# Confidential Business Information

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3AE7-20368

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** October 19, 2007
- **Citation:** 72 FR 59434

## Text

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.

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 202-366-9324. 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 (202) 366-5263, 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

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).

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.

3

United States
v.
General Motors Corp.,
574 F. Supp. 1047, 1049 (D.D.C. 1983).

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.

4
Pub. L. 106-414, 114 Stat. 1800.

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.

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.

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.

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).

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.

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.

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.

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).

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.

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.

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

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.

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.

32
See,
e.g.

http://www.claritas.com/claritas/Default.jsp?ci=2&pn=cs&_bmwusa
.

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.

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.

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).

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

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.

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.

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.

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

37
Public Citizen's comments also incorrectly assume that the collected EWR data only relate to potentially unsafe products.

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

38

See also Heller
v.
Shaw Industries
, 1997 WL 786542 (E.D. Pa) at *5 (consumer complaints held confidential).

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.

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.

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.

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.

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

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).

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.

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.

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 manner in which these programs are conducted based on a variety of internal considerations, benefits, and costs. The Alliance cited a purpose of the TREAD Act, which is to enhance the ability to carry out the Safety Act, a purpose of which is to reduce the number of accidents and the fatalities and injuries arising from them. The Alliance reiterated an earlier statement by NHTSA (which

[Text truncated at 120,000 characters. The full text is on the page linked above.]

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3AE7-20368. Public record. Not legal advice.