DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety Administration
49 CFR Parts 573, 574, 576, 579
[Docket No. NHTSA 2001-8677; Notice 3]
RIN 2127-AI25
Reporting of Information and Documents About
Potential Defects
Retention of Records That Could Indicate Defects
AGENCY: National Highway Traffic Safety Administration (NHTSA), DOT.
ACTION: Final rule.
SUMMARY: This document adopts a regulation that will implement the early warning reporting provisions of the Transportation Recall Enhancement, Accountability, and Documentation (TREAD) Act. Under this rule, motor vehicle and motor vehicle equipment manufacturers will be required to report information and to submit documents about customer satisfaction campaigns and other activities and events that may assist NHTSA to promptly identify defects related to motor vehicle safety.
We are also adopting amendments to NHTSA's general and tire recordkeeping regulations to assure that manufacturers retain relevant information.
The final rule also moves certain existing provisions of NHTSA's regulations to other parts of the Code of Federal Regulations.
DATES: Effective Date: The effective date of this final rule is [insert 30 days after publication in the Federal Register]. Applicability Dates: Various provisions of this final rule are applicable on the dates stated in the regulatory text. See 49 CFR 579.28. Petitions for Reconsideration: Petitions for reconsideration of the final rule must be received not later than [insert 45 days after date of publication in the Federal Register].
ADDRESSES: Petitions for reconsideration of the final rule should refer to the docket and notice number set forth above and be submitted to Administrator, National Highway Traffic Safety Administration, 400 Seventh Street, S.W., Washington, DC 20590, with a copy to Docket Management, Room PL-401, 400 Seventh Street SW, Washington, D.C. 20590.
FOR FURTHER INFORMATION CONTACT: For non-legal issues, contact Jonathan White, Office of Defects Investigation, NHTSA (phone: 202-366-5226). For legal issues, contact Taylor Vinson, Office of Chief Counsel, NHTSA (phone: 202-366-5263).
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Summary of the Final Rule.
In our notice of proposed rulemaking (NPRM) (66 FR 66190), we proposed to divide manufacturers of motor vehicles and motor vehicle equipment into two groups with different responsibilities for reporting information that could indicate the existence of potential safety-related defects. There was no opposition to this approach, and we are adopting it.
The first group consists of larger manufacturers of motor vehicles, and all manufacturers of child restraint systems and tires. In general, the larger vehicle manufacturers must report separately on four categories of vehicles (if they produced, imported, offered for sale, or sold 500 or more of a category annually in the United States): light vehicles, medium-heavy vehicles and all buses, trailers, and motorcycles.
These manufacturers must separately report the numbers identified above for each model and model year, as the rule defines it (ten years for vehicles and five years for tires and child restraint systems).
A manufacturer or brand name owner of tires will not have to report any information other than information relating to incidents involving deaths for limited production tires and other tires exempted from the Uniform Tire Quality Grading Standards pursuant to 49 CFR 575.104(c)(1). In addition, tire manufacturers need only report incidents involving deaths for tires other than passenger car tires, light truck tires, or motorcycle tires. (Manufacturers should note these exclusions in reviewing the reporting requirements under this rule, as we may not repeat it in all instances in which it may apply).
The second group of manufacturers consists of all other manufacturers of motor vehicles and motor vehicle equipment, i.e., vehicle manufacturers insofar as they produced, imported, or sold in the United States fewer than 500 light vehicles, medium-heavy vehicles (including buses), motorcycles, or trailers annually, manufacturers of original motor vehicle equipment and manufacturers of replacement motor vehicle equipment other than child restraint systems and tires. These manufacturers must report the same information about incidents involving deaths as the first category, but are not required to report any other information.
In addition, all vehicle and equipment manufacturers in both groups must provide copies of all documents sent or made available to more than one dealer, distributor, owner, purchaser, lessor or lessee, in the United States with respect to customer satisfaction campaigns, consumer advisories, recalls, or other activities involving the repair or replacement of vehicles or equipment.
Reports must be submitted electronically, in specified formats. The components and systems on which reporting is required will vary, depending on the type of product involved. Documents such as consumer advisories must be submitted electronically or in hard copy.
With respect to the information required to be submitted under this rule, there will be four reporting periods each calendar year of three months each. The first such report will cover the second calendar quarter of 2003. Reports, including copies of field reports, will be due not later than 30 days after the end of a calendar quarter, except for the final three calendar quarters of 2003, when we are allowing a period of 60 days after the end of the calendar quarter. Documents other than field reports that are required to be submitted under this final rule (those documents currently required under 49 CFR 573.8), will be due not later than 5 working days after the end of the month in which they are generated by the manufacturer, beginning with April 2003.
To help NHTSA identify trends that could indicate potential safety problems, manufacturers will be required, on a one-time basis, to report the number of warranty claims or adjustments and the number of field reports for each calendar quarter during the three-year period from April 1, 2000 through March 31, 2003, the date preceding the beginning of the first reporting period that is established by the final rule, April 1, 2003. Submission of copies of field reports is not required under this one-time provision.
The early warning reporting requirements will comprise Subpart C of a new 49 CFR Part 579. Following final rulemaking, the foreign defect reporting requirements proposed on October 11, 2001 (66 FR 51907) will comprise Subpart B of Part 579. This rule adopts a Subpart A containing general requirements that will apply to both Subparts B and C, except where otherwise stated.
We are also adopting amendments that extend the recordkeeping requirements of 49 CFR Part 576 to child restraint system and tire manufacturers:
In addition, the record retention requirements have been expanded to require all manufacturers to retain, for five years, the underlying records on which the information they provide NHTSA under the early warning rule is based. (For manufacturers of equipment other than tires and child restraint systems, this is limited to records related to incidents referred to in claims and notices involving deaths.)
The early warning final rule, the final rule pertaining to foreign defect campaigns, and current 49 CFR 573.8 will be codified in 49 CFR Part 579 (2002). Part 573 is being amended to include the provisions of current Part 579 (2001) with respect to defect and noncompliance responsibility. These are reflected in amendments to the scope, purpose, and definitions of Part 573, and the addition of the substantive requirements of existing Section 579.5 as a new Section 573.5.
The final rule is effective [insert date 30 days after publication of the final rule]. The first quarterly reporting period for early warning information begins on April 1, 2003. Quarterly reports for calendar 2003 will not be due until two months following the end of the quarter, (e.g., the first quarterly report will be due on August 31, 2003). Thereafter, beginning with the first quarter of calendar 2004, information is due 30 days following the end of the reporting period. The one-time report of historical information will be due September 30, 2003, approximately 90 days following the end of the first reporting period. The documents that are required to be submitted on a monthly basis will be due five days after the end of the month in which they are generated, beginning with April 2003.
II. Background: The TREAD Act (Public Law 106-414).
The Transportation Recall Enhancement, Accountability, and Documentation (TREAD) Act was enacted on November 1, 2000, Public Law 106-414.
The TREAD Act amends 49 U.S.C. 30166 to add a new subsection (m), Early warning reporting requirements. This subsection provides for NHTSA to require manufacturers of motor vehicles and motor vehicle equipment to submit information, periodically or upon NHTSA's request, that includes claims for deaths and serious injuries, property damage data, communications to customers and others, information on incidents resulting in fatalities or serious injuries from possible defects in vehicles or equipment in the United States or in identical or substantially similar vehicles or equipment in a foreign country, and other information that may assist NHTSA in identifying potential safety-related defects.
Sections 30166(m)(3), (4), and (5) address, respectively, the elements to be reported, the handling and utilization of reported information, and periodic review and update of the final rule.
The crux of the early warning provisions is Section 30166(m)(3), which states:
(3) Reporting elements.
(A) Warranty and claims data. As part of the final rule . . . the Secretary [of Transportation] shall require manufacturers of motor vehicles and motor vehicle equipment to report, periodically or upon request by the Secretary, information which is received by the manufacturer derived from foreign and domestic sources to the extent that such information may assist in the identification of defects related to motor vehicle safety in motor vehicles and motor vehicle equipment in the United States and which concerns -
(i) data on claims submitted to the manufacturer for serious injuries (including death) and aggregate statistical data on property damage from alleged defects in a motor vehicle or in motor vehicle equipment; or
(ii) customer satisfaction campaigns, consumer advisories, recalls, or other activity involving the repair or replacement of motor vehicles or items of motor vehicle equipment.
(B) Other data. As part of the final rule . . ., the Secretary may, to the extent that such information may assist in the identification of defects related to motor vehicle safety in motor vehicles and motor vehicle equipment in the United States, require manufacturers of motor vehicles or motor vehicle equipment to report, periodically or upon request of the Secretary, such information as the Secretary may request.
(C) Reporting of possible defects. The manufacturer of a motor vehicle or motor vehicle equipment shall report to the Secretary, in such manner as the Secretary establishes by regulation, all incidents of which the manufacturer receives actual notice which involve fatalities or serious injuries which are alleged or proven to have been caused by a possible defect in such manufacturer's motor vehicle or motor vehicle equipment in the United States, or in a foreign country when the possible defect is in a motor vehicle or motor vehicle equipment that is identical or substantially similar to a motor vehicle or motor vehicle equipment offered for sale in the United States.
The Secretary has delegated to the NHTSA Administrator the authority to carry out 49 U.S.C. Chapter 301 (49 CFR 1.50(a)).
On January 22, 2001, we issued an advance notice of proposed rulemaking (ANPRM) to discuss and to solicit comments on the ways in which NHTSA may best implement these statutory provisions (66 FR 6532). After considering the many comments provided in response to the ANPRM, we followed this with a notice of proposed rulemaking (NPRM), published on December 21, 2001 (66 FR 66190).
On October 11, 2001, we issued a separate NPRM that would implement another provision of the TREAD Act, adding Section 30166(l) to Title 49 (66 FR 51907). Subsection (l) also applies to manufacturers of motor vehicles and motor vehicle equipment; it requires them to notify us of safety recalls and other safety campaigns that they conduct outside the United States, or are ordered by a foreign government to conduct abroad, on vehicles and equipment identical or substantially similar to those sold in the United States. The December 21, 2001 early warning rule NPRM stated that the definitions proposed in Subpart A of that NPRM would apply to the rule regarding notification of foreign safety campaigns.
In response to the NPRM on the early warning rule, we received comments from a variety of sources. Motor vehicle manufacturers and associated trade organizations who commented were Ford Motor Company (Ford), the Truck Manufacturers Association (TMA), the Association of International Automobile Manufacturers, Inc. (AIAM), the Recreational Vehicle Industry Association (RVIA), Harley-Davidson Motor Company (Harley-Davidson), Nissan North America, Inc. (Nissan), Volkswagen of America, Inc. (for itself, Volkswagen AG and Audi AG) (Volkswagen), American Honda Motor Company (Honda), the Motorcycle Industry Council (MIC), Blue Bird Body Company (Blue Bird), General Motors Corporation (GM), Gillig Corporation (Gillig), Spartan Motors Chassis, Inc. (Spartan), Porsche Cars North America, Inc. (Porsche), Fleetwood Enterprises, Inc., (Fleetwood), Utilimaster Corporation (Utilimaster), and the Alliance of Automobile Manufacturers (the Alliance). The tire industry was represented by the Rubber Manufacturers Association (RMA). The Juvenile Products Manufacturers Association (JPMA) represented the child restraint system industry. Other motor vehicle equipment manufacturers and associated trade organizations who commented were the American Motorcyclist Association (AMA), Johnson Controls (Johnson), the Waste Equipment Technology Association (Wastec), the Specialty Equipment Market Association (SEMA), the National Truck Equipment Association (NTEA), the Motor and Equipment Manufacturers Association (MEMA) for itself and the Original Equipment Suppliers Association, the National Automobile Dealers Association (NADA), Delphi Automotive Systems, LLC (Delphi), Webb Wheel Products, Inc. (Webb), and Bendix Commercial Vehicle Systems, LLC (Bendix). We also received comments from Public Citizen (PC), Consumers Union (CU), and a number of individuals concerned about a reference in the NPRM to motorcycle apparel.
These comments have provided us with numerous insights in developing this final rule. This completes the first phase of our early warning rulemaking. Consistent with Section 30166(m)(5), we will periodically review the final rule and consider possible amendments.
III. Manufacturers That Will Be Covered by the New Reporting Requirements
A. Scope of the term "manufacturer"
The proposed rule dealt primarily with the information that would be provided to NHTSA. Most of the information to be provided involved activities and events related to motor vehicle safety in vehicles and equipment in the United States; some information would be required with regard to some claims related to deaths in foreign countries involving motor vehicles or equipment that are identical or "substantially similar" to vehicles or equipment that are sold in the United States.
The NPRM addressed who was obligated to provide the information required under the proposed rule. We recognized that the information identified in the proposed rule could be maintained within various sub-entities of a multinational corporation. To assure that we received the information and to preclude non-reporting on the basis that the information was held by an entity not covered by the regulation, we proposed to define the covered entity -- the manufacturer -- inclusively to include corporate parents, subsidiaries and affiliates. Under this formulation, the information identified in the proposed rule would have to be submitted to NHTSA regardless of where it was maintained in a multinational corporation with numerous subsidiaries. At the same time, as a practical matter, we wrote the reporting obligations such that they would most likely be carried out by the entity that has traditionally reported to NHTSA.
In particular, in the NPRM, at Section 579.3(a) ("Application"), we stated "This part applies to all manufacturers of motor vehicles and motor vehicle equipment with respect to all vehicles and equipment that have been offered for sale, sold, or leased by the manufacturer, any parent corporation of the manufacturer, any subsidiary or affiliate of the manufacturer, or any subsidiary or affiliate of any parent corporation of the manufacturer." In subsection (b), we stated that "[i]n the case of any report required under this part, compliance by either the fabricating manufacturer or the importer of the motor vehicle or motor vehicle equipment shall be considered compliance by both."[1]
Further, at proposed Section 579.4, we stated that the term "manufacturer" is used as defined in 49 U.S.C. 30102; however, for purposes of Part 579, it also "includes any parent corporation of the manufacturer, any subsidiary or affiliate of the manufacturer, any subsidiary or affiliate of any parent corporation of the manufacturer, and any legal counsel retained by the manufacturer."
In the NPRM, we stated that the TREAD Act expanded manufacturers' responsibilities with respect to foreign events and activities and thus has extraterritorial effect. As we noted, in its comments on the ANPRM, the Alliance recognized that the TREAD Act was clearly written by Congress to apply to persons and activities outside the United States, and that the rule could reasonably require reports from foreign companies manufacturing vehicles for sale in the United States as long as the reports related to issues that could arise in those vehicles. Under the NPRM, foreign entities would be required to provide the same information as we would require for domestic manufacturers, but only with respect to vehicles and equipment that they sell in the United States and to incidents involving death outside the United States that involve identical or substantially similar motor vehicles or equipment. See 66 FR at 66193-66194. We explained that, in view of both the definition of manufacturer and the specific provisions of Section 30166(m), we believed that the agency has authority to require a report from the entity that maintains the information, from the fabricating manufacturer, and from the importer of the vehicle or equipment, but that we were proposing to require reporting only by either the fabricating manufacturer or by the importer, because this was consistent with current reporting under 49 CFR Part 573 and with our recent proposals for reporting of safety recalls and other safety campaigns in foreign countries, pursuant to 49 U.S.C. 30166(l). See 66 FR at 66193-66194. And we observed that a multinational corporation must adopt practices to ensure that all relevant information on matters for which reports are required is made available to that corporation's designated reporting entity, so that the designated entity timely provides the information to NHTSA. We stated that a multinational corporation would be violating the law if it designated its U.S. importer as its reporting entity but failed to assure that the importer was provided with the information required to be reported. See id. at 66194.
In addition, in the preamble to the NPRM, at Section III.D, we explained that we proposed to deem information (such as claims-related information) that is initially received by representatives of the manufacturer (such as their registered agents and outside counsel) to be in the possession of the manufacturer, and thus to require each manufacturer to ensure that entities it has the ability to control furnish it with the information covered by this rule so that the manufacturer may make a full and timely report to NHTSA. However, we also stated explicitly that we were not proposing to require such representatives to report directly to NHTSA. See 66 Fed. Reg. at 66194.
Many manufacturers and trade associations commented on various aspects of the scope of "manufacturer," particularly with respect to subsidiaries and affiliates (including law firms). These commenters included AIAM, the Alliance, Delphi, Ford, GM, Harley-Davidson, Honda, Bendix, MEMA, Nissan, RMA, TMA, Volkswagen, and Webb. Ford, GM, Nissan, and Volkswagen also stated that they supported the Alliance's comments; Honda also stated that it supported AIAM's comments. The comments are discussed by issue, below.
1. Proposed requirements for reporting about events in foreign countries.
Foreign manufacturers that manufacture vehicles or equipment for sale in the United States have long been subject to the reach of the American legal and regulatory system. They are subject to the requirement that they certify that all their vehicles or equipment imported into the United States comply with applicable Federal motor vehicle safety standards. 49 U.S.C. 30115. They are subject to recall provisions. 49 U.S.C. 30117-120. They have been required to provide to NHTSA copies of all notices, bulletins, and other communications to more than one U.S. distributor, dealer, or purchaser regarding defects. 49 U.S.C. 30166(f) and 49 CFR 573.8. They are subject to record keeping and reporting provisions. 49 U.S.C. 30166 and 49 CFR Part 576. The Vehicle Safety Act requires such manufacturers to appoint agents for the service of process in actions involving this agency (49 U.S.C. 30164; see 49 U.S.C. 30102(a)(5)(A)). Both foreign and domestic manufacturers also appoint registered agents for the service of judicial process in general; these may be, but are not required to be, the same agents who register with NHTSA. Furthermore, foreign manufacturers that have U.S. subsidiaries do not rely exclusively on their American subsidiaries to conduct business before this agency. Rather, both Asian and European manufacturers have routinely participated in meetings at NHTSA headquarters in defects investigations, and even appear in litigation involving this agency.
As acknowledged by the Alliance in its comments on the ANPRM, the TREAD Act was clearly intended by the Congress to apply extraterritorially. The Alliance stated that this creates a "whole new body of law and potential regulation" in the area of gathering and reporting of information from persons overseas on their overseas activities.
In the NPRM, we focused primarily on information involving events or activities in the United States and to a lesser degree on certain foreign claims involving vehicles and equipment that are identical or substantially similar to those sold in the United States. As noted above, we proposed, at Section 579.3(a) and Section 579.4(a), to adopt a single, broad definition of manufacturer to assure that we received this information, be it in the possession of a domestic or foreign component of the manufacturer.
Several commenters, including the Alliance, Nissan, VW, and AIAM, objected to the breadth of our proposed definition of manufacturer. The Alliance and Nissan asserted that the proposed definition impermissibly failed to articulate a nexus between the covered manufacturers and the United States, and that in the absence of such a nexus, the proposed definition amounted to an attempt to assert extraterritorial jurisdiction in violation of international law. VW stated that NHTSA appeared to have recognized in the preamble to the NPRM that reporting obligations must be limited to foreign entities that manufacture vehicles or equipment for export to the U.S. (citing 66 FR 66193), but that NHTSA had failed to incorporate this recognition into the proposed regulatory text.
In our opinion, the proposed regulations were based upon and incorporated an adequate nexus to the United States. In addition to addressing events and acts in the United States, consistent with the TREAD Act, we required the submission of relatively limited information about claims for deaths in foreign motor vehicles that are "substantially similar" to vehicles that are sold in the United States. The substantial similarity of those foreign vehicles to their American counterparts creates a sufficient nexus to the United States.
As we indicated in the preamble to the NPRM (see 66 FR at 66193), we dealt with the nexus issue in the provisions governing the substance of the reports, rather than in the definition or "application" sections. However, to put this matter to rest, in response to the comments from the Alliance and others, we have decided to modify proposed Section 579.3(a), Application, by inserting, after the word "leased," the phrase "in the United States" and by inserting, at the very end, with respect to vehicles and equipment offered for sale, sold or leased in foreign countries, the phrase "substantially similar to any motor vehicles or motor vehicle equipment that have been offered for sale, sold, or leased in the United States." This will not make a substantive change in what we proposed.
We note further that we did not receive any comments on this aspect of the NPRM from any other branch or office of the U.S. government or from any foreign government.
2. Assertion that extending the definition of "manufacturer" to include subsidiaries and affiliates exceeds our statutory authority.
Some commenters challenged the breadth of coverage of proposed Sections 579.3(a) and 579.4(a) based on the assertion that we lack statutory authority to include subsidiaries and affiliates within the definition of "manufacturer." They contended that our proposal to do so violates congressional intent to limit the early warning requirements to those entities that fall within the literal Safety Act definition of the term -- a person manufacturing or assembling vehicles or equipment, or importing same for resale (49 U.S.C. 30102(a)(5)(A), (B)). This position was presented in the abstract, without any presentation of where the parent companies' headquarters, importing and exporting subsidiaries, and assembly operation subsidiaries are located, and without any showing whether or how, under their view of the proper definition of manufacturer, NHTSA would be assured of receiving information specifically covered by section 3 of the TREAD Act; e.g., information on foreign safety recalls and other foreign safety campaigns and information on incidents in foreign countries involving fatalities alleged or proven to be caused by a possible defect in a motor vehicle that is identical or substantially similar to one offered for sale in the United States. See 49 U.S.C. 30166(l),(m)(3)(C). Implicit in their view was that, if information on foreign recalls, foreign deaths, or other TREAD Act categories was in the possession of a subsidiary that was not a manufacturer, assembler, or importer for resale, as referred to above, there would be no legal obligation to report such TREAD Act-related information to NHTSA.
We disagree with this assertion. Our proposal to include the parent and subsidiaries and affiliates within the term "manufacturer" was derived from our authority to implement 49 U.S.C. 30166(l) and (m). These sections invest NHTSA with substantive rulemaking authority and require that we exercise it. One element of this authority to issue substantive rules is the ability to construe the statute. This includes interpreting statutory provisions, such as the definition of "manufacturer." Moreover, our interpretation is entirely consistent with congressional intent. The manifest intent was that NHTSA have the information to assist in promptly identifying safety-related defects. In contrast, under the industry commenters' position, multinational companies would not have to report foreign recall and early warning information if it was not held by entities that fit squarely into their definition of manufacturer -- the assembler or the importer for resale. This is inconsistent with the TREAD Act.
The TREAD Act was enacted in the context of substantial numbers of deaths that occurred in the United States after defect-related deaths had occurred in South America and the Middle East. The multinational corporations that made and sold the vehicle (Ford Explorer) and equipment (Firestone tires) were aware of assertions that their products had caused these deaths and had conducted safety campaigns in foreign countries. They had not informed NHTSA of these matters and NHTSA was not aware of them until after it opened a formal defect investigation in the spring of 2000. Congress sought to correct this reporting deficiency, among other things.
Congress was aware that the vehicle and tire industries are comprised of multinational corporations, most of which have their principal place of business abroad, with numerous operations and subsidiaries around the world. With increased globalization and efforts to lower labor costs, this includes assembly operations in numerous countries. Of the larger light vehicle manufacturers, only two (GM and Ford) are based domestically, and they have numerous international subsidiaries. The remainder, including Honda, Nissan, Toyota, Volkswagen, DaimlerChrysler AG, and BMW, are headquartered abroad, with one or more U.S. subsidiaries. [2] Similarly, the major tire producers are multinational corporations. Bridgestone/Firestone and Michelin are headquartered abroad, with U.S. and other subsidiaries.
Safety-related information could be maintained in a variety of locations by a variety of corporate parents and subsidiaries. For example, consider a recall in Venezuela conducted by a multinational corporation based in Europe of vehicles that are substantially similar to those that are assembled by a subsidiary in Mexico and imported by a U.S. subsidiary. Information on that foreign recall ordinarily would not have been directed to these assembling and importing subsidiaries. To interpret the legislation as applying only to assemblers and importers would be to eviscerate the TREAD Act, as it would amount to acceptance of non-reporting. In enacting the TREAD Act, Congress did not differentiate based on corporate structure and location. Congress likewise did not expect us to do so.
Moreover, while the TREAD legislation was being formulated, Jacques Nasser, then the CEO of Ford and as the representative of the automobile industry, agreed that the industry would notify NHTSA of recalls in foreign countries involving vehicles sold in the United States. S. Rep. No. 106-423 at 2-3. Also, the Alliance member companies (BMW, DaimlerChrysler, Fiat, Ford, General Motors, Isuzu, Mazda, Mitsubishi, Nissan, Porsche, Toyota, Volkswagen, and Volvo) sent a letter to NHTSA in which they committed to report to NHTSA their safety recalls and other safety campaigns that are conducted in a foreign country on a vehicle or component part that is also offered for sale in the United States. They did not limit this commitment to recalls and campaigns documented in the hands of corporate entities that are assemblers of the products or U.S.- based subsidiaries that are importers. In light of Mr. Nasser's statement and the Alliance members' commitment, which did not suggest a narrow meaning of the word manufacturer, there was no need for the Congress to more expressly legislate NHTSA's authority.
The commenters' views are even narrower than, and not consistent with, the definition of manufacturer in Section 30102(a)(5). Under that section manufacturer means a person -- (A) manufacturing or assembling motor vehicles or equipment or (B) importing them for resale. To give meaning to all words, particularly the word manufacturing, manufacturer must be broader than mere assemblers and importers. The term manufacturer includes an enterprise. See American Heritage Dictionary
(4th ed.)(manufacturer is "a person, an enterprise, or an entity that manufactures something."). This is consistent with our longstanding interpretation of the Vehicle Safety Act, which, in the course of numerous amendments, Congress has not rejected. For example, under 49 U.S.C. 30115, a "manufacturer" must certify that the vehicle complies with standards. Under our implementing regulations, the term manufacturer covers more than the assembler or importer. Under 49 CFR 567.4(g)(1)(i), for example, if a vehicle is assembled by a corporation that is controlled by another corporation that assumes responsibility for conformity with the standards, the name of the controlling corporation may be used as the manufacturer, even though it is not the assembler. See NHTSA interpretation of October 13, 1981 regarding PACCAR. This would allow, for example, parent Volkswagen of Germany to certify vehicles made by a Mexican subsidiary and imported into the U.S., DaimlerChrysler AG of Germany to certify M Class sport utility vehicles (SUVs) assembled by a subsidiary in Alabama, and Isuzu Motors Ltd. (of Japan) to certify Isuzu Rodeos assembled in Indiana. The commenters' position on the meaning of manufacturer is inconsistent with 49 CFR 567.4(g)(1)(i).
The enterprise view of a manufacturer is consistent with recent case law. See Daimler-Benz Aktiengesellschaft v. Olson, 21 S.W. 3d 707; 2000 Tex. App. LEXIS 3985 (2000), cert. den. sub nom. DaimlerChrysler v. Olson, __ S.Ct. ___, 70 U.S.L.W. 3707 (2002) (rejecting allegation by Daimler-Benz that the court lacked jurisdiction over it because it is a German corporation not doing business in Texas, and stating that "[o]ur review of this evidence shows Daimler-Benz as a company devoted to selling its cars worldwide. To achieve this goal, Daimler-Benz has established subsidiaries in important markets around the globe . . . ." 21 S.W.3d at 722-723).
Also, our approach to requiring information from multinational organizations is consistent with case law in which in a multinational corporate context, foreign parent, subsidiary and affiliate corporations of a party corporation have been required to provide information in litigation. E.g., In re Richardson-Merrell, Inc. (Bendectin Product Liability Litigation), 97 F.R.D. 481 (S.D. Ohio 1983) (compelling discovery from multinational drug manufacturer's domestic and foreign subsidiaries). Courts have applied a broad, multifaceted view of control sufficient to compel responses to discovery. For example, courts have held that subsidiary and affiliate corporations responsible for the sale of products in the United States have sufficient control over their parent's documents in order to be compelled to produce them. See, Cooper Industries, Inc. v. British Aerospace, Inc., 102 F.R.D. 918 (S.D. N.Y. 1984) (ordering defendant that distributed and serviced airplanes in the U.S. and was a wholly owned corporate affiliate of plane manufacturer British Aerospace Public Limited Co. to produce documents believed to be in its British affiliate's files); Afros S.p.A. v. Krauss-Maffei Corp., 113 F.R.D. 127 (D. Del. 1986) (ordering subsidiary to produce German parent corporation's documents where subsidiary was a wholly owned sales arm of parent and operating as exclusive seller of parent's products in the U.S.); Ferber v. Sharp Electronics Corp., 1984 U.S. Dist. LEXIS 24861, *8, 40 Fed. R. Serv. 2d 950 (S.D.N.Y. 1984) (requiring wholly owned subsidiary of Japanese corporation that acted as parent's U.S. distributor and seller with respect to calculators that allegedly infringed patent to produce information held by parent); In re Uranium Antitrust Litigation, 480 F. Supp. 1138, 1153 (N.D. Ill. 1979) (party not required to have actual managerial power over the foreign corporation, but rather that there be a close coordination between them); see also, Camden Iron and Metal, Inc. v. Marubeni America Corp., 138 F.R.D. 438 (D.N.J. 1991) (requiring U.S. based subsidiary corporation to produce Japanese parent's documents where parent had participated in negotiations over contract which became subject of present litigation) citing, Gerling Int'l Ins Co. v. Commissioner of Internal Revenue, 839 F.2d 131 (3d Cir. 1988); Uniden America Corp. v. Ericsson Inc., 181 F.R.D. 302, 307 (M.D. N.C. 1998) (ordering party corporation to produce responsive records of sister, non-party corporation where companies were owned by same parent, which had power over them, shared information regularly, and sister corporation had provided party corporation documents to assist in present litigation); Alimenta v. Anheuser-Busch Co., 99 F.R.D. 309, 313 (N.D. Ga. 1983) (sister corporations acted "as one" in transaction); Soletanche and Rodio, Inc. v. Brown & Lambrecht Earth Movers, Inc., 99 F.R.D. 269, 272 (N.D. Ill. 1983) (requiring production of foreign parent's documents in patent infringement case where French, non-party, corporate parent had potential benefit in wholly owned, American subsidiary's winning offensive litigation); First Nat'l City Bank v. I.R.S., 271 F.2d 616, 618 (2d Cir. 1959) (upholding subpoena requiring New York City bank to produce records located in its office in Panama).
Finally, our approach to requiring a multinational corporate enterprise to provide reports is consistent with the current regulatory practice of some agencies regarding reporting on foreign and domestic safety-related matters by multinational corporations. See, e.g., Food and Drug Administration (FDA) rules regarding post-marketing reporting of adverse events following FDA approval (21 CFR 314.80) and reporting adverse events associated with investigational new drugs awaiting FDA approval (21 CFR 312.32); EPA Office of Pesticide Programs, PRN 98-3 ( www.epa.gov/opppmsd1/PR Notices/index).
To make our conclusions clear, we are defining "manufacturer" in Section 579.4(c), where other terms used in the early warning rule are defined.
3. Nexus to the motor vehicle industry
Another frequent comment was that the proposal to include subsidiaries and affiliates lacked the required nexus to the automotive industry. The Alliance asserted that the proposal would impose reporting requirements on unrelated subsidiaries (such as insurance providers, financing providers, or car rental companies) as well as on companies that have established limited business relationships with each other. GM stated that it was unnecessary and unduly burdensome to require reporting by some 1,000 unrelated subsidiary corporations that apparently would be required to report consumer complaints or notices of deaths or injuries if reported to an employee. Nissan characterized the proposed inclusion of subsidiaries and affiliates as arbitrary and capricious, and commented that the proposal would likely trigger undesirable reporting requirements that were unintended by Congress.
We believe that the industry commenters have exaggerated the burdens that the proposed reporting rule would place on them, their subsidiaries, and their affiliates. We did not propose to require a vehicle manufacturer to search the records of its automobile-financing subsidiary for information responsive to the early warning requirements. Also, we did not propose to require reporting by such entities. However, if a vehicle manufacturer decided for any reason to move the location where it receives or stores relevant vehicle safety-related records, including its information management system, to such a subsidiary or affiliate, then the early warning rule would require a search of that subsidiary's or affiliate's records.
Thus, Honda Power Equipment Manufacturing, Inc., which makes lawn mowers and related equipment, would not have to search its records or report, even though it is a subsidiary of American Honda Motor Co., Inc. General Motors Corporation would not have to search the records of General Motors Acceptance Corporation (GMAC) if the manufacturer in the usual course of business does not keep early warning information in the files of the automobile-financing subsidiary. However, if GM decided to change its current practice and store relevant safety information in the files of GMAC, GM would be required to search that subsidiary's records when preparing its early warning reports.
To further clarify matters, we have decided to add a new Section 579.3(c), which specifies that, in obtaining the information to be submitted under the early warning rule, manufacturers, including parents, subsidiaries, and affiliates, need only review information and systems where information responsive to Subpart C of Part 579 is kept in the usual course of business. This clarification, which incorporates language from Rule 34 of the Federal Rules of Civil Procedure, will eliminate questions of unintended and unnecessary burdens of reporting on affiliates and subsidiaries that are not involved in the areas for which reporting is required.
4. Duplicate reporting.
A number of commenters complained that the proposed rule would likely result in duplicate reporting of the same events by more than one entity and thus and cause the early warning information we receive to be inaccurate. As we made clear in the NPRM, duplicate reporting was not required. We proposed to allow reporting by either fabricating manufacturers or importers, so long as the multinational corporation assures the reporting entity is provided with information in sufficient time for the reporting entity to submit it NHTSA in a timely manner. See 66 FR at 66194 and proposed 49 CFR Section 579.3(b). "In the case of any report required under this part, compliance by either the fabricating manufacturer or the importer of the motor vehicle or motor vehicle equipment shall be considered compliance by both." We thought that this provision would eliminate duplicate reporting from separate elements of a multinational corporation.
The comments did not discuss this provision directly, but instead, addressed the subject of duplicate reporting more generally. Nevertheless, we have considered this provision further in light of those comments. We believe that there was considerable flexibility under the proposed rule. We address situations involving complex structures and multinational corporations below, to explain that duplicate reporting is not required and to provide guidance on allowed reporting mechanisms.
Some situations involve joint ventures and production agreements. In a joint venture, two manufacturers of motor vehicles establish a separate corporation whose products each of the manufacturers sells under its own brand name. In the production agreement, one manufacturer agrees to produce vehicles for another under the second manufacturer's brand name. An example of a joint venture is New United Motor Manufacturing Inc. (NUMMI), owned jointly by GM and Toyota, which produced the Toyota Corolla and the Geo Prizm. Examples of production agreements are those between Ford and Nissan in which Ford produced the Nissan Quest as well as the Mercury Villager, and between Isuzu and Honda, under which Isuzu produced the Isuzu Rodeo as well as the Honda Passport. A term used for a vehicle such as the Passport is a "re-badged vehicle." In either case, the agency's certification regulation requires NUMMI and Ford or Isuzu, as the "actual assembler of the vehicle," to certify compliance of the vehicles they fabricate, even if sold by another company. See 49 CFR 567.4(g)(1).
As indicated in the Alliance's comment, NUMMI is strictly a fabricator, with no sales outlets or repair facilities of its own. Instead, its products are sold through Toyota and Chevrolet dealerships. The Alliance feared that the proposed rule might oblige Toyota to report on claims and complaints received by GM about GM vehicles, and GM to report on those received by Toyota about Toyota vehicles. Such duplicate reporting is not required under the rule. Reports may be submitted by Toyota as to Toyotas, and GM as to Chevrolets or Geos. Alternatively, Toyota, GM, or NUMMI may report as to all such vehicles.
The situation is similar with respect to vehicles manufactured under production agreements. For example, assume that Isuzu received consumer complaints about a brake problem in Rodeo vehicles and Honda received complaints about the problem in Passport vehicles. Both Isuzu and Honda, may report to us the information that they possess about the vehicles under their own brand names, or the assembler (Isuzu) may report fully for both companies. Honda is not excused from reporting the complaint and other relevant information in its information systems about the Passport on the theory that Honda is not the assembler or importer of the vehicles.
Although the likelihood is that the brand name owners, rather than the fabricator (if other than a brand name owner), will receive consumer contacts about these vehicles, and that the tire brand name owner will be contacted rather than the tire fabricator, we have decided to add a provision to Section 579.3(b), similar to Section 573.3(b), that permits an election between the fabricator and the brand name owner with respect to early warning reporting for vehicles and equipment. We are adding a definition of "brand name owner" to the Terminology section of the rule, to mean "a person that markets a motor vehicle or motor vehicle equipment under its own trade name whether or not it is the fabricator or importer of the vehicle." (This is similar to the definition of "new tire brand name owner" in 49 CFR 574.3(c)(3)). If the fabricator is the reporting entity, it must identify each company that is a brand name owner covered by the report ( see new Section 579.28(h)), and every identified company must provide its information to the fabricator in a sufficiently timely fashion to permit the reporting company to file timely and accurate reports. The obverse is also true; i.e., if a brand name owner is reporting for itself, it must identify each fabricating manufacturer covered by the report.
Another scenario involves a situation where the domestic subsidiary of a foreign corporation assembles a vehicle that also is assembled abroad and imported. For example, in some years, Toyota manufactured some Corolla vehicles in Japan that it exported to the United States and an American subsidiary manufactured other Corollas in the United States. Under our rule, due to the parent-subsidiary relationship, each company may report early warning information to us separately without duplication, or one or the other may report on behalf of both (we would prefer a combined report, regardless of which entity actually submits it).
The next such situation involves foreign subsidiaries of U.S. corporations that manufacture vehicles that are sold in the U.S. For example, GM owns Saab of Sweden. Ford owns Volvo, Jaguar, Land Rover, and Aston Martin. This rule does not regulate corporate structure, and it does not matter whether the U.S. importer of these brands is a subsidiary of the foreign corporation or of the U.S. parent (or some other entity). We understand that consumer contacts about U.S. activities and events involving these vehicles are reported to addressees in the United States, whereas communications about foreign events involving the same or substantially similar vehicles are sent to addressees abroad. We had assumed that ordinarily the domestic parent or domestic subsidiary or subsidiaries (separate ones for, e.g., Volvo and Jaguar) would have the records about the domestic activities and events and would report to us about both the domestic and the foreign events after having obtained relevant information from the records maintained by the foreign entity. We are not requiring duplicate reports and are not requiring separate reports from the foreign entities, either limited to the foreign events, or including both foreign and domestic events. Moreover, the time may come when brands such as these are assembled by new subsidiaries in foreign countries, which would add another entity to the mix. We have decided to permit an election for parents and subsidiaries, similar to that proposed for fabricators and importers in proposed Section 579.3, and subject to the same provisos with respect to timeliness and completeness of reporting.
Finally, we consider foreign vehicles that are not exported to the U.S. but that are substantially similar to vehicles sold in the U.S. For example, Ford of the U.K. and Vauxhall Motor Co. Ltd. (owned by GM)[3] manufacture cars for the U.K. market. Although at present, these cars generally are not exported to the U.S., some of the U.K. models are substantially similar to domestic models (our decision with respect to defining "substantially similar" is discussed below). Assume, for example, the first-generation Mondeo, which was manufactured and sold in the U.K., is substantially similar to the Ford Contour and Mercury Mystique, which recently were sold in the U.S. Likewise, assume that the U.K. Vauxhall Omega and the German Opel Omega are substantially similar to the Cadillac Catera, which GM previously sold in the U.S. The assembler is a foreign company. Information about the Mondeo in the files of Ford of the U.K., and information about the Omega in the files of Vauxhall or Opel, is likely in Europe. There is no importer of the vehicle into the U.S. Nonetheless, we would allow Ford (U.S.)[4] and GM (U.S.) to obtain and report information about covered claims for deaths in the Mondeo or the Omega from the files in the U.K. or Germany. If there were such full reporting, we would not want duplicate reporting by a foreign company. To address this scenario, we will allow reporting of claims involving deaths in foreign countries by either the fabricating manufacturer, the importer, the brand name owner, or a parent or United States subsidiary of such fabricator, importer or brand name owner of the motor vehicle or motor vehicle equipment, and that shall be considered compliance by all persons. Thus, Section 579.3(b) will read as follows:
(b) In the case of any report required under subpart C of this part, compliance by the fabricating manufacturer, the importer, the brand name owner, or a parent or United States subsidiary of such fabricator, importer, or brand name owner of the motor vehicle or motor vehicle equipment shall be considered compliance by all persons.
We believe that the modifications we are announcing today with respect to the definition of manufacturer will resolve any other potential problems related to duplicate reporting and will facilitate reporting in a manner that avoids duplicate reporting.
5. Suggestion to require a "control relationship" between manufacturers and covered subsidiaries and affiliates.
Several commenters (including the Alliance, Nissan, Honda, Bendix, and MEMA) suggested that it was not appropriate to impose reporting requirements on corporate affiliates or impute to manufacturer information in the possession of affiliates over whom the manufacturer does not have a controlling interest. More constructively, Harley-Davidson stated that it would strive to accumulate early warning reporting information from companies it does not control and would report such information if it learned of it, but might not be able to compel it from such entities.
The manufacturers did not provide concrete examples. Multinational vehicle manufacturers, in general, own all or substantial parts of vehicle manufacturing, importing, and sales subsidiaries. For example, Nissan Motor Co., Ltd. (Japan) owns one hundred percent of Nissan North America, Inc. Honda Motor Co., Ltd. owns American Honda Motor Co., Inc., a subsidiary of which, Honda of America Mfg., Inc., assembles Hondas in Marysville, Ohio. Volkswagen AG owns VW of America. DaimlerChrysler AG owns DaimlerChrysler Corp. (manufacturer of Chrysler, Dodge, and Jeep vehicles), Mercedes-Benz USA, Inc. (importer of Mercedes-Benz passenger cars, formerly known as Mercedes-Benz of North America, Inc.), and Mercedes-Benz U.S. International, Inc. (assembler of M Class SUVs in Alabama). However, there are other situations where there is partial ownership. For example, Ford owns a substantial portion of Mazda Motor Corp. and DaimlerChrysler A.G. of Mitsubishi Motors Corp.
MEMA proposed a "bright line test" in which reporting requirements would be imposed only in situations in which the manufacturer has an equity ownership of at least 50 percent in the affiliate or subsidiary. MEMA did not state the basis for its proposed "50% ownership" test. We do not see any reason to adopt a "50% ownership" test in the context of early warning reporting. It is entirely possible to for one entity effectively to control another with an ownership share of far less than 50 percent. It is too difficult to generalize as to the percentage of ownership that is required for the ability to control. Moreover, there may be multiple corporations above one another in a hierarchy and the multinational corporation may not be structured in a strictly vertical mode; there may be horizontal relationships. The concept of control is adequately addressed by the terms we used. For example, a parent corporation is defined in Black's Law Dictionary "as a corporation that has a controlling interest in another corporation." A subsidiary corporation is defined as a "corporation in which the parent corporation has a controlling share." Ibid. An affiliate of or person affiliated with a specified person means a person that directly, or indirectly through one or more intermediates, controls or is controlled by, or is under common control with, the person specified. Ordinarily, the persons are corporations. Securities and Exchange Commission regulation 17 CFR 230.405; see also, 17 CFR 240.10b-18(a)(1). We have adopted this definition.
To the extent that further interpretation of these matters is needed, we will address them in the context of concrete facts in the exercise of program administration and discretion.
As indicated earlier in this preamble, we have decided to permit joint venture manufacturers, rebadging manufacturers, and others to elect a reporter. As a practical matter, this flexible approach will enable reporting requirements to be met without resolution of control issues. Based on our experience with reporting of noncompliances and defects under section 573.3, we believe that this approach is workable.
6. Proposed application to outside legal counsel
We proposed in the NPRM to include within the term manufacturer "any legal counsel retained by the manufacturer." See proposed Section 579.4(a). However, we did not propose to require reporting by outside counsel to manufacturers. See 66 FR 66194.
Our proposal to include legal counsel in the definition resulted primarily from our perception that certain "minimum specificity" information that is a precondition to reporting claims for death or injury may not be found in manufacturers' information systems. Initial claims may be very limited in detail, and it is possible that claims will not be "perfected" until outside counsel have become involved. To report, manufacturers will need information necessary to satisfy our "minimum specificity" requirement, such as the model year of the vehicle involved in a claim. Manufacturers may need to obtain this factual information from their outside counsel after those counsel receive that information.
The provision of this type of fundamental information would not violate the attorney-client privilege or present other ethical dilemmas to outside counsel. We are seeking only basic factual allegations.
Many commenters objected to our proposal to include retained legal counsel in the definition of manufacturer, and none supported it. The negative commenters included the Alliance, Nissan, Ford, GM, AIAM, Webb, Harley-Davidson, and RMA. Essentially, they asserted that inclusion of legal counsel in the definition was unnecessary because, in virtually all cases, basic relevant information known to outside counsel was made known to them by the manufacturer that retained them; that it would be unduly burdensome for outside counsel to be required to search their records periodically for such information; and that the requirement to divulge such information might pose ethical problems or conflicts of interest for lawyers or otherwise violate proscriptions against divulging privileged information or require disclosure of attorney's work product. Specifically, Nissan observed that, if the agency is concerned about abuse of claims of privilege, it could deal with this potential problem by cautioning against improper privilege claims rather than by redefining the term "manufacturer." Ford requested that the term manufacturer be modified to exclude documents contained in litigation files.
We do not agree that the proposal would impose the sorts of burdens referred to by the commenters. However, to clarify the matter, we are adding a sentence to Section 579.28(d) to specify that in situations involving a claim for death or injury where the manufacturer does not possess all the information required for "minimum specificity," and the matter is being handled by outside counsel, the manufacturer must attempt to obtain the missing information from the outside counsel. In light of this adjustment, we are eliminating outside counsel from the definition of manufacturer contained in Section 579.4(c). Where the corporate manufacturer has the information, which the Alliance claims is virtually always the case, there will be no obligation to inquire and no burden. In view of this modification, we believe that it is unnecessary to address separately the concerns raised by Nissan and Ford.
7. Constructive notice of information received by agents.
In the preamble to the NPRM, we stated that we proposed to deem information that is received initially by representatives of manufacturers (such as their registered agents and outside counsel) to be information in the constructive possession of the manufacturer, and to require each manufacturer to ensure that entities it has the ability to control furnish it with relevant early warning information so that the manufacturer could make a complete and timely report to NHTSA. We also stated that we did not propose to require the representatives to report directly to NHTSA. See 66 FR 66194; see also id. at 66213-66214. However, while we addressed this subject in the preamble, it did not appear in the proposed regulatory text.
Many commenters challenged our statements regarding constructive possession, arguing that we lack statutory authority to interpret the term "possession" in 49 U.S.C. 30166(m)(4)(B) and claiming that they cannot require entities that they do not control to provide them with information. We disagree. As discussed above, by virtue of our authority to conduct substantive rulemaking to implement the early warning reporting requirements, we are empowered to interpret statutory terms and promulgate a rule containing our interpretation.
The Vehicle Safety Act itself provides at Section 30164 for foreign manufacturers to appoint agents for the service of notices and process in administrative and judicial proceedings, and specifically states that "service on the agent is deemed to be service on the manufacturer." Id. at 30164(b). Likewise, a common requirement under state law is the appointment of registered agents, and corporations are deemed to be served upon service on the registered agent. Therefore, we have concluded that, as in Section 30164(b), it is appropriate to impute the information contained in such claims to the manufacturer who is served via the appointed agent. Accordingly, in this final rule, we are adding a specification (Section 579.28(e)) stating that receipt of a claim by an agent of a manufacturer registered under State law or designated under the Vehicle Safety Act by a manufacturer offering vehicles or equipment for import shall be deemed received by the manufacturer. However, upon further consideration, we have concluded that it is not necessary to refer to the concept of constructive possession in the terminology or application sections of this rule. The provisions of this rule that require reporting of information in the possession of manufacturers and their subsidiaries, parents, and affiliates with respect to vehicles and equipment that they offer for sale in the United States and foreign vehicles or equipment that are substantially similar to such vehicles or equipment will suffice to ensure that we receive relevant early warning information from appropriate sources.
B. Manufacturers of motor vehicles.
The TREAD Act provides for the agency to require manufacturers of motor vehicles[5] to submit information that may assist in the identification of safety-related defects. We must decide which manufacturers of motor vehicles would be required to submit reports under this rule, and whether different reporting requirements should apply to various categories of manufacturers. Section 30166(m)(3) does not exempt any manufacturer of motor vehicles from its coverage. On the other hand, it provides substantial discretion to the agency. The word "may" is used at several points in the statute. In addition, the agency's ability to use the information submitted is a statutory concern.
One of the threshold questions in this rulemaking is whether the agency should exercise its discretion to defer the imposition of some or all potential early warning reporting requirements on some classes of manufacturers. The early warning regulation will be a new regulation, and inevitably the agency and regulated entities will face some issues in implementing it. It would be counterproductive to require the submission of more information than we could beneficially review or to impose impracticable requirements, particularly on small manufacturers. We have concluded that we should phase in the early warning reporting requirements and that, for the most part, it would be appropriate to focus first on larger volume manufacturers and on information regarding incidents and activities in the United States, as contrasted to those occurring in foreign countries.
Vehicles produced in small quantities have a smaller overall impact upon safety than large production vehicles, as we have frequently noted in providing temporary exemptions from one of more of the Federal motor vehicle safety standards under 49 U.S.C. 30113. Although we would not expect the volume of reports from any individual small volume manufacturer to be overwhelming if we were to require comprehensive reporting by smaller manufacturers, there would be some burden on them. More important, our interactions with, and review of submissions by, the large number of small manufacturers would divert the agency's resources from reports submitted by high volume manufacturers involving potential safety defects that could affect a far greater number of vehicles and thus have a greater impact on safety.
The final rule excludes from most of the reporting requirements any vehicle manufacturer that manufactures for sale, offers for sale, imports, or sells, in the United States, fewer than 500 vehicles of each specified category in the year of the reporting period and in each of the two calendar years preceding the reporting period. This exclusion will apply to most manufacturers of multistage vehicles and alterers since the vast majority of them manufacture or sell fewer than 500 vehicles annually.
We are also excluding registered importers (RIs) of vehicles not originally manufactured to comply with Federal motor vehicle safety standards from most of the reporting requirements. RIs ordinarily would not have information that would be useful because most import limited numbers of vehicles, most of which are manufactured by companies who generally report to us, and the owners of most of these vehicles probably would not report problems to the RI.
However, these small-volume manufacturers and RIs are not exempt from the requirements, addressed below, to report to us certain specified information regarding incidents involving death(s) occurring in the United States that are identified in claims against and received by the manufacturer or that are identified in notices sent to the manufacturer where the notice alleges or proves that a death was caused by a possible defect in the manufacturer's vehicle, together with information on deaths occurring in foreign countries that are identified in claims against the manufacturer involving a vehicle that is identical or substantially similar to a vehicle that the manufacturer has offered for sale in the United States. With respect to all such reported deaths, all manufacturers will have to provide certain information regarding the underlying incident, as described in greater detail below. All manufacturers will also have to provide copies of documents related to customer satisfaction campaigns, consumer advisories, recalls, and other safety activities under new Section 579.5. As discussed in Section III.A.4 above, duplicate reporting is not required. The commenters on the NPRM did not object to the concept of limited reporting by small-volume vehicle manufacturers.
For those motor vehicle manufacturers that are not excluded from full reporting based on low levels of sales in the United States, we are establishing separate reporting requirements based on the category of vehicle produced. We proposed five categories of vehicles: light vehicles, medium-heavy vehicles, buses, motorcycles, and trailers. In the final rule, we are adopting four; the final rule combines the proposed categories of medium-heavy vehicles and buses into one category. Each category has components and systems that distinguish it from the other three categories, and which may develop safety-related problems unique to that category. Therefore, we shall require different information regarding each category of vehicle, which will help to reduce the burdensomeness of the rule.
Under the rule, a light vehicle is any motor vehicle, except a bus, trailer, or motorcycle, with a gross vehicle weight rating (GVWR) of 10,000 lbs. or less. Medium-heavy vehicles include trucks and multipurpose passenger vehicles with a GVWR over 10,000 lbs., and buses regardless of GVWR (including school buses). Trailers are separately categorized regardless of GVWR. Motorcycles include any two- or three-wheeled vehicle meeting the definition of motorcycle in 49 CFR 571.3(b).
We asked for comments on whether an annual aggregate production, importation, or sales of 500 vehicles in the United States is an appropriate figure upon which to base this distinction, whether a manufacturer's eligibility for these lesser reporting requirements should be determined based upon its production in the two calendar years preceding the report or whether a shorter, longer, or different period would be appropriate, and whether small-volume vehicle manufacturers should be required to provide other data and information in addition to that relating to deaths.
RVIA commented that recreational vehicle (RV) manufacturers should be exempt from all early warning reporting, or, at most, only those requirements that are adopted for manufacturers of fewer than 500 motor vehicles. NTEA, Gillig, and WASTEC commented that the threshold should be 10,000 vehicles per year, the same as that governing eligibility to apply for temporary exemptions under Part 555 on grounds that compliance would cause substantial economic hardship, which they did not demonstrate, or, alternatively, 2,500 vehicles per year, the same as that governing eligibility to apply under Part 555 for other kinds of temporary exemptions. The rationale for these suggestions is that many companies producing multi- stage trucks and RVs in quantities greater than 500 are nevertheless "small businesses" by the criteria of the Small Business Administration (SBA) (13 CFR 121.201 (2000)).
We have considered these comments and have concluded that the 500 units is an appropriate demarcation point between larger and smaller manufacturers. We recognize that some manufacturers of more than 500 vehicles will be "small businesses" under the SBA criteria. However, that does not in itself provide a basis for exempting them from the more comprehensive reporting requirements. We have conducted investigations into alleged defects in products manufactured by relatively small businesses that have led to safety recalls and we believe that it is appropriate to obtain full early warning information from companies producing 500 or more vehicles. If experience shows that we do not get valuable information from relatively small vehicle manufacturers, we can and will adjust the threshold in the future.
We also received comments on our proposed five categories of vehicles. Utilimaster commented that it, like other delivery van producers, manufactures vehicles in both the over and under 10,000 lb. GVWR categories. It commented that "commercial delivery vans under 10,000 lbs. GVWR have little in common with cars, sport utility vehicles and pickup trucks," and should not be in the same reporting category as these vehicles. It believed that if the final rule is adopted as proposed, it would be difficult to try to conform the company's internal records systems and reporting obligations to the discrete systems and component codes and differences in parts specified in the light and medium-heavy reporting categories. It argued that "there should be only one set of failure codes and related numerical reporting."
The use of GVWR to delineate the applicability of requirements adopted by NHTSA, other Federal agencies, and state governments is a common practice that has stood the test of time. In any event, the coding of systems and components and related numerical reporting for light and medium-heavy vehicles are very similar, as is discussed below. In our view, this similarity will avoid, or at least minimize, any problems that companies such as Utilimaster might have had.
RVIA also argued that reporting should be limited to the chassis portion of a RV and exclude living quarters. We disagree. If we adopted such a limitation, fires that arose in the living quarters would not be reported. We note that the Vehicle Safety Act provides that "motor vehicle safety" includes "nonoperational safety of a motor vehicle." 49 U.S.C. 30102(a)(8).
C. Manufacturers of motor vehicle equipment.
The TREAD Act also provides for the agency to require manufacturers of motor vehicle equipment to submit early warning reporting information that may assist in the identification of safety-related defects. "Motor vehicle equipment" is defined in 49 U.S.C. 30102(a)(7), and consists of "original equipment" (OE) and "replacement equipment." These two terms are currently defined in 49 CFR 579.4. We are not changing the definitions, but we are simplifying the previous language in new Section 579.4(c) to make it more readable.
1. Original equipment.
There are approximately 10,000 to 14,000 individual items of OE in a contemporary passenger car. Some are fabricated by the vehicle manufacturer, some by independent parts manufacturers, and some parts are incorporated into systems or modules assembled by various suppliers. There is a growing trend to packaging individual parts into a single unit, or module. For example, a steering wheel assembly may include an air bag, horn control, turn signal control, wiper control, ignition switch, cruise control, lighting controls, as well as associated wiring. Many of these units are assembled by a supplier, often with components from various manufacturers. Each of these fabricators or assemblers is also a manufacturer of motor vehicle equipment.
When a component or module installed as OE on a vehicle fails, generally vehicle owners will complain or file a claim with the entity that has manufactured and warranted the vehicle, rather than the assembler of the module or the manufacturers of the individual parts, who in most instances are unknown to the vehicle owner. In view of this, in their comments to the ANPRM, the Alliance, Ford, and AIAM specifically supported exclusion of OE manufacturers (OEMs) from early warning reporting requirements. OEMs, however, are not exempt from defect reporting requirements. Pursuant to 49 CFR 573.3(f), if an OEM sells an item of OE to more than one vehicle manufacturer and a defect or noncompliance is decided to exist in that OE, the OEM is required to notify us (as are the manufacturers of the vehicles in which the OE is installed). If the defective OE is used in the vehicles of only one vehicle manufacturer, the OEM may notify us on behalf of both itself and the vehicle manufacturer (Section 573.3(e))(in either case, the OEM may also be the party remedying the safety defect or the noncompliance). Thus, OEMs can and do make determinations that OE contains safety-related defects, and they will have some information of the type that the TREAD Act authorizes us to require, such as claims alleging failures of their products. For this reason, we did not propose to totally exempt OEMs from early warning reporting.
We tentatively decided for the NPRM that most meaningful information about possible defects is more likely to come to the attention of the vehicle manufacturer earlier than it would to the OEM. However, we wanted to be certain that we obtain information regarding deaths attributed to OE. Accordingly, in the NPRM, we proposed that OEMs be exempt from all reporting requirements regarding OE they manufacture, except for reporting to us regarding deaths in the same manner as small volume vehicle manufacturers, discussed above. Of course, the vehicle manufacturer would be required to report fully in its capacity as a vehicle manufacturer, even if the vehicle manufacturer believed that the problem was the responsibility of the OEM.
NTEA suggested that, in the case of work-related equipment that is installed as original equipment, defects or alleged defects only be reported if they are "germane to the operation of the motor vehicle." It gave, as an example, defects occurring in the operation or design of work-producing equipment such as a ladder or crane. Because such a defect "has nothing to do with the safe operation of the vehicle," it should not have to be reported to NHTSA." We disagree. As noted above, the statutory term "motor vehicle safety" includes "nonoperational safety of a motor vehicle." There are certain work-performing items of equipment whose failure can have serious safety consequences. For example, a dump truck's dump body hydraulic control valve may malfunction while the truck is moving and the dump body move up, scattering materials on the roadway and blocking the driver's rearward view of the road. Such a malfunction could lead to a death, yet under the NTEA approach, it would not be reported to NHTSA because the control valve does not relate to the operation of the dump truck as a motor vehicle. Also, a falling crane could hit a vehicle or create a dangerous distraction. It is not possible to define for the many types of specialty trucks and vehicles what work-performing equipment should not be included; any attempt to exclude an item of equipment will inevitably lead to confusion as to what should be reported. In any event, in view of the limited reporting required, NTEA has not shown that including the rule would impose much of a burden.
2. Replacement equipment.
Replacement equipment comprises an even broader universe of parts than OE. It includes all motor vehicle equipment other than OE. Not only does the term have the literal meaning of equipment that is intended to replace OE, it also includes accessory equipment and "off-vehicle equipment" that is not part of a motor vehicle, such as jacks and most child restraints. Manufacturers of replacement equipment are within the scope of the early warning reporting provisions of the statute.
Some replacement equipment items are critically important from a safety perspective, while others have less of a safety nexus. Child restraints and tires are critical safety items. Therefore, we proposed that all manufacturers of child restraints and tires be required to provide the full range of information and documents proposed.
There is a large number of manufacturers of other types of replacement equipment. Much of this equipment is imported by or for auto parts houses such as J.C. Whitney, retailers such as Pep Boys, or general merchandisers. An importer for resale is considered a manufacturer under the statute. See 49 U.S.C. 30102(a)(5)(B). A large universe of entities would be subject to multiple requirements if we were to fully apply early warning reporting requirements to all fabricators and importers of replacement equipment.
Therefore, at least for purposes of this initial rulemaking, we proposed that, as with smaller volume vehicle manufacturers and original equipment manufacturers, manufacturers of other types of replacement equipment only be required to report to us claims regarding deaths and in notices regarding deaths allegedly due to possible defects in their products. We are adopting our proposal. However, we may revisit these limitations under our periodic review of the rule.
In the preamble to the NPRM, we cited retroreflective motorcycle rider apparel as an example of off-road motor vehicle equipment. The Motorcycle Rider Foundation posted a notice on its website urging readers to "Fight NHTSA's Bid For Clothing Control!," claiming that "NHTSA has no statutory authority for this power grab." Contrary to the Foundation's claim, "motor vehicle equipment" has been defined by statute (currently 49 U.S.C. 30102(a) (7)(C)) since 1966 to include "any . . . apparel . . . that is not a . . . part . . . of a motor vehicle and is . . . intended to be used only to safeguard . . . highway users against risk of accident, injury, or death." We have not, and we do not intend to, prescribe standards or requirements for motorcycle apparel other than protective headgear, which has long been subject to FMVSS No. 218. The proposed rule would not, and the final rule does not, control motorcycle clothing. It is extremely unlikely that any such apparel would be the subject of a claim involving a death.
3. Tires.
Tires, of course, are essential items of motor vehicle equipment, and tire manufacturers have the duty to conduct notification and remedy campaigns and to address defective or noncompliant tires, whether sold in the aftermarket or installed on new vehicles (see current 49 CFR 579.5(b)). Tire brand name owners (e.g., house brands) are also considered manufacturers (49 U.S.C. 30102(b) (1)(E)) and have the same defect and noncompliance reporting requirements as the actual fabricators of the tires (49 CFR 573.3(d)). We proposed that tire brand name owners be required to report, as well as tire manufacturers.
RMA asked that the final rule clarify that, where the tire brand owner is not the fabricating manufacturer, only the tire brand owner need report. We concur with this suggestion; the type of information and data we are seeking for early warning purposes is not likely to be received by the fabricating manufacturer when tires are marketed under the name of the tire brand owner. Accordingly, as adopted, Section 579.3(b) reads in pertinent part: "In the case of any report required under this part, compliance by either the fabricating manufacturer . . . or brand name owner of the . . . motor vehicle equipment shall be considered compliance by all persons."
4. Definition of "equipment."
We proposed to retain the existing definitions of Part 579 for "original equipment" and "replacement equipment," in slightly edited form. These definitions of original equipment and replacement equipment are based on 49 CFR 579.4 (as it appears in 49 CFR Parts 400-999, revised as of October 1, 2001) and are many years old. We are adopting them as proposed.
The definition of "original equipment" includes "equipment installed by the dealer or distributor with the express authorization of the motor vehicle manufacturer." Harley-Davidson observed that it has more than 2,000 suppliers and stated some items manufactured as original equipment or replacement parts for its motorcycles may find their way into the production of other motorcycle brands or the general stream of commerce. Harley- Davidson also observed that its catalog runs several hundred pages with thousands of separate replacement and custom parts. It expressed the belief that NHTSA would not want production reports on each and every one of these, and that it would not make sense to submit reports on these items unless claims involving them were actually received. Accordingly, the comment recommended that a manufacturer not be required to list all production in its reports, or report at all except when a reportable incident has occurred.
We believe that the proposed rule was clear. Any manufacturer of motorcycles, original motorcycle equipment, and motorcycle replacement equipment is responsible for reporting incidents involving deaths based on claims it receives and on notices it receives alleging a defect in its product. But it is only with respect to motorcycles themselves that the manufacturer is responsible for reporting additional and specific categories of information to NHTSA under Section 579.23. Also, the motorcycle manufacturer is not responsible for reporting regarding equipment that is not original equipment, that is to say, equipment installed by a dealer without the manufacturer's express authorization.
With regard to replacement equipment, under the rule, manufacturers of replacement equipment are required to report any claims or notices of death allegedly due to a defect. In its role as a manufacturer of replacement equipment, Harley-Davidson would not have to report an incident unless it receives a claim or notice. See Section 579.27.
IV. Information That Must be Reported.
Section 30166(m)(3)(A) provides for NHTSA to require manufacturers to report information which concerns data on "claims submitted to the manufacturer for serious injuries (including death) and aggregate statistical data on property damage from alleged defects in a motor vehicle or in motor vehicle equipment," and on "customer satisfaction campaigns, consumer advisories, recalls or other activity involving the repair or replacement of motor vehicles or items of motor vehicle equipment." Section 30166(m)(3)(B) authorizes us to require manufacturers to report other "such information" that may assist in the identification of safety defects. Finally, Section 30166(m)(3)(C) provides for reporting of incidents, of which the manufacturer receives actual notice, involving deaths or serious injuries which are alleged or proven to have been caused by a possible defect in the manufacturer's vehicle or equipment in the United States, or in a foreign country when the possible defect is in a vehicle or equipment identical or substantially similar to that sold in the United States.
A. Production information.
For each reporting period, we proposed to require manufacturers that manufactured for sale, offered for sale, imported, or sold in the United States 500 or more vehicles of specified categories, and all manufacturers of child restraint systems and tires, to provide information on the volume of production of their products. Production numbers are needed because the agency's trend analyses frequently are normalized to rates, such as the number of claims per unit of production. We proposed to require these manufacturers to submit the following information with respect to each model and model year of vehicle manufactured in the calendar year of the reporting period and the nine model years prior to the earliest model year of the reporting period, including models no longer in production: the manufacturer's name, the quarterly reporting period, the make, the model, the model year, the current model year production to the end of the reporting period, and the total model year production for all model years for which production has ceased. See 66 FR 66194.
Under the NPRM, for each model of vehicles that are manufactured with more than one type of fuel system, and for each model of medium-heavy vehicles with more than one type of service brake system, the information required by this subsection would have been reported separately. In the final rule, this distinction between types of fuel systems has not been adopted for light vehicles, and applies only to medium-heavy vehicles including buses. The final rule distinguishes between gasoline powered, diesel powered, and other. The distinction between types of service brake systems (hydraulic and air) applies to medium-heavy vehicles including buses, and trailers.
In its analysis of potential defects, ODI has found it useful to compare problems in similar types of vehicles. The reporting category of "light vehicles" covers more types of vehicles than are defined in 49 CFR 571.3(b). For example, "light vehicle" includes passenger cars, various types of multipurpose passenger vehicles (e.g., minivans, vans, SUVs), and some trucks. Therefore, we have concluded that, in addition to identifying the make and model of a vehicle, manufacturers of light vehicles must also indicate the type classification of the vehicle as defined in Section 571.3(b) (i.e., passenger car, multipurpose passenger vehicle, or truck) that appears on the vehicle's label pursuant to Section 567.4(g)(7) certifying compliance with all applicable FMVSS. Manufacturers would also report production data for incomplete light vehicles. An "incomplete light vehicle" is an incomplete vehicle as defined by Section 568.3 which, when completed, will be a light vehicle. For similar reasons, we are requiring each light vehicle manufacturer to identify the "platform" of the vehicle, using its own nomenclature, as discussed in Section IV.H.1.
Similar considerations apply to child restraint systems. Therefore, we are requiring manufacturers of those products to indicate the "type" of child restraint system in their production reports. We are establishing three separate categories, as follows: "Rear-facing infant seat" means a child restraint system that positions a child to face in the direction opposite to the normal direction of travel of the motor vehicle and is designed to hold children up to 20 pounds; "Booster seat" means, as defined in S4 of FMVSS No. 213, "either a backless child restraint system or a belt- positioning seat;" and "Other" encompasses all other child restraint systems not included in the first two categories.
We recognize that manufacturers of medium-heavy trucks, buses, and trailers generally do not specify "model years" for their products. For purposes of this rule, to avoid confusion, we are defining the term "model year" for those vehicles to mean the year the vehicle was produced if no model year has been assigned to it. For equipment, "model year" will mean the calendar year the item was produced. We are using the term "produced" rather than "manufactured" to make it clear that we are not referring to the year a product was imported into the United States.
With respect to tires and child restraint systems, production data would only need to be submitted for a period of five years (i.e., the year of the reporting period and the four previous years). The ten-year period would still apply to vehicle manufacturers.
B. Definition of "claim."
Section 30166(m)(3)(A) refers to claims data. The ANPRM stated that, in order to achieve the goals of the TREAD Act, the term "claim" must be construed broadly and provided some examples.
We researched the definition of claim, considered comments received in response to the ANPRM, and considered our investigatory experience with requests for claims information when we issued the NPRM.
As noted in the NPRM, case law provides interpretations of the word "claim" in various contexts. In a Federal law context, "'claim' is something more than mere notice of an accident and an injury. The term 'claim' contemplates, in general usage, a demand for payment or relief." Avril v. U.S., 461 F.2d 1090, 1091 (9th Cir. 1972). See also, Conoco, Inc. v. United States, 39 Env't. Rep. Cas. (BNA) 1541 (N.D. La. 1994)(written request for compensation for damages or costs); 31 U.S.C. 3729(c) (claim involves request for demand for money or property).
State case law also provides a definition of the word "claim." For example, Fireman's Fund Insurance Co. v. The Superior Court of Los Angeles County, 65 Cal. App. 4th 1205, 1216 (1997), noted that a claim encompasses more than a suit:
"claim" can be any number of things, none of which rise to the formal level of a suit -- it may be a demand for payment communicated in a letter, or a document filed to protect an injured party's right to sue a governmental entity, or the document used to initiate a wide variety of administrative proceedings.
Other state law cases have further addressed the meaning of "claim." Safeco Surplus Lines Co. v. Employer's Reinsurance Corp., 11 Cal. App. 4 th 1403, 1407 (1992), held that a "claim" is "the assertion, demand or challenge of something as a right; the assertion of a liability to the party making it do some service or pay a sum of money." Phoenix Ins. Co. v. Sukut Construction Co., 136 Cal. App. 3d 673, 677 (1982), stated that "a claim both in its ordinary meaning and as interpreted by the courts, is a demand for something as a right, or as due and a formal lawsuit is not required before a claim is made."
We explained that the definition of claim should be broad, and meet our needs under the TREAD Act. We proposed the following definition for claim (at 66 FR 66195-96):
A written request or demand for relief, including money or other compensation, assumption of expenditures, or equitable relief, related to a motor vehicle crash, accident, the failure of a component or system of a vehicle or an item of motor vehicle equipment, or a fire. Claim includes but is not limited to a demand in the absence of a lawsuit, a complaint initiating a lawsuit, an assertion or notice of litigation, a settlement, covenant not to sue or release of liability in the absence of a written demand, and a subrogation request. A claim exists regardless of any denial or refusal to pay it, and regardless of whether it has been settled or resolved in the manufacturer's favor. The existence of a claim may not be conditioned on the receipt of anything beyond the document stating a claim.
The proposed definition of claim addressed the nature of a reportable claim and the subject matter that was covered. This was set forth in one definition to simplify matters and avoid to the extent possible complex definitional structures. First, a reportable claim would be a written request or demand for relief, including money or other compensation, assumption of expenditures, or equitable relief. It would include, but not be limited to, a demand in the absence of a lawsuit, a complaint initiating a lawsuit, an assertion or notice of litigation, a settlement, covenant not to sue or release of liability in the absence of a written demand, and a subrogation request. A claim would exist regardless of any denial or refusal to pay it, and regardless of whether it has been settled or resolved in the manufacturer's favor. Finally, the existence of a claim could not be conditioned on the receipt of anything beyond the document stating a claim. The last two sentences of our proposal were designed to assure that all relevant claims are provided to us. This would preclude attempts, similar to those that have been made by some manufacturers in our investigations, to evade reporting claims by conditioning them on receipt of parts, or their own assessments of the merits of claims. Second, as to the subject matter, we referred to a motor vehicle crash, accident, component or system failure, and a fire, as these are events that have safety implications. The proposed definition would exclude, for example, events with which the rule is not concerned, such as injuries in manufacturers' factories. Finally, the definition did not address what the claim must involve, allege or contain, as those matters are not parts of a definition of a claim. They are addressed below, as are warranties.
PC, CU, the Alliance, AIAM, Nissan, Honda, JPMA, RMA, and Harley-Davidson provided comments on this definition.
PC expressed approval of the proposed definition, with the caveat that the agency should also require the submission of basic information concerning lawsuits, such as the date the complaint was filed, the alleged injury, and the eventual disposition of the case. The additional information proposed by PC would not be necessary for early warning screening. The date the complaint was filed and the eventual disposition of the matter are not important to NHTSA for early warning purposes. NHTSA is concerned with the incident and using the basic information about the incident to identify a potential defect trend, not the outcome of litigation, which often occurs years later.
The Alliance recommended an alternative definition for a claim. It suggested a claim means:
a written request or written demand for relief, including money or other compensation, assumption of expenditures, or equitable relief, related to a motor vehicle crash, accident, the failure of a component or system of a vehicle or an item of motor vehicle equipment, or fire originating in a motor vehicle, that is sent to the manufacturer from the claimant or his/her authorized representative. Claim includes a demand in the absence of a lawsuit, an assertion or notice of litigation, or a subrogation request.
In support of its definition, the Alliance commented, and RMA concurred, that the definition of "claim" must specify more clearly that a claim must be in writing, regardless of whether it is a "request" or a "demand." Furthermore, the Alliance stated that the definition should limit fire- related claims to those allegedly originating in a motor vehicle, to avoid the need to report claims related to fires in factories or offices of a manufacturer. The Alliance suggested that the definition must clarify that the claim must originate outside the company by the claimant or the claimant's authorized representative. The Alliance added that some of the types of activities included in NHTSA's proposed definition seemed inappropriate, such as "settlement," or "covenant not to sue," which is not a claim and will not be processed or coded as a claim by the manufacturer's ordinary claims-processing functions. It noted that a "claim" precedes a "settlement" or "covenant not to sue," so it saw no need to include those terms in the definition. Finally, the Alliance submitted that a class action suit should be reported as one claim, rather than per member, because there is no way to ascertain the size of the class.
Harley-Davidson observed that the proposed definition of "claim," unlike the proposed definition of "warranty claim," is not necessarily limited to claims presented to the manufacturer, and should be revised accordingly.
JPMA requested the agency clarify that manufacturers need not report requests for free replacement components, such as harness clips, broken in collisions where the claim does not allege or suggest that the broken component had anything to do with the injuries sustained in the collision.
We have carefully considered these comments. The Alliance and RMA suggested that NHTSA clarify that the claim be made in writing. The proposal defines a claim in part as "a written request or demand for relief." The Alliance asked whether a "demand" also has to be in writing, asserting that some may conclude that only a "request" has to be in writing. We meant that "written" applies to and modifies both requests and demands, but since there appears to be some confusion as to our intent we are adding "written" before "demand."
The Alliance, RMA and Harley-Davidson also suggested that a claim must be one that is sent to the manufacturer from the claimant or the claimant's authorized representative. As noted in the definitions of claim from cases cited above, transmission of the claim is not part of the definition of claim. We believe that it is implicit that a claim would not have to be reported if it had not been received by the manufacturer or its registered agent. Nonetheless, we are adding to the reporting requirements the element that the claim must be one that is received by the manufacturer.
A third suggestion submitted by the Alliance is for NHTSA to delete the terms such as "settlement," or "covenant not to sue," because a manufacturer would have to receive a claim prior to these types of activities being undertaken. We disagree with this assertion. A settlement agreement or a covenant not to sue may have been preceded by only an oral demand upon the manufacturer. Oral demands need not be reported. Thus, the exclusion of settlements or covenants not to sue could result in underreporting.
The Alliance also suggested that a class action suit be counted as one claim because it is impossible to determine the size of the class. We agree in part with this comment. Rarely are class actions suits brought where the claims are based on fatalities or injuries. In any event, for such class actions, each separate class action suit would be considered as a single claim, at a minimum. However, if a class action suit against a manufacturer does identify specific persons (excluding John and Jane Does) who died or were injured, the manufacturer should report on each of these claims separately. Similarly, in instances where there is a class action involving property damage, each identified class representative should be reported as presenting a separate claim.
We have considered cross-claims and third-party claims. A manufacturer would not need to report any claim, including a cross-claim, if it had already reported a claim involving the incident. However, it would have to report a third-party claim against it if it had not previously reported the incident. This would assure that we receive the information about the incident underlying the claim. For example, the original defendant might be an automotive dealership that third-partied the manufacturer as a defendant to a suit.
The vehicle manufacturers also raised comments on whether claims arising out of some fires should be reported. The Alliance commented that the inclusion of "fire" in the definition could be construed as covering claims received by a manufacturer related to fires that did not originate in motor vehicles. The intent of NHTSA's proposed definition was that the fire must relate to a motor vehicle or item of motor vehicle equipment; we did not intend to require reports on office or factory fires. Nonetheless, to clarify reporting of claims due to a fire, we are modifying the proposal to specify that it includes fires originating in or from a motor vehicle or a substance that leaked from a motor vehicle. This would cover, for example, fires from gasoline that spilled in a crash.
We also received comments on environmental claims. In general, NHTSA does not address issues involving alleged injury due to long-term environmental exposure. However, there can be overlaps between vehicle safety and environmental issues, and therefore we are not excluding all environmentally-related claims. For example, a vehicle fuel-release problem may be cognizable under the Clean Air Act, tort law, and the Vehicle Safety Act. Unfortunately, the comments we received on this issue lacked detail and did not suggest how to exclude irrelevant claims, although some examples were provided. For example, Nissan and the Alliance stated that exposure to asbestos in brake linings could lead to a claim related to environmental exposure. We are also aware of issues related to emissions of volatile organic compounds from vehicle interiors and of end-of-life environmental claims such as those related to disposal. This could include claims associated with the disposal of tires, batteries and mercury-containing components, as well as other vehicle residuals such as in junkyard operations (e.g., incineration). We have decided that these types of claims do not have to be reported to NHTSA under the early warning rule and are adding an exclusion to the definition of "claim" to reflect this. The reason is that these claims do not relate to the safety of a motor vehicle that is or may be operated. They would not aid in spotting a defect trend and are not the basis of past Vehicle Safety Act recalls.
JPMA, which represents child restraint manufacturers, commented that NHTSA should clarify that manufacturers of this equipment need not report requests for free replacement components, such as harness clips, broken in collisions where the claim does not allege or suggest that the broken component had anything to do with deaths or injuries or property damage. This comment is not consistent with the structure of the rule. Under the rule, manufacturers are required to report claims in the absence of an allegation of a specific failure of a component or causation. As discussed in the NPRM, many claims do not include specific allegations, but merely include general allegations of product failure. This is a type of information that NHTSA is seeking to help it identify defect trends. We believe that by requiring the reporting of all claims that fall within the definition, NHTSA will capture the information most likely to identify a potential defect trend. Of course, if the consumer's request was not related to a crash, such as a statement that a component was lost and the consumer requested a free replacement, the manufacturer would not report that request.
Therefore, based upon the foregoing we are defining "claim" as:
A written request or written demand for relief, including money or other compensation, assumption of expenditures, or equitable relief, related to a motor vehicle crash, accident, the failure of a component or system of a vehicle or an item of motor vehicle equipment, or a fire originating in or from a motor vehicle or a substance that leaked from a motor vehicle. Claim includes, but is not limited to, a demand in the absence of a lawsuit, a complaint initiating a lawsuit, an assertion or notice of litigation, a settlement, covenant not to sue or release of liability in the absence of a written demand, and a subrogation request. A claim exists regardless of any denial or refusal to pay it, and regardless of whether it has been settled or resolved in the manufacturer's favor. The existence of a claim may not be conditioned on the receipt of anything beyond the document(s) stating a claim. Claim does not include demands related to asbestos exposure, to emissions of volatile organic compounds from vehicle interiors, or to end-of-life disposal of vehicles, parts or components of vehicles, equipment, or parts or components of equipment.
C. Definition of "notice."
Section 30166(m)(3)(C) provides for the reporting of "all incidents of which the manufacturer receives actual notice," involving fatalities or serious injuries that are alleged or proven to have been caused by a possible defect in its products. The term "actual notice" is extremely broad. To avoid impractical requirements, we proposed to require reporting of incidents of which a manufacturer receives or obtains documentation (e.g., in written or electronic formats). 66 FR 66196. We tried to avoid overlapping the definition of claim, which, as noted above, includes a written request or written demand for relief. In this context, we proposed to define "notice" in the context of an applicable incident to mean "a document received by or prepared by a manufacturer that does not include a demand for relief." This would include, for example, a letter advising a manufacturer of a crash in which there was a death or injury and an allegation of a defect in the vehicle where there was no claim for monetary or other relief. In the preamble to the proposed rule, we noted that newspaper articles or other media reports would not, in themselves, constitute "notice," unless either they were provided to the manufacturer, such as by an owner, or actions taken by the manufacturer reflect that it had received notice of the incidents in question.
The Alliance, Nissan, MEMA, PC, Bendix, and RMA provided comments. PC agreed with NHTSA's proposed definition.
The manufacturer commenters (Alliance, Nissan, MEMA, Bendix, and RMA) argued that the proposed definition of "notice" was too broad and over inclusive. More particularly, Nissan and RMA stated that the language "prepared by the manufacturer" was a concern. RMA observed that the agency did not provide examples of what type of document "prepared by the manufacturer" would be included within the definition of "notice," and recommended that this category be eliminated in the absence of further guidance and clarification on the issue. Thus, RMA recommended that the definition of "notice" be "a document received by a manufacturer that does not include a demand for relief."
All the manufacturers complained that the proposed definition would be construed to include all newspaper articles and media reports discussing the manufacturer and asserted that this would impose a tremendous burden on the manufacturers. Nissan was concerned as to what actions taken by a manufacturer can transform a mere article into a reportable notice.
Several commenters submitted alternate proposals for the definition of notice. The
Alliance suggested that notice be defined as a written communication sent to a manufacturer alleging that a defect in a motor vehicle or item of motor vehicle equipment by that manufacturer caused an injury or fatality to the person originating the communication or to the person on whose behalf the notice is sent, but that does not request relief from the manufacturer. Notice does not include newspaper articles, publicly available Internet bulletin board postings or other materials in the public domain.
Nissan recommended that the definition of notice exclude situations where a manufacturer would have to report on "actions" in connection with media reports and be limited to those that, on their face, are presented to manufacturers for the purposes of notifying them of a potential vehicle defect. MEMA suggested that "notice" be defined as "a document received by a manufacturer that (a) does not include a demand for relief, and (b) does not consist of unconfirmed media or other unconfirmed reports."
Finally, Bendix suggested that requests for information that manufacturers receive from other government agencies, such as the NTSB, should be excluded from the definition of notice. We have considered these comments and have modified the proposed definition of "notice" to reflect them.
The Alliance recommended without explanation that the definition of notice include an element of death or injury. This was not included in MEMA's suggested definition. We are not adopting the Alliance's proposal. The definition of notice characterizes the essential nature of the notice. The elements that must to be set forth in the notice to trigger reporting are separate from the definition and are addressed under the regulatory requirements.
Next, under the definition in the NPRM, a document "prepared by a manufacturer" that does not include a demand for relief would be a "notice." As noted above, several commenters expressed concern over the potential breadth of the language "prepared by the manufacturer." In consideration of these comments, we are not adopting this phrase as part of the final definition. Before adopting such a requirement, we need to consider further the obligations that such a requirement would impose and the associated burdens.
Several manufacturers expressed concern that they would have to review and scan every news medium for reports discussing their products. This does not follow from a fair reading of the preamble to the NPRM. As we stated, newspaper articles and other media reports would only be reported when sent to the manufacturer by an owner or in situations where the manufacturer itself acknowledges, through its actions, that it received notice of the actual incident that was the subject of the media report. Furthermore, under the proposed rule, to trigger reporting, notices of death and injury had to allege or prove that the fatality or injury was caused by a possible defect in the manufacturer's vehicle or equipment and the vehicle had to be identified with minimal specificity.
Nonetheless, to reduce burdens that might be associated with review of newspaper articles, the definition of "notice" in the final rule requires reporting only of letters and other documents sent to the manufacturer (including those sent in electronic form) that on their face include the elements of the rule regarding notices of deaths and injuries, without regard to the content of any enclosed or attached newspaper article. This is expressed in the final rule by the phrase "other than a media article." In general, newspaper articles do not have the required elements for reporting, including an allegation of a death or injury alleged or proven to have been caused by a defect, and minimal specificity regarding the vehicle or equipment. We believe that this resolution will result in very little unreported information and that it will reduce burdens associated with the asserted need to review newspapers or magazines for articles that may involve reportable incidents. This approach is similar to the first part of MEMA's proposed definition. However, we believe the definition suggested by the Alliance is too narrow. The Alliance would limit reporting of notices to those sent to a manufacturer by a customer or his/her representative. We would want reporting of notices by others, such as an injured non-owner passenger or eyewitness, and reporting where the legal status of a person as a representative is not specified, as it might not be in a letter written by a non-attorney.
Finally, we agree with Bendix that requests for information from other government agencies would generally not constitute a "notice." However, we will not exempt all communications from such agencies, since they could relate to a problem that the agency or one of its employees had with a vehicle or an item of equipment. This is most obvious with respect to communications from the General Services Administration, which manages many Federal vehicles, but also can apply to other agencies. To avoid unnecessary burdens, however, we will exempt communications from NHTSA, since we would already have the information included in such a communication.
Therefore, "notice" is defined in the final rule as "a document, other than a media article, that does not include a demand for relief and that a manufacturer receives from a person other than NHTSA."
D. Identification of the product in claims and notices.
To be covered by these early warning requirements, a claim or notice, as well as other matters addressed below, would have to identify the vehicle or equipment item involved in at least a minimal way. Otherwise, it would not be possible to identify what vehicle or equipment was involved, and the information would not help us to identify potential defects. In the context of identification, we proposed to use the term "minimal specificity" and to define it to mean "(a) for a vehicle, the make, model and model year, (b) for a child seat, the model (either the model name or model number), (c) for a tire, the model and size, and (d) for other motor vehicle equipment, if there is a model or family of models identified on the item of equipment, the model name or model number."
We proposed to define "model year" for this and all other early warning reporting purposes, for vehicles, to include the year that a vehicle was manufactured if the manufacturer has not assigned a model year to the vehicle covered by the report. For equipment, we proposed that "model" mean the name that its manufacturer uses to designate it. " Model year" would mean the calendar year in which the equipment was manufactured.
We asked for comments on the clarity and inclusiveness of these proposed definitions.
Johnson asked the agency to confirm that an incident involving an item of equipment need not be reported by its manufacturer unless the manufacturer has knowledge of the assembly part number or the component part number of the equipment item involved. The comment did not elaborate on why model name or model number would be inadequate and why an equipment item would have to be identified with this level of specificity for its manufacturer to comply with the proposed early warning reporting requirements. In view of the lack of information in the comment, we have no basis to modify our proposed definition. Adoption of such a suggestion could result in underreporting of claims of death.
RMA commented that, for a tire, the minimal information required should be the "manufacturer, tire line, tire size, and tire identification number (TIN)." According to RMA:
the term "tire line" is the preferred term used by the tire manufacturers to designate their products, and, in most cases, is synonymous with the term "tire model." The "tire line" name appears on the tire sidewall and is readily identifiable by consumers. Examples of "tire line" names are: Grabber AP, Discover A/T, Scorpion A/S, Firehawk LH, Energy MXV4 and Wrangler HT.
Accordingly, NHTSA will adopt the RMA recommendation to use the term "tire line" rather than "model," and to define it as "the entire name used by a tire manufacturer to designate a tire product, including all prefixes and suffixes as they appear on the sidewall of the tire."
RMA asserted that that a reporting manufacturer should verify that it was, in fact, the manufacturer of the tire and that tire line, size, and TIN are needed for a precise identification of the tire. We disagree with respect to the TIN. To require a TIN would result in underreporting. If a tire is involved in a death, for early warning purposes it is sufficient that we know the tire manufacturer, tire line, and tire size, whereas the TIN may not be known at the time that the manufacturer initially receives the claim or notice. Timeliness is of the essence. Thus, we have decided that minimal specificity for tires is the manufacturer, tire line, and tire size.
With regard to claims, notices, and other reporting obligations discussed below, for vehicles, we proposed to define "model" to mean "a name that a manufacturer applies to a family of vehicles within a make which have a degree of commonality in construction, such as body, chassis or cab type." "Make," in turn, would mean "a name that a manufacturer applies to a group of vehicles." The proposed definition of "make" was identical to the definition of "make" used in 49 CFR Part 565, Vehicle Identification Number Requirements (see Section 565.3(g)). The proposed definition of "model" is the definition the VIN regulation uses for "[vehicle] line" (see Section 565.3(f)). We requested comments on this approach and how our definition may achieve it. We did not receive any.
Our objective is to obtain reports by commonly-understood designations. For example, manufacturers must submit separate reports for pickup trucks and sport-utility vehicles built on a similar frame, since the submission of more narrowly defined data sets provides enhanced analytical capabilities, the vehicles are subject to different uses and stresses, and the vehicles have numerous different components. We would receive separate reports for identical vehicles of different "makes" (such as Chevrolet and GMC pickups, or Ford Taurus and Mercury Sable passenger cars). In addition, manufacturers would submit separate reports for different basic models of pickup trucks, such as the Ford F-150, F-250, and F-350, but within each such model, they would not submit separate reports for two-door and four-door versions, or versions with different engines, transmissions, or trim packages. Moreover, manufacturers would not report separately for two-wheel drive and four-wheel drive versions of the same vehicle, since this distinction is normally not critical in an early warning context.
If an otherwise covered claim or