Confidential Business Information, 26071-26073 [E8-10192]

Agencies

• National Highway Traffic Safety Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 73, Number 90 (Thursday, May 8, 2008)]
[Proposed Rules]
[Pages 26071-26073]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-10192]


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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Part 512

[Docket No. NHTSA-06-26140; Notice 3]
RIN 2127-AJ95


Confidential Business Information

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

ACTION: Denial of Petition for Reconsideration.

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SUMMARY: This document denies a petition for reconsideration regarding 
amendments to NHTSA's regulation on Confidential Business Information. 
The petition, by the American Association for Justice, sought the 
rescission of class determinations that provide confidential treatment 
for certain categories of information submitted to NHTSA pursuant to 
the Early Warning Reporting regulations.

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:

I. Background

    Pursuant to the Transportation Recall Enhancement, Accountability, 
and Documentation (TREAD) Act, NHTSA has adopted Early Warning 
Reporting (EWR) regulations. 49 CFR Part 579. See 49 U.S.C. 30166(m), 
Public Law 106-414. Under these regulations, in general, larger 
manufacturers must submit certain data to the NHTSA on a quarterly 
basis. Their EWR reports include information on production, incidents 
involving deaths or injuries, property damage claims, consumer 
complaints, warranty claims, field reports and common green tires, with 
some variation based on the reporting sector. In general, smaller 
manufacturers must report on incidents involving deaths.
    On October 19, 2007, NHTSA published regulations addressing the 
confidentiality of EWR data. 72 FR 59434. The Appendices to the October 
2007 notice contain class determinations providing that certain EWR 
information is confidential. Under Appendix C to 49 CFR Part 512, EWR 
data on production (except for light vehicles), consumer complaints, 
warranty claims, field reports and common green tires, as well as 
copies of field reports are confidential. 72 FR at 59470. Under 
Appendix D, the last six

[[Page 26072]]

(6) characters of the vehicle identification number (VIN) in an EWR 
report on death(s) or injuries are confidential. Id. As explained in 
the preamble to the October 2007 rule, NHTSA based these class 
determinations on the substantive criteria in Exemptions 4 and 6 of the 
Freedom of Information Act (FOIA), 5 U.S.C. 552(b)(4) and (b)(6).
    Under FOIA 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.'' National Parks & Conservation 
Ass'n v. Morton, 498 F.2d 765, 770 (D.C. Cir. 1974). The class 
determinations in Appendix C to Part 512 are based on Exemption 4. FOIA 
Exemption 6 provides for the withholding of ``personnel and medical 
files and similar files the disclosure of which would constitute a 
clearly unwarranted invasion of personal privacy.'' 5 U.S.C. Sec.  
552(b)(6). The agency applied Exemption 6 to the last six (6) 
characters of the VINs affixed to those vehicles allegedly involved in 
a death or injury reported under 49 CFR part 579 to protect the 
identity of individual vehicle owners. The class determination in 
Appendix D to part 512 is based on Exemption 6. For a more detailed 
discussion of the agency's analysis regarding the class determinations 
in Appendices C and D, we refer readers to the preamble of the October 
2007 rule.

II. American Association for Justice Petition and NHTSA's Response

    In a December 3, 2007 letter, the American Association for Justice 
(AAJ), formerly known as the Association of Trial Lawyers of America, 
petitioned for reconsideration of the class determinations on EWR data. 
AAJ asks NHTSA to withdraw the class determinations, based on two 
arguments.
    First, AAJ asserts that Federal law requires NHTSA to apply a 
balancing test used by a court in evaluating a motion to unseal court 
records filed in a products liability action. See Chicago Tribune Co. 
v. Bridgestone/Firestone, Inc., 263 F.3d 1304 (11th Cir. 2001). Under 
this test, AAJ argues, an agency must balance the manufacturer's 
interest in keeping the information confidential with the alternate 
contention that disclosure serves the public interest in health and 
safety. AAJ asserts that a blanket exemption under the FOIA would 
violate this federal balancing test and that the agency must continue 
to evaluate the disclosure of a manufacturer's EWR data on a case-by-
case basis.
    Second, AAJ asserts that automobile companies would not suffer 
detrimental competitive consequences from the disclosure of their EWR 
submissions. It states that industry's arguments regarding the 
competitive impact of the disclosure of EWR data should be discounted 
because manufacturers already learn about their competitors' products 
through reverse-engineering. AAJ cites an article in WIRED magazine 
discussing the vehicle tear-down process followed by manufacturers in 
general, and General Motors Corporation in particular. See Carl 
Hoffman, The Teardown Artists, WIRED (Feb. 2006). AAJ contends that 
since manufacturers already conduct these types of activities, 
disclosing EWR data may not have an additional impact on competition 
and that it could significantly improve public safety.
    As to both of these arguments, we disagree with AAJ's views 
regarding the applicable legal principles. In Chicago Tribune, a 
balancing test was applied in the unsealing of documents produced in a 
products liability lawsuit. In our view, the body of law that governs 
the disclosure of EWR data is FOIA law, rather than the law on the 
unsealing of documents in Chicago Tribune. More particularly, as 
explained in the preamble to the October 2007 rule, the proper standard 
is that of Exemption 4 of the FOIA. See 72 FR at 59437. In Exemption 4, 
Congress has already struck the balance and no further balancing of the 
public interest is warranted. See Public Citizen Health Research Group 
v. FDA, 185 F.3d 898, 904 (D.C. Cir. 1999); 72 FR at 59437 and 59449-
50. In any event, to the extent relevant, the agency weighed the 
public's interest in these data against its continued ability to obtain 
EWR data under its impairment prong analyses. See, e.g., 72 FR at 
59449-51 (consumer complaints), 59456-57 (warranty claims), and 59460-
62 (field reports). AAJ does not dispute our impairment analyses.
    We also disagree with AAJ's related contentions that this 
information would protect consumers and that NHTSA did not dispute 
AAJ's claim that the disclosure of EWR information is vital to the 
public interest but that NHTSA gave greater weight to competitive 
consequences that would result from the release of the data, which were 
presented by the automotive industry. AAJ's conclusory contentions on 
the value of the information to the public were not supported in its 
submission. And, we had explained that the disclosure of the EWR data 
covered by the Appendices would provide limited, if any, safety 
benefits to the public, see, e.g., 72 FR at 59450, 59457, and 59462, 
but would be likely to cause substantial competitive harm to 
manufacturers and significantly impair the agency's ability to carry 
out the EWR program effectively. See, e.g., 72 FR at 59441-63.\1\ In 
the course of our assessment, we applied the FOIA law and considered 
the administrative record in reaching the determinations in Appendices 
C and D. AAJ and others had the opportunity to submit detailed comments 
presenting their views and any facts in support of them.
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    \1\ We note that the EWR information on deaths and injuries are 
not covered under the class determinations in Appendix C.
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    The AAJ petition and article from WIRED do not provide 
justification for revision of the October 2007 rule and its appendices 
on the grounds that automobile companies would not likely suffer 
detrimental competitive harm from the disclosure of EWR data. The 
article points out that teardowns and related activities can yield 
valuable information about a competitor's products, such as dimensions, 
parts weight, and how parts are assembled together. However, the AAJ 
petition and article do not indicate, much less demonstrate, that 
teardowns provide information comparable to EWR data.
    The preamble to the October 2007 rule discussed EWR data and 
explained, among other things, the competitive value of those data. AAJ 
does not address how an entity could use tear-down information to 
develop EWR information or comparable information. NHTSA addressed EWR 
consumer complaints, warranty claims, and field reports. See 72 FR at 
59444-63. The compendium of EWR consumer complaint data provides 
valuable information on customer satisfaction and how well products 
were received, quality and field experience. See 72 FR at 59444-48. 
Tear-downs do not provide this information. See e.g., 72 FR at 59445, 
59447-48.
    EWR warranty data provide a compendium of information on the 
quality and in-use performance of significant systems or components. 
See 72 FR at 59451-55. These data serve as a valuable indicator of the 
field performance and experience of parts and systems in vehicles and 
tires. See

[[Page 26073]]

72 FR at 59454-55. Vehicle tear-downs do not provide this information.
    EWR field report data address malfunctions or performance problems. 
See 72 FR at 59457. They reflect the in-use experience of a 
manufacturer's product collected at its expense and with the intent of 
identifying problems associated with its products. 72 FR at 59459; see 
also 72 FR at 59457-60. These data provide in-use information on 
technologies employed by manufacturers and provide competitively 
valuable information on product performance and experience in the 
field, including at times reliability and durability of systems and 
components. 72 FR at 59459-60. Again, vehicle tear-downs do not provide 
this information.
    Furthermore, NHTSA addressed EWR production data and explained why 
they are confidential (other than for light vehicles). See, e.g., 72 FR 
at 59441-44. AAJ's petition does not address production data at all. 
NHTSA also explained why EWR common green tire identifiers are 
confidential. 72 FR at 59462-63. AAJ does not address this information 
either.
    Also, AAJ does not address the issue of costs in collecting 
information on competitor products. In general, the ability of a 
competitor to engage in reverse engineering, which forms a basis for 
AAJ's contentions, does not alone resolve the confidentiality of 
information; cost is a significant factor. See 72 FR at 59448 (quoting 
Worthington Compressors v. Costle, 662 F.2d 45, 51-52 (D.C. Cir. 
1981)). The article from Wired alluded to the considerable costs 
incurred by GM to conduct vehicle tear-downs. It noted that a full 
vehicle tear-down takes approximately six weeks and requires work by 
technicians and the use of sophisticated equipment. The article also 
noted that the process focuses on costs; cost estimators estimate the 
price of every part used in the examined vehicle. AAJ does not address 
any of these vehicle tear-down costs. If there was a means by which 
competitors could acquire the competitive information provided by EWR 
submissions, such as consumer complaints, warranty claims, and field 
reports, these costs would certainly be considerable. See, e.g., 72 FR 
at 59448, 59454, and 59459.
    Lastly, AAJ does not address Appendix D or any of the FOIA 
Exemption 6 issues detailed in the preamble to the October 2007 rule 
related to the disclosure of the full VIN reported in an incident 
involving an alleged death or injury. See 72 FR at 59463-65. For 
example, it does not address the privacy concerns raised by the agency 
if complete VIN information were disclosed. It does not address the 
fact that the agency's final rule permits the disclosure of the first 
eleven (11) of the seventeen (17) characters that comprise each VIN or 
that the first eleven characters are sufficient to identify the make, 
model, and model year of a vehicle. And, it does not address relevant 
case law. See Center for Auto Safety v. NHTSA, 809 F. Supp. 148 (D.D.C. 
1993); see also 72 FR at 59465.

III. Conclusion

    For the reasons stated above, the agency is denying AAJ's petition 
for reconsideration.

    Authority: 49 U.S.C. 322; 5 U.S.C. 552; 49 U.S.C. 30166, 49 
U.S.C. 30167; 49 U.S.C. 32307; 49 U.S.C. 32505; 49 U.S.C. 32708; 49 
U.S.C. 32910; 49 U.S.C. 33116; delegation of authority at 49 CFR 
1.50.

    Issued on: April 30, 2008.
James F. Ports, Jr.,
Deputy Administrator.
[FR Doc. E8-10192 Filed 5-7-08; 8:45 am]
BILLING CODE 4910-59-P