[Federal Register: October 19, 2007 (Volume 72, Number 202)]
[Rules and Regulations]
[Page 59433-59470]
[DOCID:fr19oc07-17]

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Part IV

Department of Transportation

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National Highway Traffic Safety Administration

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49 CFR Part 512

Confidential Business Information; Final Rule

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 512

[Docket No. NHTSA-06-26140; Notice 2]
RIN 2127-AJ95

Confidential Business Information

AGENCY: National Highway Traffic Safety Administration (NHTSA), DOT.

ACTION: Final rule.

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SUMMARY: This final rule addresses the confidentiality of certain
information that manufacturers of motor vehicles and motor vehicle
equipment submit to NHTSA pursuant to the early warning reporting (EWR)
rule. The agency is establishing class determinations that certain
categories of EWR information are confidential, based on Exemption 4 of
the Freedom of Information Act (FOIA). These categories of EWR data are
production numbers (other than for light vehicles), the numbers of
consumer complaints, the numbers of warranty claims (warranty
adjustments in the tire industry), the numbers of field reports, copies
of field reports and common green tire identifier information. In
addition, based on the privacy interests protected by FOIA Exemption 6,
the rule includes a class determination encompassing the last six (6)
characters of the vehicle identification numbers (VINs) which are
reported in certain EWR submissions involving deaths and injuries. This
final rule also clarifies the agency's general requirements regarding
confidentiality markings in submissions in electronic media.

DATES: This final rule is effective on November 19, 2007. If you wish
to submit a petition for reconsideration of this rule, your petition
must be received by December 3, 2007.

ADDRESSES: Petitions for reconsideration should refer to the docket
number and be submitted to: Administrator, National Highway Traffic
Safety Administration, 1200 New Jersey Avenue, SE., West Building
Fourth Floor, Washington, DC 20590, with a copy to the DOT docket.
Copies to the docket may be submitted electronically through the
Federal E-Rulemaking Portal at http://www.regulations.gov. Follow the

online instructions for submitting comments.
    You may call Docket Management at<PHONE_NUMBER>. The Docket room
(ground floor Room W12-140, 1200 New Jersey Avenue, SE.) hours are from
9 a.m. to 5 p.m., Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: Michael Kido, Office of Chief Counsel,
NHTSA, telephone<PHONE_NUMBER>, 1200 New Jersey Avenue, SE.,
Washington, DC 20590.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
    A. National Traffic and Motor Vehicle Safety Act
    B. TREAD Act--Early Warning Reporting
    C. Confidentiality of EWR Data
    D. Litigation Challenging the 2003-2004 CBI Rule
II. 2006 Notice of Proposed Rulemaking
III. The Final Rule
    A. Determinations of the Confidentiality of EWR Data Are Based
on FOIA Exemptions 4 and 6
    B. Approach--Class Determinations v. Individual Assessments
    C. Class Determinations Based on FOIA Exemption 4
    1. Production Numbers
    2. Consumer Complaints
    3. Warranty Claims
    4. Field Reports
    5. Common Green Tire Identifiers
    D. Class Determination Based on FOIA Exemption 6
IV. Exemption 3
V. Other EWR Data
VI. Identification of Confidential Business Information Located in
Electronic Files
VII. Updated Agency Contact Information
VIII. Data Quality Act Issues
IX. Privacy Act Statement
X. Regulatory Analyses and Notices
    A. Executive Order 12866 and DOT Regulatory Policies and
Procedures
    B. Regulatory Flexibility Act
    C. Executive Order 13132 (Federalism)
    D. Unfunded Mandate Reform Act
    E. Executive Order 12988 (Civil Justice Reform)
    F. Paperwork Reduction Act
    G. Executive Order 13045
    H. Regulation Identifier Number (RIN)

I. Background

    On October 31, 2006, NHTSA published a notice of proposed
rulemaking (NPRM) regarding the confidentiality of certain early
warning reporting (EWR) data submitted to the agency by manufacturers
of motor vehicles and motor vehicle equipment. 71 FR 63738. In that
notice, the agency proposed to create class determinations that
specified EWR data would be confidential based on the criteria
applicable to required submissions under Exemption 4 of the Freedom of
Information Act (FOIA). In addition, some of the data in VINs would be
confidential based on FOIA Exemption 6. The October 2006 NPRM also
proposed to clarify requirements applicable to persons seeking
confidential treatment for information contained on electronic media.
In this final rule, the agency adopts the proposed class determinations
and amends the submission process for requesting confidential treatment
for information on electronic media. The background and genesis of this
rulemaking is summarized below.

A. National Traffic and Motor Vehicle Safety Act

    In 1966, Congress enacted the National Traffic and Motor Vehicle
Safety Act (Safety Act) with the purpose of reducing traffic accidents
and deaths and injuries to persons resulting from traffic accidents. 49
U.S.C. 30101.\1\ Since it was amended in 1974, the Safety Act has
contained a series of provisions that address motor vehicles and motor
vehicle equipment that contain a potential or actual defect that is
related to motor vehicle safety.\2\
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    \1\ Pub. L. 89-563, 80 Stat. 718. This preamble will use the
current citations to the United States Code. In 1994, the Safety
Act, as amended, was repealed, reenacted, and recodified without
material change as part of the recodification of Title 49 of the
United States Code. See Pub. L. 103-272, 108 Stat. 745, 1379, 1385
(1994) (repealing); id. at 745, 941-73 (1994) (reenacting and
recodifying without substantive changes).
    \2\ Pub. L. 93-492, 88 Stat. 1470 (1974).
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    The Safety Act requires a manufacturer to notify NHTSA and the
vehicle or equipment owners if it learns of a defect and decides in
good faith that the defect is related to motor vehicle safety. 49
U.S.C. 30118(c). This duty is independent of any action by NHTSA.\3\
Ordinarily, a manufacturer's notice is followed by the manufacturer's
provision of a free remedy to owners of defective vehicles and
equipment. See 49 U.S.C. 30120. Collectively, the manufacturer's notice
and remedy are known as a recall.
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    \3\ United States v. General Motors Corp., 574 F. Supp. 1047,
1049 (D.D.C. 1983).
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    Congress also provided NHTSA with considerable investigative and
enforcement authority. The Safety Act authorizes NHTSA to conduct
investigations and to require manufacturers to submit reports to enable
the agency to determine whether the manufacturer has complied with or
is complying with the statute, including its duty to conduct recalls
when warranted. 49 U.S.C. 30166(b), (e). An investigation may culminate
in an order to the manufacturer to provide notification of a safety-
related defect or a noncompliance to owners of the vehicle or
equipment. 49 U.S.C. 30118(a), (b).

B. TREAD Act--Early Warning Reporting

    For several decades preceding the enactment of the Transportation
Recall Enhancement, Accountability, and

Documentation (TREAD) Act of 2000,\4\ the Safety Act provided for
limited submissions of information by a manufacturer to NHTSA prior to
the manufacturer's submission of a notice of a safety-related defect.
See 49 U.S.C. 30118(c); 49 CFR part 573. Manufacturers were required to
submit copies of technical service bulletins and other communications
to the agency. See 49 U.S.C. 30166(f); 573.8 (1999); 66 FR 6532, 6533
(Jan. 22, 2001). NHTSA also received consumer complaints. At times,
this information provided a basis for opening an investigation and at
times it did not. This practical limitation on NHTSA's investigations
manifested itself in 2000 when it was revealed that under the limited
level of reporting then required, the agency had not been provided
sufficient information to identify defects in Firestone tires mounted
on Ford Explorers. 66 FR at 6534. There were numerous fatalities before
NHTSA opened an investigation and Firestone conducted recalls of its
tires.
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    \4\ Pub. L. 106-414, 114 Stat. 1800.
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    In response to these and other shortcomings in the Safety Act, on
November 1, 2000, Congress enacted the TREAD Act. The TREAD Act added
provisions to the Safety Act that expanded the scope of the information
manufacturers must submit to NHTSA prior to a manufacturer-initiated
recall. In relevant part, the TREAD Act required the Secretary of
Transportation to publish a rule setting out the early warning
reporting requirements to enhance the agency's ability to carry out the
Act. 49 U.S.C. 30166(m). In general, the TREAD Act authorized the
agency to require manufacturers to submit information that may assist
in the early identification of defects related to motor vehicle safety.
    In July 2002, pursuant to the TREAD Act, NHTSA promulgated the
Early Warning Reporting (EWR) rule. 67 FR 45822 (July 10, 2002).\5\
Generally, the EWR rule required manufacturers of automobiles and other
light vehicles, medium-heavy trucks and buses, motorcycles, and
trailers that produce or sell 500 or more vehicles per year in any of
these industry sectors and manufacturers of child restraints and tires
(except as to relatively low production tire lines) to submit data
regarding production numbers (cumulative total vehicles or equipment
manufactured annually), incidents involving death or injury based on
claims and notices, property damage claims, consumer complaints,
warranty claims paid, and field reports on a quarterly basis. See 49
CFR 579.21-579.26. Collectively this information is referred to as EWR
data. In this notice, we refer to the vehicle and tire manufacturers
that report under 49 CFR 579.21-579.24 and 579.26 as larger
manufacturers.\6\ The information is submitted electronically to the
agency in a standardized format. See 49 CFR 579.29.
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    \5\ Thereafter, NHTSA published amendments to the EWR rule. As
used herein, the references to the EWR rule are to the rule as
amended. The reader should note that the discussion of the EWR rule
in this notice is a summary. The full text of the rule and
associated Federal Register notices should be consulted for a
complete description.
    \6\ Manufacturers other than larger vehicle and tire
manufacturers and child restraint manufacturers have limited EWR
obligations. See 49 CFR 579.27.
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    More specifically, the categories of information on which these
manufacturers of light vehicles, medium-heavy vehicles and buses,
motorcycles, trailers, tires and child restraints generally report
under the EWR rule are:

     Production. These manufacturers must report the number
of vehicles, child restraint systems, and tires, by make, model, and
model (or production) year, during the reporting period and the
prior nine model years (prior four years for child restraint systems
and tires).
     Deaths. These manufacturers must report certain
specified information about each incident involving a death that
occurred in the United States that is identified in a claim (as
defined) against and received by the manufacturer. They must also
report information about incidents involving a death in the United
States that is identified in a notice received by the manufacturer
alleging or proving that the death was caused by a possible defect
in the manufacturer's product. Finally, they must report on each
death occurring in a foreign country that is identified in a claim
against the manufacturer involving the manufacturer's product, or
one that is identical or substantially similar to a product that the
manufacturer has offered for sale in the United States.
     Injuries. These manufacturers must report certain
specified information about each incident involving an injury that
is identified in a claim against and received by the manufacturer,
or that is identified in a notice received by the manufacturer which
notice alleges or proves that the injury was caused by a possible
defect in the manufacturer's product.
     Property damage claims. These manufacturers (other than
child restraint system manufacturers) must report the numbers of
claims for property damage that are related to alleged problems with
certain specified components and systems, regardless of the amount
of such claims.
     Consumer complaints. These manufacturers (other than
tire manufacturers) must report the numbers of consumer complaints
they receive that are related to problems with certain specified
components and systems. Manufacturers of child restraint systems
must report the combined number of such consumer complaints and
warranty claims.
     Warranty claims. These manufacturers must report the
number of warranty claims (adjustments for tire manufacturers),
including extended warranty and good will, they pay that are related
to problems with certain specified components and systems. As noted
above, manufacturers of child restraint systems must combine these
with the number of reportable consumer complaints.
     Field reports. These manufacturers (other than tire
manufacturers) must report the total number of field reports they
receive from the manufacturer's employees, representatives, and
dealers, and from fleets, that are related to problems with certain
specified components and systems. In addition, manufacturers must
provide copies of field reports received from their employees,
representatives, and fleets, but are not required to provide copies
of reports received from dealers and product evaluation reports.
    Tire manufacturers must also provide information on their common
green tire lines:
     Common green tires. Tire manufacturers must identify
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.

C. Confidentiality of EWR Data

    The EWR rule did not address the confidentiality of EWR data. It
noted, however, that this issue would be considered as part of the
proposed amendments to NHTSA's confidential business information rule.
See 67 FR at 45866, n.6.
    In July of 2003, NHTSA addressed the confidentiality of EWR data in
its general rule on Confidential Business Information (CBI). 49 CFR
Part 512, 68 FR 44209 (July 28, 2003). The 2003 CBI rule addressed the
confidentiality of EWR information in a new Appendix C, which set forth
class determinations treating certain EWR information as confidential
based on FOIA Exemption 4. In particular, the rule determined that EWR
data on production numbers (except light vehicles), consumer
complaints, warranty claims, and field reports including copies of
field reports, were confidential. 49 CFR Part 512 Appendix C (2003).
The agency based these class determinations on the substantial
competitive harm and impairment standards of FOIA Exemption 4. See 5
U.S.C. 552(b)(4); 49 CFR Part 512 App. C (2003). The 2003 CBI rule did
not resolve the confidentiality of EWR data on deaths and injuries, or
on property damage claims.
    In April 2004, NHTSA amended the CBI rule in its response to
administrative petitions for reconsideration of the July 2003 rule. 69

FR 21409 (April 21, 2004). Specifically, the agency added two class
determinations to Appendix C. One class determination, based on FOIA
Exemption 4, covered common green tire identifiers submitted by tire
manufacturers under the EWR rule, 49 CFR 579.26(d). A second class
determination, based on FOIA Exemption 6, covered the last six (6)
characters of vehicle identification numbers (VINs) contained in EWR
death and injury reports. See, e.g. 49 CFR 579.21(b)(2).

D. Litigation Challenging the 2003-2004 CBI Rule

    Public Citizen filed a lawsuit challenging NHTSA's class
determinations in Appendix C to 49 CFR Part 512. The Rubber
Manufacturers Association (RMA) intervened and asserted, among other
things, that in light of a disclosure provision in the TREAD Act,\7\
NHTSA was precluded from disclosing all EWR data, subject to a limited
exclusion. In a March 31, 2006 decision, the United States District
Court for the District of Columbia addressed some of Public Citizen's
claims. The Court upheld the agency's authority to promulgate the
regulation making categorical confidentiality determinations for
classes of EWR data. Public Citizen, Inc. v. Mineta, 427 F. Supp. 2d 7,
12-14 (D.D.C. 2006). The Court concluded, however, that NHTSA had not
provided adequate notice and an opportunity to comment on those
determinations in the proposed rule. Id. at 14-17. The Court remanded
the matter to NHTSA but did not address the parties' other claims. Id.
Thereafter, in a supplemental opinion, the Court addressed RMA's claim
that the disclosure of EWR data was precluded by the disclosure
provision in the TREAD Act and FOIA Exemption 3, 5 U.S.C. 552(b)(3),
which provides for the withholding of information when disclosure of
that information is prohibited by another statute.\8\ Public Citizen,
Inc. v. Mineta, 444 F. Supp. 2d 12 (D.D.C. 2006). The District Court
held that the TREAD Act's disclosure provision was not an Exemption 3
statute. RMA appealed the District Court's judgment to the U.S. Court
of Appeals for the District of Columbia Circuit (No. 06-5304) and that
case is currently pending.
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    \7\ 49 U.S.C. 30166(m)(4)(C). In reference to information
provided by manufacturers pursuant to the EWR rule, this provision
states: ``Disclosure. None of the information collected pursuant to
the final rule promulgated under paragraph (1) [the EWR rule] shall
be disclosed pursuant to section 30167(b) unless the Secretary
determines the disclosure of such information will assist in
carrying out sections 30117(b) and 30118 through 30121.''
    \8\ Exemption 3 applies when information is ``specifically
exempted from disclosure by statute (other than section 552b of this
title) provided that such statute (A) requires that the matters be
withheld from the public in such a manner as to leave no discretion
on the issue, or (B) establishes particular criteria for withholding
or refers to particular types of matters to be withheld''. 5 U.S.C.
552(b)(3).
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II. 2006 Notice of Proposed Rulemaking

    In light of the District Court's decisions, on October 31, 2006,
NHTSA published an NPRM addressing the confidentiality of certain EWR
information. In short, the agency proposed class determinations that
production numbers for reporting sectors other than light vehicles,
consumer complaints, warranty claims (warranty adjustments in the tire
industry), field reports (including copies of field reports) and common
green tire identifier information would be confidential. This proposal
was based on the criteria in FOIA Exemption 4. 71 FR at 63741-42. Under
Exemption 4, where the submission of information to the government is
mandatory, as is reporting required by the EWR rule, the information is
confidential if its disclosure is likely to cause substantial harm to
the competitive position of the person from whom the information was
obtained or to impair the Government's ability to obtain necessary
information in the future. This proposal was consistent with the 2003
and 2004 rules, and was based on the docket for that rulemaking. See
NHTSA Docket No. 2002-12150 (available at http://dms.dot.gov which is being transferred to http://www.regulations.gov).

    More particularly, in formulating the proposal, NHTSA considered
comments from a diverse cross-section of the automotive industry and a
non-governmental organization. Commenters included the Automotive
Occupant Restraints Council (AORC), Bendix Commercial Vehicle Systems
(Bendix), Blue Bird Body Company (Blue Bird), Enterprise Fleet Services
(Enterprise), Harley-Davidson Motor Company (Harley-Davidson), the
Juvenile Products Manufacturers Association (JPMA), the Motor and
Equipment Manufacturers Association and the Original Equipment
Suppliers Association (MEMA/OESA), Hella North America (Hella) (which
primarily referred to the comments from MEMA/OESA), the Motorcycle
Industry Council, the Tire Industry Association (TIA), Utilimaster
Corporation (Utilimaster), WABCO North America (WABCO), and Workhorse
Custom Chassis (Workhorse). NHTSA also considered comments by Public
Citizen and its litigation group.
    As in the previously remanded rule, the agency's October 2006 NPRM
also proposed creating a class determination for the last six (6)
characters of VINs of vehicles allegedly involved in deaths and
injuries reported in the EWR data. See 71 FR at 63745 and 69 FR at
21416. This was based on Exemption 6 of the FOIA, which provides for
withholding information that, if disclosed, would constitute a clearly
unwarranted invasion of personal privacy. We noted our ability to
obtain personal information regarding individual owners and past owners
using a VIN and expressed our concern over the disclosure of full VINs
of vehicles reportedly involved in an event resulting in an injury or
fatality. Notwithstanding this limited redaction, we noted that the
public would be able to identify the make, model, and model year of the
vehicle involved in an injury- or fatality-producing incident reported
through EWR data.
    The NPRM published in October of 2006 explained that we were not
proposing class determinations of confidentiality of other categories
of EWR information, namely, information on incidents involving deaths
and injuries, and on property damage claims. See id. at 63745-46.
Further, the agency noted that the issue of whether the TREAD Act
disclosure provision qualifies as a FOIA Exemption 3 statute was
pending in the Court of Appeals and indicated that the agency would act
in a manner consistent with that ruling once issued.
    Apart from the confidentiality of EWR data, the NPRM proposed
clarifications to the submission procedures to address recurring
problems encountered by the agency with requests for confidential
treatment contained on electronic media such as CDs or DVDs.
    In response to the October 2006 NPRM, a number of trade
associations representing a variety of automotive sectors, companies,
consumer groups and individuals submitted comments. The industry
commenters included the Alliance of Automobile Manufacturers (the
Alliance), Association of International Automobile Manufacturers
(AIAM), General Motors North America (GM), National Marine
Manufacturers Association (National Marine), Nissan North America
(Nissan), Rubber Manufacturers Association (RMA), Truck Manufacturers
Association (TMA), and Utility Trailer Manufacturing (Utility)--all of
which generally supported the proposed class determinations based on
FOIA Exemptions 4 and 6.

    Non-industry commenters included numerous individual consumers and
groups (Public Citizen, American Association for Justice (AAJ), and
Quality Control Systems (Quality Control)).\9\ These commenters
generally criticized the proposed class determinations and asked that
the agency withdraw its proposal. Many individual commenters also
appear to have mistakenly believed that the proposal would affect
information (e.g., consumer complaints and information produced during
defect investigations) that is already made available to the public
through the agency's Web site.
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    \9\ The vast majority of individuals who commented appeared to
believe that the agency, in light of the class determinations, would
cease making public information pertaining to defect investigations
and recalls. The class determinations adopted today address only EWR
data and do not pertain to other information that the agency
currently discloses to the public. The agency will continue to make
this information publicly available.
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III. The Final Rule

    The rule that NHTSA is publishing today creates class
determinations that EWR data on production numbers (other than for
light vehicles), the numbers of consumer complaints, warranty claims
and field reports, copies of field report documents, and common green
tire identifier information are confidential. These class
determinations, which are included in a new Appendix C to 49 CFR Part
512, are based on FOIA Exemption 4. Second, the rule creates a class
determination based on FOIA Exemption 6 that covers the last six (6)
characters of VINs contained in EWR reports pertaining to incidents
involving death or injury. These 6 characters would be redacted from
injury or fatality information contained in EWR submissions. Thus,
absent an individual manufacturer's request for confidentiality for
particular EWR death and injury reports, these reports would be
released to the public, except for the last 6 characters of a VIN. This
class determination is in a new Appendix D to 49 CFR Part 512.
    The agency also is modifying the procedural provisions of 49 CFR
512.6 with respect to the submission of information contained on
electronic media for confidential treatment. The rule adopts a slightly
modified version of the changes proposed in our NPRM by permitting some
flexibility in the identification of confidential information and
pagination requirements. Details of the new procedures are discussed
under Section VI. Identifying Confidential Business Information Located
in Electronic Files.
    Finally, this rule updates the agency's contact information to
reflect the Department of Transportation's new address. This change is
incorporated into 49 CFR 512.7.
    Our rationale for the final rule follows.

A. Determinations of the Confidentiality of EWR Data Are Based on FOIA
Exemptions 4 and 6

    The confidentiality of most EWR data is based on FOIA Exemption 4,
5 U.S.C. 552(b)(4). FOIA Exemption 4 provides for the withholding of
``trade secrets and commercial or financial information obtained from a
person and privileged or confidential''. Under Exemption 4, the
standard for assessing the confidentiality of information that parties
are required to submit to the government is whether ``disclosure of the
information is likely to have either of the following effects: (1) To
impair the Government's ability to obtain necessary information in the
future; or (2) to cause substantial competitive harm to the competitive
position of the person from whom the information was obtained.'' \10\
National Parks & Conservation Ass'n v. Morton, 498 F.2d 765, 770 (D.C.
Cir. 1974). These two alternative tests are referred to as the
impairment prong and the competitive harm prong.
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    \10\ The term ``trade secrets'' has been narrowly defined by the
Court of Appeals for the District of Columbia Circuit for the
purpose of FOIA Exemption 4 as encompassing ``a secret, commercially
valuable plan, formula, process, or device that is used for the
making, preparing, compounding, or processing of trade commodities
and that can be said to be the end product of either innovation or
substantial effort.'' Public Citizen Health Research Group v. FDA,
704 F.2d 1280, 1288 (D.C. Cir. 1983).
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    Under the competitive harm prong of the National Parks test, there
must be ``actual competition and a likelihood of substantial
competitive injury'' from disclosure of the information. CNA Financial
Corp. v. Donovan, 830 F.2d 1132, 1152 (D.C. Cir. 1987). This standard
requires only that disclosure of information would ``likely'' cause
competitive harm, for whatever reasons. McDonnell Douglas Corp. v. U.S.
Dept. of the Air Force, 375 F.3d 1182, 1187 (D.C. Cir. 2004); see also
Occidental Petroleum Corp. v. SEC, 873 F.2d 325, 341 (D.C. Cir. 1989).
Under this prong, the agency assesses the likelihood of substantial
injury; it does not make that assessment and then further balance it
against other matters such as the public's interest in the information.
    In fact, the D.C. Circuit has firmly rejected the contention that
under Exemption 4 a court should gauge whether the competitive harm to
an entity submitting confidential information from the public
disclosure of the information is outweighed by the strong public
interest in the information. As discussed below, in Public Citizen
Health Research Group v. FDA, 185 F.3d 898, 904-05 (D.C. Cir. 1999),
the court held that the appropriate balancing is reflected in the test
of confidentiality set forth in National Parks. There is no further
balancing of the public's interest in the information.

B. Approach--Class Determinations v. Individual Assessments

    As explained in the NPRM, the District Court in Public Citizen,
Inc. v. Mineta, 427 F.Supp. 2d 7, 12-14 (D.D.C. 2006), ruled that NHTSA
had the authority to promulgate the 2003 CBI rule making categorical
confidentiality determinations for classes of EWR data. See 71 FR at
63740. Consistent with the District Court's opinion, the agency
proposed a rule to address the confidentiality of EWR information
through specific class determinations based on FOIA Exemptions 4 and 6.
Id. We pointed out that this proposal was largely similar to our prior
determinations. 71 FR at 63740 and 63741.
    Both industry and non-industry commenters provided views on the
proposed adoption of class determinations. Industry comments (e.g.,
AIAM, the Alliance, and Nissan) were predicated in part on the
recurring nature of early warning reporting under 49 CFR Part 579. In
connection with each quarterly submission of EWR data, manufacturers
would request confidential treatment for the EWR data and would provide
the same justifications in each quarterly request. This result, the
manufacturers maintained, would create significant administrative
burdens for both the submitting entities and the agency. Nissan added
that such a burden was not anticipated by the EWR rule and would be
inconsistent with the TREAD Act's premise against creating undue
burdens in implementing the EWR program. See also H.R. Rep. No. 106-
954, at 14 (Oct. 10, 2000) (pointing out that the agency's EWR rule
``may not impose requirements that are unduly burdensome to a
manufacturer, taking into account the manufacturer's cost of complying
with such requirements'').
    Non-industry commenters criticized the agency's proposed class
determination approach. For example, Quality Control suggested that the
agency apply a presumption of non-confidentiality (i.e., of disclosure)
to whatever class determinations that the

agency adopts. Public Citizen asserted that the District Court's
holding regarding the agency's authority to promulgate class
determinations based on FOIA exemptions was in error. Thus, Public
Citizen disputed the legality of creating class determinations. It also
pointed out that the agency had previously proposed the creation of
presumptively nonconfidential categories that in Public Citizen's view
would cover complaints, property damage and paid warranty claims. In
comments to the agency's prior rulemaking, Public Citizen expressed
support for class determinations that applied a presumption in favor of
broad disclosure of EWR information.
    As noted in the summary of this rule, NHTSA has decided to
promulgate class determinations on the confidentiality of some but not
all categories of EWR data. In adopting this approach, we have
considered a number of matters. First, we have considered whether class
determinations may lawfully be adopted. As explained by the District
Court, NHTSA may adopt categorical rules to manage the tasks assigned
to it by Congress under the TREAD Act. Public Citizen, 427 F. Supp. 2d
at 13.
    Second, we have identified and assessed the alternatives. One
alternative is to require manufacturers to submit individual requests
for confidentiality for each quarterly submission of EWR data. A second
alternative is to adopt binding class determinations. Class
determinations could be adopted on a category-by-category of EWR data
basis, where warranted, as was proposed in the October 2006 NPRM and
had been adopted in the rule that was remanded by the District Court. A
variation on this approach, which was not proposed, would be class
determinations that cover all EWR data. A third alternative is
presumptive categorical determinations of confidentiality.
    In considering the alternatives, two significant concerns are the
provision of direction to the regulated entities and predictability.
About 500 manufacturers regularly report EWR data. One general concern
is providing direction to them regarding the confidentiality of EWR
data. A related and more specific concern is that the agency convey its
views, not only on procedures, but on the substance of what they must
show in seeking confidentiality and/or on whether some or all of the
information is confidential.
    Another concern is consistency. As detailed in the EWR rule, there
are common data elements in the EWR submissions. NHTSA is concerned
that it provides consistent determinations of the confidentiality of
data reported on the common data elements. The common data elements in
EWR submissions exist both across and within EWR categories of vehicle
and equipment manufacturers. For example, most categories of larger
manufacturers regulated under the EWR rule submit consumer complaint
data. See 49 CFR 579.21(c) (light vehicles), 579.22(c) (medium heavy
vehicles and buses), 579.23(c) (motorcycles), 579.24(c) (trailers).\11\
And most reporting sectors submit warranty claims data. See 49 CFR
579.21(c) (light vehicles), 579.22(c) (medium heavy vehicles and
buses), 579.23(c) (motorcycles), 579.24(c) (trailers), 579.26(c)
(warranty adjustments in the tire industry).\12\ All the categories of
vehicle manufacturers submit field reports, as do child restraint
manufacturers. See 49 CFR 579.21(c) (light vehicles), 579.22(c) (medium
heavy vehicles and buses), 579.23(c) (motorcycles), 579.24(c)
(trailers); 579.25(c) (child restraints).
---------------------------------------------------------------------------

    \11\ See also 49 CFR 579.21(c) (child restraint manufacturers
report combined consumer complaints and warranty claims).
    \12\ See previous footnote.
---------------------------------------------------------------------------

    Within the categories of manufacturers that submit EWR data, there
are common data elements. For example, all light vehicle manufacturers
report on the same 18 different systems and components. These include,
for example, steering systems, air bags, seat belts and wheels. See 49
CFR 579.21(b)(2), (c). Child restraint manufacturers report on the same
elements such as buckles and harnesses, and handles. 49 CFR
579.25(b)(2), (c). And tire manufacturers report on the same items,
such as the tread and sidewall. 49 CFR 579.26(b)(2), (c). In addition,
most of the vehicle categories include some of the same and similar
reporting elements, including brakes, electrical, exterior lighting,
tires, and wheels. See 49 CFR 579.21(c) (light vehicles), 579.22(c)
(medium heavy vehicles and buses), 579.23(c) (motorcycles), 579.24(c)
(trailers). The data elements are largely the same.
    Third, the agency is concerned about the burden on the
manufacturers in submitting individual requests for confidentiality,
and the burden on the agency of processing individual requests and
ruling on them. Also, if NHTSA staff denies a request, the party may
petition for administrative reconsideration by NHTSA's Chief Counsel,
who issues the final agency action on the request. 49 CFR 512.19. This
creates additional burdens on persons seeking confidentiality and on
the agency.
    NHTSA is also concerned about other aspects of the administration
of its programs. For example, the agency considers the burdens on small
businesses.
    If NHTSA were simply to require individual requests for
confidential treatment with the submission of EWR data on a quarterly
basis under 49 CFR Part 512 without the Appendices on the
confidentiality of EWR data (Appendices C and D in today's rule), a
large number of manufacturers would submit requests for
confidentiality, without meaningful direction from the agency. In the
absence of the direction that would be provided by a class
determination, manufacturers likely would submit a wide variety of
requests. They would be written in different ways (as requests under 49
CFR 512.8 now are), with a broad range of statements of fact and
opinion, and rationales. NHTSA would make ad hoc determinations of the
confidentiality of the EWR data for which confidentiality was
requested. Some requests would meet the standards for confidential
treatment under Exemption 4 of the FOIA, and some would not. Agency
denials of requests likely would be followed by requests for
reconsideration. The process would be anything but orderly.
    Moreover, there would be a large number of submissions. Based on
the assumption that almost all of the 500 larger manufacturers that
regularly submit EWR data would request confidentiality on a quarterly
basis, there would be about 2000 requests for confidential treatment of
EWR data per year.
    The EWR submissions include separate data entries for numerous
makes/models/model years and systems and components, and the amount of
information is substantial. Since the inception of the EWR rule, NHTSA
has received a large volume of data and documents from reporting
manufacturers. For the period from 2004 through the end of 2006, the
agency received millions of items of aggregate data from the
approximately 500 entities that regularly report EWR data to the
agency.\13\ From the approximately 60 light vehicle manufacturers who
regularly submit EWR data, the agency has received information
pertaining to nearly 163 million warranty claims, nearly 9.5 million
consumer complaints, over 5.8 million field reports, and over half a
million distinct field report

documents. Manufacturers in other EWR reporting sectors, in addition to
reporting detailed quarterly production data, likewise submitted large
amounts of data. Medium-heavy bus and truck manufacturers submitted
information regarding over 8.6 million warranty claims, nearly 277,000
complaints, over 301,000 field reports, and nearly 20,000 distinct
field report documents; trailer manufacturers submitted information
covering over 1.3 million warranty claims, nearly 77,000 complaints,
over 20,000 field reports, and over 400 distinct field report
documents; and motorcycle manufacturers provided nearly 889,000
warranty claims, nearly 41,000 complaints, over 26,000 field reports,
and nearly 26,000 distinct field report documents. Motor vehicle
equipment manufacturers submitted large volumes of EWR data as well.
Child restraint manufacturers submitted information on over 50,000
complaints and warranty claims, over 8,500 field reports, and provided
over 4,500 distinct field report documents. Tire manufacturers provided
data on over 1.3 million warranty adjustment claims.
---------------------------------------------------------------------------

    \13\ The term ``aggregate data'' refers to the quarterly
submissions of the numbers of paid warranty claims, consumer
complaints, field reports, and property damage claims received by
the agency.
---------------------------------------------------------------------------

    If the agency were to review requests for confidentiality from
individual manufacturers, inevitably there would be inconsistent
resolutions on the confidentiality of data submitted in the numerous
data elements in EWR reports. These different outcomes would stem from
the different approaches in manufacturers' requests and different
assertions in them, different agency staff reviewing different
requests, and pressure to resolve requests in order to minimize the
inevitable backlog, discussed below. Thus, a third problem would be
consistency.
    In addition, a requirement that manufacturers submit individual
requests for confidentiality would pose a substantial burden on the
manufacturers and the agency. As noted above, there likely would be
about 2000 requests for confidentiality of EWR data per year. Most
would cover the range of EWR data, including production data, consumer
complaints, warranty claims and field reports. Some, such as would be
expected from Goodyear based on its historic practices,\14\ would cover
EWR information on deaths and injuries and property damage claims,
which are not covered by today's rule. The preparation of these
requests would impose a substantial burden on the manufacturers. The
burden would fall disproportionately on the manufacturers that are not
comparable in size to companies such as Toyota and General Motors, and
have limited to no experience in requesting confidentiality from NHTSA.
The preparation of the initial requests would be particularly
burdensome. Ultimately, NHTSA would deny some of these requests and
manufacturers would file petitions for reconsideration. Over time, we
expect that most manufacturers, perhaps with outside assistance, would
likely be able to submit a request for confidentiality that NHTSA would
grant. In the long run, the process would become routinized. At this
stage, a manufacturer would largely repeat what it had said in a
previous request for confidentiality of EWR data that the agency had
granted, making that and subsequent quarterly individual assessments
duplicative. As a result, requiring EWR data submitters to provide a
detailed written justification for each quarterly submission would be
difficult to justify, as it would impose burdens on manufacturers that
are unnecessary given the availability of class determinations under
the District Court's decision in Public Citizen.
---------------------------------------------------------------------------

    \14\ Goodyear submits quarterly requests for confidentiality of
EWR data notwithstanding a stay pending a decision by the court on
the RMA claim that the TREAD Act is a FOIA Exemption 3 statute.
These requests provide insight into the nature of requests for the
confidentiality of certain EWR data.
---------------------------------------------------------------------------

    In contrast to these projected 2000 requests, the agency normally
receives approximately 450 requests for confidential treatment
annually.\15\ A portion of these are addressed with limited effort
because they involve information submitted voluntarily, which is
subject to an objective standard that ordinarily is met based on a
limited review.\16\ Adding the 2000 requests for confidential treatment
that would likely accompany EWR submissions, on an annual basis, would
significantly add to the burden faced by the agency.
---------------------------------------------------------------------------

    \15\ This number was derived from the number of requests for
confidential treatment that the agency has received over the past
three calendar years and the expectation that we will receive
requests for confidentiality of EWR information that would not be
resolved by this rulemaking.
    \16\ Critical Mass Energy Project v. NRC, 975 F.2d 871 (D.C.
Cir. 1992).
---------------------------------------------------------------------------

    The agency's experience in processing and responding to
confidentiality requests, such as those submitted during the course of
enforcement investigations, provides a foundation for an assessment of
the burden and its implications. A comparison of the expected number of
EWR submissions to the number of confidentiality requests that
manufacturers now submit, which do not involve EWR data, while taking
content to account, indicates that if the agency were to attempt to
process individualized requests for confidentiality of EWR data from
each or most manufacturers that regularly report EWR data, the agency
would be overwhelmed. There would be considerable additional work from
logging in, to assigning and controlling assignments, to analyzing the
requests, to preparing draft letters, to review, to preparation and
execution of final letters to logging them out. There would also be an
overall management burden. There are no available resources to do this
work. A backlog would develop and delays in responding to requests for
confidentiality of EWR data and other requests for confidentiality
would ensue. Requests for confidentiality that likely would have merit
and those that likely would not be favorably received by the agency
would be caught in the backlog. Consistent with our customary
practices, the information would be withheld until the agency decides
whether it is confidential. Disclosure to the public of information,
including both EWR and non-EWR information, that is the subject of a
request for confidentiality but that ultimately is determined not to be
entitled to be withheld under Exemption 4 would be hindered and
delayed. This likely would include at least some EWR data on deaths and
injuries. Based on historical actions, it likely would include some
information submitted by manufacturers in defect investigations.
Ultimately, the public interest would be impacted. Another effect would
be the likely diversion of some resources from other agency safety
efforts, including pursuing other enforcement activities, in order to
mitigate the delay.\17\
---------------------------------------------------------------------------

    \17\ Public Citizen, within the context of disclosing EWR data,
noted that ``[t]he categorical disclosure of documents and data
obtained under the early warning system is essential for the proper
functioning of the early warning rule''.
---------------------------------------------------------------------------

    In view of the foregoing, requiring and processing individual
requests for confidential treatment for all EWR data is not a viable
alternative.
    A second alternative is to proceed by binding rule. If NHTSA were
to proceed by issuance of class determinations, the agency would take
advantage of the benefits of rulemaking. Interested parties would know
NHTSA's assessment of the confidentiality of most of the EWR data.\18\
The Supreme Court has long recognized the general preference for
rulemaking over ad hoc adjudications. In SEC v. Chenery Corp. 332 U.S.
194, 202 (1947), the Court observed that since an agency, unlike a
court, does have the ability to make new

law prospectively through the exercise of its rulemaking powers, it has
less reason to rely upon ad hoc adjudication to formulate new standards
of conduct. The Court recognized that the function of implementing the
act should be performed, as much as possible, through this quasi-
legislative promulgation of rules to be applied in the future.
---------------------------------------------------------------------------

    \18\ The confidentiality of EWR data on deaths, injuries and
property damage claims is not resolved by today's rule. Most
manufacturers have not reported claims for deaths. Of those that
have, NHTSA expects that most manufacturers, except tire companies,
will not submit individualized requests for confidentiality.
---------------------------------------------------------------------------

    Binding determinations for EWR data are appropriate mechanisms to
address the confidentiality of the EWR data report submissions. The
submissions are standardized. The EWR reports contain identical
informational elements for each regulated manufacturer category under
the EWR rule. See 49 CFR Part 579, Subpart C. EWR reports are submitted
pursuant to standardized electronic reporting templates that are used
repeatedly from reporting period to reporting period. Each manufacturer
in a regulatory category reports on the same systems and components.
Each quarterly report provides a snapshot of that manufacturer's
experience for each of the standard informational elements, making
these submissions identical with respect to the nature of their content
between reporting periods.
    Binding determinations eliminate the problems with ad hoc
determinations. They provide direction to the regulated community. They
assure consistency. They avoid resource burdens, particularly for small
businesses. They eliminate the substantial workload that the agency
would face in processing and addressing requests for confidentiality.
They also avoid a substantial backlog on processing of requests for
confidentiality that impacts not only EWR data but other information
submitted to NHTSA as well. This would result in quicker disclosure to
the public of information that is not confidential. This is in the
public interest.
    The District Court recognized the suitability of adopting class
determinations when it ruled that limited categorical rules that
address the confidentiality of EWR data are necessary ``to allow the
agency to administer the EWR program effectively,'' Public Citizen, 427
F. Supp. 2d at 13, and that the agency was ``justified in making
categorical rules to manage the tasks assigned to it by Congress under
the TREAD Act.'' Id. Consistent with this approach, the agency is
adopting an appropriate method to help it manage the EWR program while
satisfying its obligations under the FOIA. By adopting class
determinations, the agency ensures that it applies a consistent and
reliable approach when addressing the treatment of EWR data. Commenters
on both sides of this issue also recognize the value of class
determinations but each favors class determinations that result in
opposite results--disclosure or withholding.
    A third alternative is presumptive class determinations. In the
October 2006 NPRM, we explained the practical differences between
adopting ``binding'' as opposed to ``presumptive'' determinations.
Binding determinations would alleviate the need for submitters to
provide a formal written request for confidentiality and supporting
justification, whereas presumptive determinations would still require
submitters to provide a written request and supporting justification
pursuant to 49 CFR Part 512. 71 FR at 63745 n. 19. The agency currently
uses presumptive determinations for certain classes of information
detailed in Appendix B of 49 CFR Part 512.
    Presumptive determinations are a middle ground between ad hoc
determinations and class determinations. In our view, presumptive
determinations of the confidentiality of EWR data are inappropriate.
While a presumptive determination would provide direction to the
regulated community and the public and should avoid inconsistent
rulings on the confidentiality of the EWR data submitted in
satisfaction of EWR information requirements, it would not eliminate
the requirement for individualized requests for confidentiality of EWR
data. Since the elements and the basis for withholding them would be
the same, individualized requests for confidentiality of EWR data
would, as a practical matter, be unnecessary. Thus, they would impose
an unnecessary burden on manufacturers. Also, the agency would face a
substantial burden in processing requests for confidentiality under the
presumptive determination alternative.\19\
---------------------------------------------------------------------------

    \19\ Public Citizen had suggested presumptions in favor of
disclosure. In view of the general thrust of disclosure under FOIA
in the absence of an exemption, this is not meaningful.
---------------------------------------------------------------------------

    The EWR data differ from the presumptive classes in 49 CFR Part 512
Appendix B in important respects. The presumptive class determinations
in Appendix B cover information that has limiting factors such as a
finite period of time for which confidentiality is sought or after
which it ends (e.g., new product plan information for the upcoming
model year expires once that product arrives or becomes public
knowledge). Additionally, when reviewing requests for confidential
treatment covering new product information (e.g., introduction of a new
model) the agency not infrequently discovers that a manufacturer's
media center has already publicly released that information, which
makes it necessary for the agency to check the accuracy of a given
confidentiality request. As a result, the nature of the information
covered by Appendix B requires individualized agency review to ensure
that non-confidential information is readily disclosed to the public.
The EWR information (other than death, injury and property damage
claims data, which are not covered) does not raise these concerns.

C. Class Determinations Based on FOIA Exemption 4

    Exemption 4 of the FOIA covers information in federal agency
records that is commercial or financial information obtained from a
person that is privileged or confidential. EWR information. 5 U.S.C.
552(b)(4).
    The terms ``commercial'' or ``financial'' information are given
their ordinary meanings. Public Citizen Health Research Group v. FDA,
704 F.2d 1280, 1290 (D.C. Cir. 1983). Records are commercial so long as
a submitter has a commercial interest in them. Id. EWR data meet this
element of Exemption 4.\20\
---------------------------------------------------------------------------

    \20\ See the discussion of the categories of EWR information
below. Those discussions demonstrate that the manufacturers have a
commercial interest in the data.
---------------------------------------------------------------------------

    Second, the information must be obtained from a ``person.'' The
word ``person'' encompasses business establishments, including
corporations. See FlightSafety Servs. v. Dep't of Labor, 326 F.3d 607,
611 (5th Cir. 2003). EWR data is obtained from manufacturers, which are
corporate business establishments. Thus, EWR data is obtained from
persons within the meaning of Exemption 4.
    Third, the information must be confidential.\21\ As noted above, in
National Parks the Court declared that the term confidential should be
read to protect governmental and private interests in accordance with a
two part test: commercial or financial matter is ``confidential'' for
the purposes of Exemption 4 if disclosure of the information is likely
to have either of the following effects: (1) To impair the Government's
ability to obtain necessary information in the future; or (2) to cause
substantial competitive harm to the competitive position of the person
from

whom the information was obtained. 498 F.2d at 770.\22\
---------------------------------------------------------------------------

    \21\ Alternatively, privileged information may be withheld under
Exemption 4. EWR data is not privileged. See 49 CFR 579.4(c)
(definition of field report).
    \22\ Impairment to the Government's ability to obtain this
information in the future serves as an independent basis for
withholding under Exemption 4. See National Parks, 498 F.2d at 770.
The case law also strongly points to the availability of a ``third
prong'' under Exemption 4--that of protecting other Governmental
interests, such as compliance and program effectiveness. This third
prong has been recognized, but not formally adopted, by the D.C.
Circuit. See Critical Mass v. NRC, 975 F.2d 871, 879 (D.C. Cir.
1992) (noting that Exemption 4 can protect interests beyond
impairment and competitive harm). See also 9 to 5 Org. for Women
Office Workers v. Bd. of Governors of the Fed. Res. System, 721 F.2d
1, 11 (1st Cir. 1983) (adopting a third prong under Exemption 4
based on the Government's interest in administrative efficiency and
effectiveness).
---------------------------------------------------------------------------

    Actual competitive harm need not be demonstrated for the purposes
of the competitive harm prong. Rather, actual competition and a
likelihood of substantial competitive injury is all that need be shown.
CNA Financial Corp. v. Donovan, 830 F.2d 1132, 1152 (D.C. Cir. 1987).
Vehicle and equipment manufacturers that submit EWR data operate in a
highly competitive environment that is expected to become even more
competitive.\23\ There is competition for sales.\24\ The industry is
subject to a variety of competitive factors, including costs,
competition in consumer-based surveys, and production differences.\25\
---------------------------------------------------------------------------

    \23\ See, e.g. GM Looks to Future, USA TODAY, at 10A (Feb. 7,
2007) (observing that the changing auto industry and fierce
competition are forcing GM to undergo structural changes), Micheline
Maynard, Car Parts Maker Moves to Break its Union Deals, NY TIMES,
April 1, 2006, at A1 (noting increasingly stiff competition in the
U.S. auto market), and Joann Muller, Autos: A New Industry,
BUSINESSWEEK, July 15, 2002, at 98 (reporting on the changing U.S.
auto market as ``intense'' competition changes the shape of the auto
industry).
    \24\ See comments of the Alliance and others on competition,
discussed below under consumer complaints.
    \25\ See, e.g. Ford Ahead on Cost Savings Target for Materials,
REUTERS, Mar. 16, 2007 (available at http://www.autonews.com)

(noting challenges to Ford's ability to achieve future cost
savings), Tony Lewin, Nissan Factory Expertise Will Boost Laguna
Quality, AUTOMOTIVE NEWS, Oct. 30, 2006 (available at http://www.autonews.com
) (describing implementation of Nissan-developed

quality control systems into Renault-manufactured vehicles), and
Domestics Gain in Quality Derby, AUTOMOTIVE NEWS, Aug. 14, 2006
(available at http://www.autonews.com) (reporting improvements by

U.S. domestic automobile manufacturers in J.D. Power and Associates'
Vehicle Dependability Study results).
---------------------------------------------------------------------------

    We now turn to certain categories of information that manufacturers
must submit under the EWR rule.
1. Production Numbers
    The EWR rule requires larger volume manufacturers of light
vehicles, medium-heavy vehicles and buses, motorcycles, trailers and
tires and all child restraint manufacturers to submit production
figures stating the number of vehicles, tires and child restraint
systems, generally by make, model, and model (or production) year,
produced during the model year of the reporting period and the prior
nine model years (prior four years for child restraint systems and
tires). See 49 CFR 579.21(a), 579.22(a), 579.23(a), 579.24(a),
579.25(a), 579.26(a).
    In the NPRM, NHTSA proposed to make a class determination that
production figures in EWR data for motor vehicles, other than light
vehicles, and for child restraints and tires would not be released to
the public. The agency based this proposed class determination on the
competitive harm prong of FOIA Exemption 4, as interpreted in National
Parks.\26\ 71 FR at 63742.
---------------------------------------------------------------------------

    \26\ The basis for excluding EWR production data on light
vehicles (``any motor vehicle, except a bus, motorcycle, or trailer,
with a gross vehicle weight rating of 10,000 lbs or less,'' 49 CFR
579.4) from the class determination on confidentiality, as noted in
the NPRM, is that those data are publicly available. Information
that is already publicly available cannot be withheld by an agency
under Exemption 4. Niagara Mohawk Power Corp. v. Dep't of Energy,
169 F.3d 16, 19 (D.C. Cir. 1999). We note that there are limits to
the production information on light vehicles that is publicly
available and which therefore is not withheld. The agency has
granted confidential treatment for data on production of light
vehicles with particular consumer features.
---------------------------------------------------------------------------

    Numerous parties have provided information to NHTSA on the question
whether the disclosure of EWR production data, other than for light
vehicles, would be likely to cause the manufacturer submitting the data
to suffer competitive harm from the use of the information by
competitors. The parties have addressed a number of related issues
including whether EWR production data from reporting sectors other than
light vehicles is publicly available and the consequences of the
release of this production information, as well as the potential
benefits of releasing it.
    Industry commenters stated that the production information was not
publicly available in the detail that submitters must provide pursuant
to the EWR rule.\27\ Non-industry groups did not show otherwise.
---------------------------------------------------------------------------

    \27\ For example, some manufacturers' total production of tires
is publicly available, but the breakdown by model, size and
production in a specified period is not. Vehicle production data
that are available, other than for light vehicles, are limited and
do not approach the same level of detail that these submitters
provide to the agency in their EWR submissions. See Harley-Davidson
Form 10-K Annual Report at 31 (Feb. 2, 2007) (stating production
plans for 2007 by total motorcycle production). See also http://www.jama.org
 (offering total production numbers for individual

Japanese motorcycle manufacturers).
---------------------------------------------------------------------------

    The Truck Manufacturers Association (TMA) noted that that medium-
heavy truck manufacturer EWR production data are detailed by model.
They provide a compendium of detailed production data revealing the
production history and sales trends for each individual model over
time. TMA explained that these data can provide valuable insights into
a manufacturer's production and marketing strategies. Since truck
manufacturers offer a variety of different model lines, if the
production data were released, competitors would gain valuable insights
into the marketplace performance of a particular model or group of
models without bearing any market risk. Competitors could analyze a
reporting manufacturer's production data for all or select models to
reach conclusions about a company's production and marketing
strategies, production capacities, customer preferences and other
commercially valuable information not otherwise obtainable. Using this
information, TMA asserted, manufacturers can chart the strengths and
weaknesses of their competitors' businesses within specific make, model
and model years. The competitive impact of the disclosure of such
information is of particular significance to medium truck producers
since their collective customer base consists largely of fleet
purchasers. A manufacturer can use medium-heavy vehicle production data
to react more quickly to its competitors by changing its model
offerings and shifting its sales and marketing strategies while
avoiding the substantial costs and risks associated with new product
development.\28\ TMA used an example to make its point:

    \28\ Manufacturers not only withhold this information from their
competitors but also from their own suppliers. See Steve Konicki,
Just-In-Time Autos, Techwebnews, 2001 WLNR 3151365 (May 7, 2001)
(reporting that Ford Motor Company does not share its production
data regarding medium and heavy truck applications with one of its
largest diesel engine suppliers--International Truck and Engine
Corporation). It is also commonly known that sales numbers, which
closely track production numbers, are commercially sensitive data
that companies do not routinely disclose. As an example of this
practice, ArvinMeritor--a large supplier of various vehicle
components--declined to disclose its diesel engine sales data,
citing the data's competitively sensitive nature. Transcript of
ArvinMeritor, Inc. Analyst Meeting at 38 (Dec. 22, 2005).
---------------------------------------------------------------------------

    Manufacturer A offers a medium-duty truck equipped with a diesel
engine as standard equipment, and is considering whether to offer an
optional gasoline engine on this model. Manufacturer A could access
the EWR data of its competitors, identify similar models, and track
their sales of similar vehicles equipped with gasoline engines to
determine (i) its competitors' production capacity for such
vehicles, (ii) the market acceptance for the gasoline option at

given points in time, and (iii) customer preference trends over
time. Based upon this information, Manufacturer A can decide whether
to offer this option before it invests money and other resources,
and without bearing the same market risk and uncertainties as its
competitors. (A similar analysis could be conducted model-by-model
to evaluate the market acceptance of various vehicle configurations
---------------------------------------------------------------------------
and features.)

    Utilimaster, a final stage manufacturer of walk-in vans for parcel
delivery and baking products industry applications, as well as freight
bodies for general commercial use, stated that production data, if
disclosed, would likely be used by competitors in their marketing and
promotional efforts to obtain a competitive advantage against the EWR
data submitter. Blue Bird, a large manufacturer of buses, school buses
and motor homes, described production data for its industry, which are
not publicly available, as highly proprietary and sensitive information
that would benefit competitors who could use the information to chart
the strengths and weaknesses of Blue Bird's business within specific
make, model and model year classifications. The information would
provide a tool for competitors in conducting market research and
strategic planning.
    Harley-Davidson, a motorcycle manufacturer, noted that detailed
motorcycle production data such as submitted under the EWR rule are
unavailable publicly and explained that the motorcycle business is
essentially a bundle of niches, including touring, sport trails and a
number of others. Companies base their product mix decisions on various
factors. Future company plans are often based on an evolution of
product direction and experience, including past production. The
information reveals a company's internal future planning, providing
competitors with information on a company's future production efforts.
The Motorcycle Industry Council similarly observed that motorcycle
production and sales data by model have not been publicly available.
    Utility, a trailer manufacturer, noted that EWR data are organized
by make, model and model year. This information reflects a company's
production capacity, sales performance and, in turn, the relative
success of a company's marketing strategy. Utility asserted that
competitors could use this sensitive information to monitor a
manufacturer's current production capacity and over time to ascertain
the amount of resources that a manufacturer has expended in adding to
that production capacity. Similarly, it stated that a supplier
examining the production data of one of its customers, the vehicle
manufacturer, can confirm its status as a sole supplier, which can
enhance its position during supply contract negotiations. National
Marine, a trade group representing boat trailer manufacturers, and its
affiliate the Trailer Manufacturers Association, added that because
boat trailer manufacturers typically produce a smaller number of units,
the disclosure of quarterly production data would permit competitors to
ascertain information about the number of units sold, potential costs,
and production concerns of the manufacturers. Such information, it
noted, can be used competitively against a trailer manufacturer.
    The Juvenile Products Manufacturers Association (JPMA),
representing manufacturers of child restraint systems, which are
commonly known as child car seats, explained that the release of EWR
quarterly production data would provide competitors and new entrants to
the market with invaluable ``real-time'' ongoing competitive
information about the reporting manufacturer's production capacity,
sales and market performance. Such information, which would otherwise
either be unobtainable or obtainable only through expensive market
research, would give competitors invaluable insights into the
operational and market strengths and weaknesses of submitters, enabling
competitors to target their production and marketing efforts to areas
where they detect vulnerabilities in a submitter's market position.
    Cooper Tire submitted a study, further confirmed through comments
from the Rubber Manufacturers Association (RMA), regarding the
competitive harm that disclosure of otherwise confidential tire
production numbers would have in the tire industry. The RMA, a trade
association that includes tire manufacturers, stated that tire
manufacturers can change the course of tire production in a relatively
short period of time. If production numbers were released,
manufacturers could change the production of types, sizes and lines of
tires after reviewing a competitor's data. The data could indicate
whether a competitor, for example, could produce sufficient quantities
to supply a market or could be planning a promotion. EWR production
data are valuable since they allow competitors to change production
depending on the production output of a competitor. In addition, if
released, production volume by stock keeping unit (SKU) could reveal
marketing plans and vulnerabilities, facilitating targeting by
competitors.\29\ Similarly, disclosing production volume by tire line
(and by SKU) could reveal private label (brand) customers' purchases.
---------------------------------------------------------------------------

    \29\ See 49 CFR 579.26(a). The regulations define a stock
keeping unit as ``the alpha-numeric designation assigned by a
manufacturer to uniquely identify a tire product. This term is
sometimes referred to as a product code, a product ID, or a part
number.'' 49 CFR 579.4(c).
---------------------------------------------------------------------------

    In comments, RMA expanded on the Cooper study, noting that because
tire manufacturers can alter their production within a relatively short
period of time, this ability to change production dependent on the
production output of competitors could significantly affect
competition. RMA asserted that the quarterly tire production data
reveal snapshots of the different segments within which a given company
operates and its concentration of resources within those segments.
    In contrast to the statements by the vehicle, child restraint and
tire industries on the substantial competitive harm that would result
from the disclosure of EWR production data, Public Citizen asserted
that a class determination covering production is irrational. It
expressed its view that there is no evidence that competitive harm has
occurred for light vehicle manufacturers whose production numbers have
been released and stated that NHTSA did not show why disclosure of EWR
production data will harm only vehicle manufacturers other than light
vehicle manufacturers.\30\ Public Citizen did not present specifics to
justify its view favoring the disclosure of the EWR production numbers.
While Public Citizen's comments on the October 2006 NPRM were filed
almost a month after the close of the comment period and well after
other commenters submitted their comments, significantly, Public
Citizen did not rebut the industry commenters' statements on the
competitive harm that would flow from the release of EWR production
data. Other non-industry entities also objected to the proposed class
determination of confidentiality of EWR production numbers, but none
provided facts to refute the claims or

explanations by industry commenters on the competitive effects of
disclosure.
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    \30\ Public Citizen's Litigation Group had criticized the
agency's class determination for production numbers. It stated that
there is no history of prior administrative decisions concluding
that these data are confidential under Exemption 4 and no
comprehensive examination of the competitive value of the
information to each affected industry sector. In the footnote that
follows, we address competing views of historical decisions which
generally involve a single product that is the subject of an
investigation. This notice addresses comments regarding various
sectors, which Public Citizen did not rebut.
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    The literature further indicates that production numbers, by their
very nature, are competitively valuable and useful in helping
manufacturers improve their efficiency and in learning what their
competitors are producing. See Sidney Hill, Jr., Real Time's Role in
Product Quality, Manuf'g Bus. Tech., May 1, 2005, at 22 (commenting on
the value of mining real-time production data to manufacturers).
Knowledge of what a competitor manufactures and sells are basic pieces
of information sought by companies. See Laurence A. Carr, Front-Line
CI, Competitive Intelligence Magazine, March 2001, at 11 (indicating
that company staff should have detailed information on competitor
products, marketing strategies, tactics, and programs). Companies
operating in the automotive sector are no different in this regard. See
Agostino von Hassell & Mark Bella, Making the Most of Automotive Data,
Modern Plastics, June 1, 2004, at 16 (noting the importance of
production and sales numbers in helping to predict the likely volume of
new orders).
    After carefully considering the comments and other information of
record, NHTSA has determined that the release of EWR production numbers
on medium-heavy vehicles and buses, motorcycles, trailers, child
restraint systems and tires would be likely to result in competitive
harm to the manufacturer submitting the data.
    The EWR production data, in pertinent part, are a comprehensive
compendium of information by make, model and model year, for medium-
heavy vehicles and buses, motorcycles, trailers, child restraint
systems and tires. They are real time data that are updated quarterly.
They are not publicly available. As noted by numerous commenters, the
production data are proprietary. The industry expends efforts to
maintain the confidentiality of their production figures. This was not
disputed by non-industry commenters.\31\
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    \31\ One matter raised in the comments is the availability of
production data in individual investigations by NHTSA's Office of
Defects Investigations, which investigates potential defects in
vehicles and equipment. The agency noted in the NPRM, for example,
that production data on child restraints and tires are not
available. At the opening of an investigation, NHTSA often withholds
production data or it groups it, as for example grouping a number of
sizes of tires so that production of individual sizes is not stated.
At later times in the process, NHTSA has disclosed the number of
tires in recalls. E.g., Recall (NHTSA) number 07T-005 involving
certain tires made by Cooper Tire. RMA and Public Citizen have made
different assertions regarding the agency's historical practices.
These issues need not be resolved here.
    More importantly, in terms of depth and scope, there are
significant differences between the body of EWR data and data on the
production of vehicles in individual investigations. While some
production data on limited segments may be available for some
reporting sectors, these data do not approach the level of detail or
coverage contained in EWR submissions that is likely to cause
substantial competitive harm to submitters. EWR production data are
submitted quarterly and cover all models and model lines. In
contrast, data involving vehicles and equipment in investigations
typically involve a particular vehicle or equipment model or
platform across one or several model or production years. The
release of the production data on a single item is not comparable in
terms of the scope of information released or the competitive
effects of the release if the full compendium of EWR production data
were released.
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    As substantiated by the comments, production numbers reveal
otherwise unobtainable data relating to business practices and
marketing strategies. The EWR production data can be used by
competitors to monitor the evolving and current production, on a model-
by-model basis, of the company that submitted the data. The data also
reveal a manufacturer's capacity to produce certain products. Using
this information (if released), competitors could adjust their own
production volumes to better compete against the manufacturer that
submitted the EWR data and make other production or marketing-related
decisions to the substantial detriment of the submitter.
    In a very real sense, production numbers reveal significant parts
of a company's business plan to competitors. Production numbers reveal
how the submitting manufacturer concentrates its production efforts.
For example, RMA explained that the disclosure of tire production data
would enable manufacturers to analyze their competitors' businesses.
Cooper Tire added that production numbers reveal substantial
information related to marketing plans and strategies. Cooper Tire
further explained that because of the intense level of competition
within the tire industry and the size differences among competitors,
the disclosure of production data would make the risk of substantial
competitive harm high, particularly for smaller manufacturers that
produce for the replacement market.
    In addition, because production is closely related to sales in the
ordinary course of business, EWR production data can be used to assess
a competitor's sales and market performance,\32\ through means
otherwise unavailable without considerable market research expense.
Sales data are generally regarded as having high competitive
importance. This market-related information would be valuable to the
reporting manufacturer's competitors, who commonly want to know how
well their competitors' products have been and are selling. The
competitors would use the production information in their own product
planning and marketing. Knowledge of what competitors are selling can
change marketing tactics, result in the redevelopment of strategic
plans, and lead to key recruitments. Also, since product plans are
based upon an evolution of production direction and experience,
disclosure of production information would expose important aspects of
manufacturers' future product plans to competitors.
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    \32\ See, e.g. http://www.claritas.com/claritas/Default.jsp?ci=2&pn=cs&_bmwusa
.

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    Similarly, EWR production data reveal a variety of valuable
information related to the success of a competitor's marketing
strategies. Through common monitoring activities, a company may know
that a competitor has launched a new product or marketing campaign. But
the critical information on the success of the campaign is not public.
EWR data could be used to monitor the success of the campaign, without
the cost of market research. The competitor could also avoid or
minimize business risks by using the EWR production data to decide
whether to launch a parallel effort. Using EWR production data,
operating strengths and weaknesses of individual submitters would be
discovered without resorting to costly market research and competitors
would chart this information and use it to target a submitter's
vulnerabilities.
    Suppliers to an EWR submitter can, in some instances, use the
production information to gain a competitive advantage over that
submitter. Suppliers compete with vehicle manufacturers in negotiations
over prices. Suppliers can use production information during pricing
negotiations with EWR submitters to confirm their positions as sole
suppliers, which can help them secure higher prices for their
equipment.
    Although non-industry commenters opposed the proposed class
determination for EWR production data and suggested that production
data are publicly available, they did not provide facts demonstrating
that these data are available to the same extent as required by the EWR
regulation.
    The non-industry commenters also did not provide facts
contradicting the competitive value of production data to competitors
or the competitive effects on the submitters that would be likely to
accompany their disclosure. Their argument on the light vehicle sector
is largely a non sequitur. Production data for light vehicles have been
released for a long time. But that does not demonstrate that if they
had not been

released, there would not be any competitive harm from a change in
policy of release. For example, Honda and Toyota went to considerable
effort to design and produce their initial hybrid vehicles, the Insight
and the Prius. Each of these vehicles is different. If a competing
manufacturer were considering entering the regenerative hybrid market,
information on which models sold well and which did not would be of
considerable value. Honda and Toyota would have undertaken the market
risk, but the competitor would benefit from the production numbers with
highly reduced market research costs. Also, the mere statement that it
has been released in the light vehicle sector is not a sufficient
rebuttal to the specific comments from members of other industry
sectors regulated under the EWR rule.
    For the foregoing reasons, in light of the competitive value of the
EWR production data on medium-heavy vehicles and buses, motorcycles,
trailers, child restraints and tires, the manner in which these data
would be used by competitors and the competitive effects that would be
likely to follow if the data were disclosed on a wholesale basis to
competitors, their disclosure is likely to cause substantial harm to
the competitive positions of the manufacturers that submit the
data.\33\ This harm would flow from the affirmative use of the
proprietary data by competitors.
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    \33\ The regulatory language adopted in Appendix C to Part 579
at the end of this notice varies slightly from the language in the
NPRM. The language in Appendix C includes clarifications and the
words ``is likely to cause''. The latter is consistent with the
terms of NHTSA's assessments of the consequences of the release of
the EWR information addressed in Appendix C and the standard of
National Parks.
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2. Consumer Complaints
    The EWR rule requires larger volume manufacturers of light
vehicles, medium-heavy vehicles and buses, motorcycles, and trailers to
submit the number of consumer complaints that they have received broken
out, for each make and model, by specific component categories (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). Manufacturers of child restraints submit combined numbers of
consumer complaints and warranty claims. See 49 CFR 579.25(c). Consumer
complaints are defined in the EWR regulation as:

    [A] communication of any kind made by a consumer (or other
person) to or with a manufacturer addressed to the company, an
officer thereof or an entity thereof that handles consumer matters,
a manufacturer Web site that receives consumer complaints, a
manufacturer electronic mail system that receives such information
at the corporate level, or that are otherwise received by a unit
within the manufacturer that receives consumer inquiries or
complaints, including telephonic complaints, expressing
dissatisfaction with a product, or relating the unsatisfactory
performance of a product, or any actual or potential defect in a
product, or any event that allegedly was caused by any actual or
potential defect in a product, but not including a claim of any kind
or a notice involving a fatality or injury.\34\
---------------------------------------------------------------------------

    \34\ 49 CFR 579.4(c).
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    Manufacturers are required to submit EWR data on consumer
complaints regardless of whether they allege or appear to involve
safety-related defects. 67 FR at 45849 (July 10, 2002). 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 through this mass of information, looking for
potential defect trends. See 67 FR 45822, 45865 (July 10, 2002); see
also 71 FR 63738, 63741 (Oct. 31, 2006); 72 FR 29435, 29437-38 (May 29,
2007). This has proven true. NHTSA's experience with EWR data has shown
that the vast bulk of EWR consumer complaint data has not been
indicative of defect trends. Some consumer complaint EWR data have been
helpful in identifying a potential defect trend.
    In the NPRM, the agency proposed to make a class determination that
EWR consumer complaint numbers would not be released to the public. 71
FR at 63742. The agency based this proposed class determination on
information on both the competitive harm and impairment prongs of
National Parks. We first address the likely competitive harm from the
release of consumer complaint data, then we discuss the impairment to
the agency's ability to obtain as complete consumer complaint
information as possible if the information was released.

Competitive Harm

    Numerous parties have provided information to NHTSA on the question
whether the disclosure of EWR complaint data would be likely to cause
the submitting manufacturer to suffer competitive harm. This includes
commenters from the automotive industry and non-industry commenters.
    Commenters from across different sectors of the automotive industry
addressed the competitive value and use of consumer complaint data. At
the outset of its comments, the Alliance stressed that there is actual
competition in the auto industry. Manufacturers compete vigorously for
new vehicle sales. Two of the elements over which manufacturers compete
and expend substantial amounts of research money are consumer
satisfaction and quality in the market for new vehicle sales. The
Alliance supported its statement by information from Maritz Marketing
Research, which identified factors considered by consumers in
purchasing new vehicles, including overall quality and reliability
(dependability).
    The Alliance further showed that EWR information, including
consumer complaints, is proprietary and comprehensive in nature. Its
competitive value is enhanced by its comprehensive nature (for light
vehicles they involve 18 vehicle systems and components as well as
fires and rollovers, 49 CFR 579.21(b)(2), (c)) and continuing content
which permits a model-to-model comparison on the numerous systems and
components in EWR reports. The release of EWR consumer complaint data
would permit wholesale industry-wide comparisons of the quality or
durability of all significant systems or components on models chosen
for comparison.
    As explained by the Alliance, EWR consumer complaint data provide
an extremely valuable window into the customer satisfaction of vehicle
owners and the perceived quality of vehicle models on a make/model/
model-year and system basis. Additionally, the EWR data provide
valuable insights into a given manufacturer's business practices and
decisionmaking, including, the methods used to collect consumer
complaints.
    The Alliance maintained that the comprehensive nature of these
submissions--covering all makes and models over a multi-year
timeframe--makes them a valuable compendium of consumer satisfaction
and quality information that could not be replicated easily at any
price and could be used by competitors. Citing Worthington Compressors,
Inc. v. Costle, 662 F.2d 45, 51 (D.C. Cir. 1981), 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. In the immediate context, the submitters
have expended considerable sums to gather large volumes of EWR data and
the release of it would be contrary to the competitive interests of
these entities and to the benefit of their competitors.
    AIAM's comments focused on the totality and comprehensive nature of
the EWR data, including consumer complaint data, which give the data

value that is enhanced by the EWR rule's standardized reporting format.
AIAM stated that a knowledgeable competitor can view this mosaic of
information and reach valuable conclusions. The comprehensive body of
information facilitates manufacturer-to-manufacturer comparisons. 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. The data would
provide useful information about cost and quality. AIAM provided
examples.
    AIAM also explained that EWR complaint 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 permit
competitors to evaluate a particular technology, process or supplier,
at a risk and cost that is lower than otherwise attainable, as the
competitor would not have to develop that information. Using this
information, AIAM noted, competitors might be able to base decisions to
pursue certain technologies to a substantial degree on their reviewing
a submitter's EWR complaint information. Without this information, the
competitor may have reached a different conclusion. 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.
    AIAM added that the EWR information would also provide a competitor
with information about the submitters' cost structure. Competitors
could evaluate the information and make decisions whether to pursue
various products or marketing strategies based on an assessment
pertaining to the submitter's costs. A submitter's relative costs can
also be evaluated using these data.
    Nissan's comments noted that it uses inputs from customer call
centers to gauge market responses to new features, to identify areas
requiring consumer education and to help identify issues that could
potentially require field or production adjustments. Customer inputs
including consumer complaints help identify areas where field
experience is showing an issue warranting further investigation. Nissan
emphasized that the information is pointer information that may suggest
further inquiry and is not necessarily indicative of a safety-related
defect. The information primarily serves independent business reasons.
If EWR consumer complaint information were publicly available,
competitors could track that information and learn whether there is a
market reaction to any new technology, supplier or product changes or
new marketing effort. It is valuable, as a market reaction can lead a
competitor to focus on it. The information would be valuable to
competitors who may be considering deploying similar or competing
technology. They could rely on Nissan's information in making a
critical decision such as when to enter the market, which technology or
suppliers to use, or how to best market the technology. It may be
indicative of consumer confusion over a new technology. The value of
this information is in that it would enable competitors to use
information created by significant input to advance their own
commercial interests. Complaints, Nissan explained, also reveal company
practices and the performance of materials and components that are
successful and those that are not.
    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. The compendium of consumer complaint
data, laid out model-by-model and system-by-system has great
competitive value and 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 and systems 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 endorsed a comment by GM as applying with equal force to the
truck industry. GM had explained that if a supplier offers a newly-
designed system to a vehicle manufacturer, a manufacturer can undertake
a tear down evaluation and test it, but no practical test duplicates
the experience gained from hundreds of thousands of miles on the road.
A vehicle manufacturer that installs the system gains the field
experience. If EWR data were made available, other manufacturers would
have access to some of the same information and would be able to make
their decisions with less testing and analysis. The disclosure of the
data would force the first manufacturer to subsidize its competitors,
reducing their costs at the first manufacturer's expense.
    TMA presented a scenario to demonstrate how the information can be
used:

    [i]t may be well known that Truck Manufacturer A uses Lighting
Assembly X on one of its truck models. (The manufacturer of lighting
equipment is typically identifiable on the lamp or lamp assembly.)
If Manufacturer B is deciding whether to use the same assembly on
one of its models, Manufacturer B could review the EWR warranty,
consumer complaint and field report data to evaluate Manufacturer
A's field experiences with its lighting equipment on that model. As
a result, Manufacturer B will get all of the benefits of
Manufacturer A's field experiences with that product--good or bad--
while avoiding the costs, effort and risk that Manufacturer A has
incurred. Moreover, Manufacturer B could immediately benefit from
that experience data, while it took Manufacturer A years to be in
the same position. (Emphasis in original.)

    TMA stated that the disclosure of consumer complaint 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. TMA
added that the release of the information would adversely affect these
manufacturers' customers, in terms of fleet performance and durability.
    Utility observed that the EWR regulation requires trailer
manufacturers to provide information relating to each make and model as
well as for system components. Trailer manufacturers can use EWR
complaint data to evaluate trailer performance, help identify
technological and engineering improvements that might better satisfy
customers and provide guidance to prioritize resources to implement
these improvements. If these data were released, competitors would gain
product and component performance data that they could implement into
marketing strategies. Accordingly, Utility said it would be irreparably
harmed.
    Harley-Davidson stated that it aggressively seeks consumer contact,
including opinions. Consumer input would be counted in EWR reports when
it meets the EWR rule's broad definition of consumer complaint.
Harley's continued success depends on satisfying

motorcycle enthusiasts. It asserted that disclosing this added
feedback, which it obtained through considerable effort, would cause it
harm. It added that the data are not likely to be related to a
potential safety issue.
    The Juvenile Products Manufacturers Association (JPMA) observed
that different manufacturers maintain different information on consumer
complaints. If the EWR information were disclosed, those with more
limited submissions would obtain more information about their
competitors' products than they would be disclosing, which would give
them unequal access to competitively significant information. In
addition, EWR information could be used by new entrants to the market
to obtain valuable competitive information at virtually no cost that
would otherwise be very expensive or impossible to obtain. JPMA added,
for the compendium of EWR information on consumer complaints and
warranty claims broken down by make and model of child car seat, this
type of quality information on individual products is highly
proprietary to individual manufacturers. These real time data provide
ongoing competitive information about each submitter's market
performance. According to JPMA, the data provide insights into a
submitter's operational and market strengths and weaknesses by
revealing the relative field performance through reports on consumer
complaints and warranty claims of a manufacturer's product line. These
data are either unobtainable or obtainable only through expensive
market research.
    Several manufacturers addressed another consequence of disclosure:
misleading and unfair comparisons of the data. The Alliance stated 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. Reports
with simple comparisons could affect the competitive positions of
manufacturers in a way that was unfair. Also, TMA stated, with
supporting explanation, that manufacturers and consumers could misuse
it 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 reports that are not safety related. This, JPMA said, will
result in unwarranted disparagement.
    Several entities acknowledged the limited releases of information
submitted by the manufacturers during investigations by NHTSA's Office
of Defects Investigation (ODI). The Alliance stated that the release of
limited consumer complaint 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 data 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 data 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
information on consumer complaints should be maintained.
    Similarly, JPMA explained that although its members do not object
to the release of the numbers of complaints on a specific make or model
of child restraint within the context of a specific defect
investigation, the wholesale disclosure of consumer complaint numbers
by make and model would reveal highly proprietary information
competitors, providing them with a compendium of quality information
developed by a submitter.\35\
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    \35\ The Motor Equipment Manufacturers Association/Original
Equipment Suppliers Association (MEMA/OESA) also opposed treating
complaint data as not confidential and stressed that quantitative
differences between defect investigation and EWR submissions made
comparisons between the two inapposite.
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    On the other hand, non-industry commenters argued that EWR consumer
complaint data should not be held confidential. Public Citizen agreed
with NHTSA's statements in the NPRM that ``the commercial value of
complaint data is well recognized'' and that ``complaint data are a
valuable data source used by companies to help them identify areas of
concern including product performance, to consumers and provide
guidance on where to allocate their limited resources.'' Public Citizen
added that ``[c]onsumer feedback is vital for companies striving to
maintain a profitable business.''
    Public Citizen raised issues of public availability of information,
including information other than EWR data and EWR data.\36\ It
indicated that, to some extent, information is available through
industry guides that are available to manufacturers for a fee and
suggested that NHTSA should explore that. It said that NHTSA must prove
that other industry groups do not have access to this information. In
its view, industry can afford expensive trade publications. However,
the public which would benefit from the data, often has severely
limited access to these avenues of information, if access even exists.
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    \36\ Public Citizen referred to the Automotive Industry Status
Report, noting vaguely that it already makes some of the proposed
exempt information available to manufacturers for a fee. But it did
not say what information, or compare the breadth or detail of EWR
reporting to that in the Automotive Industry Status Report. We have
placed a copy of the Report in the docket. Based on our review, in
the absence of any specifics from Public Citizen, we do not accept
its conclusion.
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    Public Citizen asserted that under the EWR rule, only total numbers
of complaints are provided to the agency, which greatly hinders its
usefulness. It viewed these data as extremely basic and requiring no
unnecessary details about company operations or future company plans.
AAJ raised a policy argument to support its view that the data should
be disclosed. AAJ argued that in proposing this class determination,
NHTSA did not adequately mention that complaint data are crucial for
consumers to make an expensive purchase of an item that has the
potential to cause bodily injury. It said consumers are entitled to all
available data to render their decision to purchase a motor vehicle. It
also asserted that complaints would be valuable to a jury to render a
verdict. Therefore, in AAJ's view, NHTSA did not reasonably consider
the public's interest in disclosure and the public has a compelling
interest in the information, financially and for safety. Neither Public
Citizen, which filed its comments long after the close of the
rulemaking comment period and long after the industry representatives
had submitted comments, nor AAJ provided information rebutting the
industry commenters' explanations of how the complaint data can be used
competitively to the significant detriment of the competitive positions
of the submitters.\37\
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    \37\ Public Citizen's comments also incorrectly assume that the
collected EWR data only relate to potentially unsafe products.

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    In the literature, the commercial value of consumer complaint data
is well recognized. See e.g., Edward Bond & Ross Fink, Meeting the
Customer Satisfaction Challenge, 43 Industrial Management, Issue 4
(July 1, 2001) (Noting the importance of measuring customer
satisfaction, describing customer complaints as a data source to a
company that can create a ``big benefit'' from small changes); John
Goodman & Steve Newman, Six Steps to Integrating Complaint Data into QA
Decisions, 36 Quality Progress, Issue 2 (Feb. 1, 2003) (Stressing the
importance of complaint data in helping to identify issues with
products and the data's effectiveness in assisting companies with
resource allocation decisions to address quality assurance issues);
Dep't of Commerce, Managing Consumer Complaints (1992) (Complaint data
may signal how products and services meet or do not meet consumer
expectations and how products can be better designed. They may signal a
need for better quality control. Complaint management can save business
unwanted costs); Michael Graver, Listening to Customers (Recognized as
a key component to various business strategies, world-class companies
now measure and manage customer value and satisfaction. These are often
a key performance measure, a leading indicator of financial
performance, an important diagnostic measure for continuous improvement
and a tool to manage competitive advantage); Robert Woodruff, Customer
Value: The Next Source for Competitive Advantage (1997) (Managers
consider their customers when determining which improvements are
needed. Competition for advantage in markets through superior customer
value delivery); Jane Goodman-Delahunty, Promoting Consumer Complaints
in the Financial Sector (2001) (Industry providers should affirmatively
encourage consumer complaints. Consumer complaints can be a valuable
resource regarding defects in products and services that can otherwise
result in a loss of business and market share).\38\
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    \38\ See also Heller v. Shaw Industries, 1997 WL 786542 (E.D.
Pa) at *5 (consumer complaints held confidential).
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    After carefully considering the comments and other information of
record, NHTSA has determined that the release of EWR consumer complaint
data 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
data.
    The EWR consumer complaint data amount to compendiums of
comprehensive information on consumer complaints. The manufacturers'
reports cover broad landscapes of makes and models of motor vehicles
and child restraints, providing information on current models and those
produced in the previous 10 years for motor vehicles and 4 years for
child restraints. 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 consumer
complaints is enhanced by their continuing content, which is updated by
quarterly reports, and by their standardized reporting format. They can
be used for industry-wide comparisons on these numerous systems and
components. The amount of consumer complaint data is substantial. For
the first 15 quarters of EWR data, an average of 65 light vehicle
manufacturers per quarter reported over 12 million consumer complaints;
an average of 87 medium-heavy vehicle and bus manufacturers reported
over 365,000 consumer complaints; an average of 18 motorcycle
manufacturers per quarter reported nearly 51,000 consumer complaints;
an average of 285 trailer manufacturers per quarter reported nearly
97,000 consumer complaints and an average of 20 child restraint
manufacturers reported a combination of nearly 65,000 consumer
complaints and warranty claims.
    The manufacturers that submit the data expend considerable sums to
collect the information. This includes staffing phone centers,
reviewing mail and considering electronic communications.
    The consumer complaints that are amassed and binned by individual
manufacturers for EWR reporting are collected for each manufacturer's
internal use. The data are not publicly available and are highly
proprietary.\39\ The data could not be replicated easily at any price.
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    \39\ The disclosure of consumer complaint data in investigations
is limited. It does not involve a compendium of information that is
fairly comparable to the EWR data.
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    Manufacturers compete and expend substantial amounts of research
money on consumer satisfaction and quality in the market. There is
competition to introduce new models and features that meet customer
satisfaction. Companies seek to keep customers satisfied in order to
maintain and grow their customer base. At the same time, companies seek
to avoid expenses incurred in rectifying quality problems and the
associated customer dissatisfaction that attends such problems. It is
well recognized that consumer complaints are commercially valuable.
This is recognized in the literature. They are particularly valuable in
the highly competitive motor vehicle and equipment industries.
    EWR consumer complaint data are a very valuable information
compendium on customer satisfaction of vehicles and child restraints.
This data base provides information on perceived problems with the
company's product. As Harley-Davidson explained, the data are
reflective of opinions from consumer contact. This is valuable to
companies, which depend on satisfying customers. Disclosing this added
feedback, which a submitter obtained through considerable effort, would
provide useful information to competitors.
    More broadly, the data also reveal market responses to various
aspects of vehicles and equipment. They provide feedback on new
features, areas requiring consumer education and issues that could
potentially require field or production adjustments, regardless of
safety. Customer inputs such as complaints help identify areas where
field experience is showing an issue.
    Companies track what competitors are introducing, including product
modifications and new technologies. Suppliers, which commonly promote
the introduction and use of their equipment, are known. What is not
known is whether a product was well received. If the consumer complaint
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 or new marketing effort. 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 when to enter the
market, which technology or suppliers to use, or how to best market the
technology. The value of this information is in that it would enable
competitors to use information created by significant input to advance
their own commercial interests.
    In addition, the EWR consumer complaint information amounts to a
data bank of quality control information of a manufacturer's products,
model-by-model and system-by-system. It provides in-use information on
technologies. Competitors can engage in ``tear downs'' of another
company's products. They can run lab tests. But

efforts such as these fall short of providing a good understanding of
the quality of a product in operation in the field. EWR consumer
complaint data provide information on the reliability and durability of
various systems and components. Competitors would use this information
to evaluate a particular technology or supplier, at a lower risk and
cost than otherwise attainable, because the competitor would not have
to develop that information. Using this information, competitors could
base decisions whether (or not) to employ certain technologies or
suppliers to a substantial degree on their reviewing a submitter's EWR
complaint information. While the manufacturer submitting the data would
have expended substantial resources in deciding whether to install a
particular technology, 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 and associated
pre-production modifications. Beyond selection of a technology, there
are often questions on the preferable design approach. The EWR
complaint data would enable one company to use the experience of others
to select an optimal design. If released, a competitor could view this
information, a model-to-model comparison on the numerous systems and
components in EWR reports, and reach valuable conclusions. The release
of the data would permit wholesale industry-wide comparisons of the
quality or durability of significant components on models chosen for
comparison.
    In a similar vein, EWR consumer complaints are useful in evaluating
field experience and product performance. Complaints (or the absence
thereof) reveal the performance of materials and components that are
successful and those that are not. The disclosure of consumer complaint
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. Competitors
could use this information to assess the in-use performance of parts
and systems. EWR consumer complaint data help identify where
technological and engineering improvements that might better satisfy
customers and provide guidance to prioritize resources to implement
these improvements. It could also be used to select a production
process or make purchasing, pricing, and sourcing decisions, while
avoiding the cost and risk that would otherwise be encountered. This
would have competitive impacts.
    The EWR consumer complaint information would also provide a
competitor with information about the submitter's cost structure. In
some contexts, the data would reveal rates of problems. These rates are
an important factor in the costs of various technologies. Competitors
could evaluate the information and make decisions whether to pursue
various products or marketing strategies based on an assessment of the
submitter's costs.
    Additionally, the EWR data provide competitors with valuable
insights into a given manufacturer's business practices and
decisionmaking, including the methods used to collect consumer
complaints.
    Public Citizen agreed that consumer complaint information has
value. But it disagreed in a general and conclusory manner with the
proposal's view that EWR consumer complaint data is competitively
valuable. Public Citizen filed its comments in 2007 long after both the
close of the comment period on the NPRM and after the industry
commenters had submitted comments. Its opinions that the reporting of
only numbers of complaints greatly hinders the data's usefulness and
that these data are extremely basic and require no unnecessary details
about company operations or future company plans were contrary to the
weight of the comments. Public Citizen did not provide facts to rebut
the statements of the industry commenters.\40\ Moreover, the industry
has experience in considering consumer complaints and explained the
value of these EWR data.
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    \40\ Some of Public Citizen's comments were based on a
misunderstanding of the proposed rule. Public Citizen referred to
fatalities, injuries and property damage claims, but those were
outside the scope of the proposed rule.
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    As the court recognized in Worthington Compressors, Inc. v. Costle,
662 F.2d 45, 51-52 (D.C. Cir. 1981):

    If * * * competitors can acquire the information only at
considerable cost, agency disclosure may well benefit the
competitors at the expense of the submitter. * * * Because
competition in business turns on the relative costs and
opportunities faced by members of the same industry, there is a
potential windfall for competitors to whom valuable information is
released under FOIA. If those competitors are charged only minimal
FOIA retrieval costs for the information, rather than the
considerable costs of private reproduction, they may be getting
quite a bargain. Such bargains could easily have competitive
consequences not contemplated as part of FOIA's principal aim of
promoting openness in government. * * * [T]he essential test is the
same: whether release of the requested information, given its
commercial value to competitors and the cost of acquiring it through
other means, will cause substantial competitive harm to the business
that submitted it.

    The release of EWR consumer complaint information collected at
considerable cost by manufacturers would have competitive consequences,
as recognized in Worthington Compressors. The submitters expend
considerable sums to gather large volumes of EWR data. Their
information is valuable and could be used by competitors. 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.\41\
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    \41\ As an alternative basis for confidentiality, the disclosure
of the comprehensive compendiums of EWR information would likely
result in 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. (On
remand, if the court finds the tests cannot be accurately
duplicated, it should consider whether competitors or consumers may
misuse the information to the detriment of appellants' competitive
positions). 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
systems for collecting consumer complaints. Some have wider nets
than others. The net result would be unfair, 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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    Public Citizen suggested that the data should be released because
they involve safety concerns.\42\ This is not a valid characterization
of the data. By definition, consumer complaint data go well beyond
safety data. 49 CFR 579.4. Also, our experience over 4 years has been
that the vast bulk of consumer complaint data are not indicative of
defect trends.
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    \42\ Public Citizen referred to dangerous products that injure
and kill people. It also stated that the release of the data will
encourage the production of better products which ultimately will
benefit industry. Public Citizen did not support this statement, and
it is outside the considerations under Exemption 4.
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    Public Citizen had also raised issues about the availability of the
EWR

complaint data. These data are not publicly available, as repeatedly
stated by industry commenters, and Public Citizen has not shown
otherwise. The limited disclosures of limited consumer complaint data
by the agency in ODI defect investigations of particular problems in
specific products do not resemble the breadth or scope of the
information that is submitted pursuant to the EWR rule. The agency's
valid reasons for choosing to disclose certain data during
investigations (e.g., to elicit additional consumer attention
concerning a possible, specific defect, or to inform consumers of the
specific scope of an investigation or recall) are not applicable in the
EWR context. Similarly, the data collected by third-parties such as
Consumer Reports and other publications is not comparable in depth,
breadth or scope, and Public Citizen did not show otherwise.
    As the Alliance and others explained, NHTSA's current practice of
generally disclosing limited, model- and model-year-specific consumer
complaint numbers when such information relates to specific defect
investigations does not justify the wholesale release of the EWR data.
To the extent such limited disclosures are competitively useful, it is
primarily to identify whether another manufacturer may have a similar
issue (e.g., uses the same part and has a similar failure experience).
These limited disclosures do not offer the same market-oriented base of
information as the comprehensive collection of trend data provided
pursuant to the EWR rule. Non-industry commenters did not dispute these
points. As a result, a comparison between publicly available complaint
data and the compendium of EWR complaint data submitted by
manufacturers is not valid.

Impairment

    In addition to proposing to hold EWR consumer complaint 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. 71 FR 63743. As reflected in that notice,
manufacturers may obtain and receive customer input and feedback on
product performance in a variety of ways, and establish differing
practices for the receipt of customer complaints. The nature and level
of effort expended by a company is discretionary. It is beneficial to
NHTSA if a company expends considerable effort. More consumer input
channels increase the robustness of the available data, which is
submitted under the EWR program. Consumer complaints 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 agency seeks to ensure that it
receives as much information as possible to identify possible defect
trends.
    Under the early warning reporting provisions of the Safety Act,
however, 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 other words, NHTSA may require manufacturers to
submit reports based on information that they have collected but may
not require manufacturers to collect and submit information not
otherwise collected. In view of the fact that the quantity and
comprehensiveness of the EWR consumer complaint data depend in part on
the willingness of manufacturers to collect this information through a
broad and multi-input approach, 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
consumer complaints was justified on the basis that disclosure would
impair the agency's ability to obtain this information in the future.
    The Alliance stated that there are variations in how manufacturers
conduct their consumer complaint programs. Manufacturers can alter the