the owner of a vehicle
using a VIN, the Alliance asserted that the information met the
threshold requirement of personal and similar files--information that
applies to a particular individual. Next, it explained that the
disclosure of this information would constitute a clearly unwarranted
invasion of personal privacy. Finally, the Alliance offered a balance
of the privacy interests at stake with the public interest in
disclosure. Under an Exemption 6 case it cited, the public interest is
limited to shedding light on the government's activities. And,
disclosing the last 6 digits of the VIN would not advance that
interest. Based on its analysis, the Alliance recommended that the last
6 digits of VINs in EWR death and injury reports not be disclosed. TMA
supported the exemption.
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    \69\ See NHTSA Docket 2002-12150, Item Nos. 58 (Alliance's
discussion of obtaining Social Security Numbers using VINs) and 64
(websites enabling users to locate personal information using VINs).
The agency examined a widely available legal database--WESTLAW--and
several websites that offered to provide personal information on
individuals using the VIN of a vehicle for a nominal fee. Using
WESTLAW, the agency could determine the name, address, date of
birth, and lien information of the vehicle owner using the full VIN.
In view of this easy identification, the disclosure of full VIN
information would jeopardize the personal privacy of individuals
involved in EWR reports of fatalities and injuries arising from
motor vehicle crashes.
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    Public Citizen stated that it respected NHTSA's intent to protect
individual citizen's personal privacy. However, it contended that
exempting the VIN is unnecessary and advocated that NHTSA abandon its
proposal. Public Citizen noted that VINs are visible to the public on
the vehicle's dashboard and are publicly available through police
reports. Public Citizen contended that the last six figures of a VIN
serve the important role of allowing members of the public to see if
their personal records have made it into the early warning data base
and would aid the public in seeing if multiple records are in reference
to the same individual vehicle or different vehicles of the same make.
    Under Exemption 6, the information must fall within the category of
``personal * * * and similar files.'' The EWR information on deaths and
injuries is submitted by manufacturers electronically into an
electronic file in the agency's ARTEMIS database. The VIN information
can easily be used with readily available databases to identify the
owners of the vehicles in crashes that resulted in deaths or injuries,
as alleged in claims or notices to the manufacturer. There was no
dispute in the comments that the threshold requirement of personal and
similar files was met and NHTSA finds that it has.
    If the threshold requirement is met, the focus of the inquiry turns
to whether the disclosure of the records ``would constitute a clearly
unwarranted invasion of personal privacy.'' 5 U.S.C. 552(b)(6). This
requires a balancing of the public's right to disclosure against the
individual's right to privacy. The first step is an assessment of the
privacy interests, if any, that would be threatened by the disclosure.
In Center for Auto Safety v. NHTSA, 809 F. Supp. 148 (D.D.C. 1993), the
court recognized the privacy interests in the names and addresses on
consumer complaints received by NHTSA. The court noted that some of the
complaints may refer to injuries of a personal and upsetting nature. It
is possible that persons involved in such incidents would resent
unsolicited intrusions into their experiences. Id. at 149. The same or
similar interests exist here, as the EWR data at issue involves
incidents that resulted in an injury or fatality. For example, it is
foreseeable that the persons who could readily be identified from VINs
or surviving family members would be contacted by attorneys and
consultants, seeking involvement in legal activities related to the
incident or information for a potentially related matter. Public
Citizen did not address the interests of the individuals, who have been
in an incident and had a relationship with a person who died in an
incident or who was injured in an incident. We conclude that disclosure
of the complete VINs in death and injury reports at issue would result
in a substantial threat to individuals' personal privacy interest.
    The second step is an assessment of the public interest in
disclosure. Under Exemption 6, the concept of public interest is
limited to shedding light on the government's performance of its
statutory duties. United States Department of Justice v. Reporters
Comm. for Freedom of the Press, 489 U.S. 749, 773 (1989); National
Ass'n of Retired Federal Employees v. Horner, 879 F.2d 873, 879 (D.C.
Cir. 1989); cf., DOD v. FLRA, 510 U.S. 487, 497 (1994). With the
limited redaction of part of the VIN under this rulemaking, the public
would be able to review EWR information on claims for fatalities and
injuries, including identification of the make, model and model year of
the vehicle and the component or system implicated in the claim. This
information apprises the public of significant information. Disclosing
additional VIN information, with the sequential number unique to the
vehicle, that would enable someone to identify the owner of the vehicle
and other personal information would not, however, further serve the
public interest. If disclosed, it would not answer the question of
``what the government is up to.'' Reporters Comm., 489 U.S. at 773
(1989).
    Public Citizen contended that the last six figures of a VIN serve
the important role of allowing members of the public to see if the
incident in which they were involved is in the early warning database
and would aid the public in seeing if multiple records are in reference
to the same individual vehicle or different vehicles of the same make.
This does not squarely address the question of what the government is
up to. In any event, an interested person could review EWR data to see
the date the make, model and model year of the vehicle, the first part
of the VIN, the incident date, the numbers of deaths and injuries, the
State where the incident occurred and the vehicle system or component
that allegedly contributed to the incident. See, e.g., 49 CFR
579.21(b)(2). In the first 15 quarters of comprehensive EWR reporting,
there have been 23,647 reports of deaths and injuries in vehicles based
on claims and notices. That amounts to 1576 per quarter, or about 30
per State per quarter on the average. In view of the level of detail in
EWR reporting, it is highly likely that if a reported incident matched
the one that the person was involved in, it was reported by the
manufacturer.\70\ Similarly, multiple records are unlikely given the
review of data by manufacturers before submission. Neither does the
need to verify whether multiple records are duplicative outweigh these
interests, particularly when other information related to those
incidents would likely be disclosed, such as the time, date, and place
of the incident. Individuals have a privacy interest when it comes to
their involvement in a traumatic incident and it is not the province of
outside parties to be the decision-maker in this regard. In any event,
while of questionable relevance under Exemption 6, we note that
redaction of the last six characters provides sufficient information
for interested parties to determine a vehicle's identity down to its
engine type and plant of production using the first 11 characters of
the VIN. Using this information, the public can still ascertain whether
a particular type of vehicle may be involved in a potential vehicle
safety issue.\71\
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    \70\ As a practical matter, individuals seeking this type of
information on their own cases are free to file a Privacy Act
request with the agency to confirm the inclusion of their cases in
the EWR database.
    \71\ Public Citizen also stated that the VIN is visible on the
dashboard and that police reports are publicly available. However,
it did not explain the likelihood of the public finding a vehicle,
particularly if it is involved in a fatality and may have been sent