Public Disclosure of Industry Data Could Hamper, Not Help, Vehicle Safety

Since General Motors announced the recall of millions of older vehicles to remedy safety issues that first had cropped up a decade ago, politicians and some safety advocates have pushed to require the public disclosure of auto companies’ confidential internal documents and data about the performance of their vehicles in the field and about how they evaluate and remedy product issues.

Currently, this information is provided to NHTSA but is not generally made public. The premise for public disclosure is that many more sets of eyes should be allowed to see this information, because NHTSA’s review is failing to identify potential safety defects.

Proponents of increased public access to this data say it will make the motoring public safer. But will it? Does any such benefit justify the disclosure of automakers’ internal confidential business information?

The short answer is any potential benefit likely will be obscured by the creation of distracting noise about baseless claimed safety issues and outweighed by increased costs and burdens on the auto industry.

Presently, manufacturers of light vehicles are required by statute and regulation (Early Warning Reporting [EWR] requirements) to submit to NHTSA, on a periodic basis, information the agency believes might allow it to identify potential safety-related defects. This includes production information (vehicles built by make, model) and certain information on incidents where it is alleged a defect caused the injury or death.

Vehicle manufacturers also must provide data on the number of property damage claims, customer complaints, warranty claims and field reports (along with copies of the field reports) received.

Finally, they must provide copies of certain communications with their dealers (technical service bulletins), vehicle owners and lessors (customer satisfaction and recall campaign notices, consumer advisories) and others regarding defects in vehicles whether or not they are safety related.

This information essentially permits NHTSA to monitor manufacturer activity and information to identify potential safety-related defects that may need investigation and to evaluate whether routine remedial field actions taken by manufacturers need to be elevated to regulated safety related recalls.

Much of this information and data generally is not publicly disclosed by the agency and is exempt from disclosure under the Freedom of Information Act. NHTSA has determined certain classes of the data submitted – warranty claims, consumer complaints and field reports – would cause competitive harm to the manufacturers if disclosed. Manufacturers can, where appropriate, request information concerning production, incidents involving injuries and deaths and property damage claims not be disclosed.

In February, GM notified NHTSA of the recall of millions of vehicles to replace defective ignition switches. Those switches could move from the “run” position to the “accessory” position under certain conditions, resulting in the car turning off or deactivating the vehicle’s airbags.

The chronology of events submitted to the agency by GM detailed a decade-long effort to identify and remedy the issue. During that time, both GM and NHTSA (independently and from GM) received information related to the issue that many have claimed should have prompted earlier action.

This past summer, committees in both the House and the Senate held hearings on the GM recall. In addition, two members of those committees proposed amendments to existing laws concerning the EWR information manufacturers are required to provide to NHTSA, the principal focus of which is to require public disclosure of that information.

The proposals (H.R.4364 and S2559) would require the public disclosure of some, but not all, of the EWR data currently reported to NHTSA. So far, they would require disclosure of information concerning reported incidents involving injury or death and the numbers of property damage claims and customer complaints the industry now provides to NHTSA.

In addition, both would eliminate the existing NHTSA determination that certain classes of information and documents are exempt from public disclosure. The proposals also would require the agency to generally revise disclosure regulations based on a presumption in favor of disclosure of EWR information.

The sponsors of both proposals claim the public disclosure of this and perhaps other EWR information will increase transparency. In other words, the public would be able to review the information provided by manufacturers and considered by NHTSA to determine whether the agency and the manufacturers are doing their jobs in identifying and remedying safety-related defects. If various private individuals or organizations think some of the data indicates a car is defective, they can publicize their evidence and demand remedial action.

When the EWR regulations were adopted, manufacturers were concerned about the public disclosure of confidential internal vehicle data and information. They claimed disclosure of this information would result in competitive harm, because other auto companies could use the information in their own product development and marketing.

They also claimed much of the information could be misunderstood or misinterpreted by vehicle owners to suggest product issues that did not really exist.

Even today, when disclosing certain vehicle information in the context of defect investigations, manufacturers caution NHTSA that some of the information, particularly warranty data, “has limited analytical value in analyzing the field performance of a motor-vehicle component,” because the warranty records evidence the part was repaired or replaced, not the reason for the repair. This caution is made even though NHTSA has prior experience reviewing such information.

NHTSA twice has agreed with automakers’ claims they would suffer competitive harm from the disclosure of some of the information required. It went on to identify classes of documents that always would be treated as confidential and exempt from disclosure under the FOIA. Those classes include data relating to warranty claims and adjustments, data relating to field reports and copies of field reports and data relating to consumer complaints.

Automakers also can claim on a case by case basis that other data be treated as exempt under the NHTSA regulations.

To the extent the proposals would require disclosure of data concerning customer complaints and potentially other competitively sensitive information, they needlessly will cause auto makers to suffer the competitive harm NHTSA has twice recognized as the basis for its class determination that such information be exempt from public disclosure.

To the extent the new proposals seek to nullify all of NHTSA’s class determinations, they will make it harder and more costly for automakers to protect confidential business information. While the proposals purport to do nothing to eliminate the protection of trade secrets and commercial or financial information afforded under the Administrative Procedure Act, eliminating the streamlined procedure for protecting such information will increase costs.

Leaving aside the issue of the direct impact of the proposals on automakers, there is still a question about whether public access to this information will be beneficial. There are few if any organizations that have NHTSA’s experience in evaluating the EWR data. NHTSA has been evaluating EWR data for more than a decade and possesses the tools to thoroughly evaluate that data. Whether it reached the wrong conclusion from its review of GM’s ignition switch data doesn’t change these facts.

Some automotive safety-advocacy groups may have capability, but their agendas can be skewed in favor of the over-reporting of claimed safety defects. Isolated issues can become the basis for claims of serious product defects.

For those lacking any background and context, the data could be misinterpreted to suggest defects that in reality do not exist. The result will be the creation of unneeded and unjustified noise about the existence of safety defects NHTSA will have to sort through in addition to its own ongoing review. And, these are the groups that have some interest in safety.

Others who review the data may have motivations unrelated to safety. One such group that comes to mind is class-action lawyers. Any disclosure by an automaker about a product issue or recall routinely becomes the subject of class-action lawsuits claiming the company has impaired the resale value of the affected vehicles.

If EWR data is publicly disclosed, those lawyers would be free to sift through automakers’ confidential information for evidence supporting another potential class action, creating more distraction. Thus, the likelihood legitimate defect issues will be identified by the public is not particularly high and does not justify the potential burdens and the potential for distraction caused by public disclosure.

The proposed legislation quite obviously was hastily prepared. Both were released to coincide with congressional hearings on GM’s recall. Neither proposal has been considered by committee and likely won’t be for some time.

As presently drafted, the proposed legislation will burden automakers and NHTSA and will not necessarily improve, and may in fact detract from, motor-vehicle safety.

Attorney Richard Wilhelm is based in Dickinson Wright PLLC’s Detroit office. He can be reached at 313-223-3550 or [email protected].