TO begin his session, “NHTSA Final Rule on Early Warning Reporting,” NATM general counsel Kim Mann posed a few related questions:
“How many trailer manufacturers are here today who did not attend either my Wednesday or Thursday sessions? … A lot.
“How many of you are large trailer manufacturers for the purpose of EWR reporting requirements? … A lot.
“How many don't have a clue what I'm talking about?”
After some scattered laughter died down, Mann got serious.
“Those people who have raised their hands last and second-last should listen very carefully,” he said. “This is a very, very important subject and it could have serious financial repercussions for you guys.”
How serious?
Well, the Transportation Recall Enhancement, Accountability, and Documentation Act — better known as the TREAD Act — has provided NHTSA with some penalty powers described by Mann as “extraordinary.” Before the TREAD Act, NHTSA was permitted to fine companies $1,000 per violation of the Motor Vehicle Safety Act, up to $800,000 for a series of related violations. With the TREAD Act, NHTSA is empowered to issue fines of between $5,000 per violation, up to $15 million per violation. NHTSA also is empowered to assess fines of $5,000 per day for failure to report on time, up to $15 million per violation.
So do the math: If a company is 30 days late with a report, that's $150,000.
Mann said that, although the fines are not automatic and NHTSA has the discretion on whether to assess a fine and how much to assess, the organization “has made it clear they are going to be enforcing this EWR regulation strictly and assess major penalties for violations. They have said to anticipate that the normal fine for a violation will be a seven-figure number, OK? So that's a pretty serious matter to consider.”
Petition to NHTSA
He said that, although NHTSA has realized that trailer manufacturers are different than Ford, GM or Firestone and need to be treated differently, they still have been swept into the same category and it will be difficult to convince NHTSA to separate them.
NATM has petitioned NHTSA to reconsider its decision, focusing primarily on the definition of a “large manufacturer” — manufacturers that produce more than 500 units a year — because it is going to be “costly in every sense of the word: dollars, personnel, and potential fines for failing to comply.”
He said NHTSA still has not taken any action on the petition filed by NATM — or by any organization.
“We felt that what we needed to do is try to convince NHTSA to alter the definition of a large manufacturer for reporting purposes so that our members, our types of trailers that our members manufacture, will be classified as small manufacturers and have minimal and manageable reporting requirements,” he said. “They've just been sitting on their hands.”
He said that NATM sensed that NHTSA was going to be slow in handling its petition, so it filed another petition in December asking NHTSA to delay the effective date nine months from the date that it acts on the original petition.
“NHTSA, true to form, has again done nothing,” he said. “The fact is, because there has been no change in the regulations, there's been no delay in its effective date.”
So unless there is action from NHTSA, the first quarterly report is due Aug 31, to cover the second quarter. The final two quarterly reports in 2003 are also due 60 days after the end of the quarter. Starting in 2004, the deadline is 30 days after the end of the quarter.
NHTSA underestimates impact
Describing the threshold of 500 units per year that defines a large manufacturer, Mann said: “That's an astounding number. Anybody could do that. I have been told there are literally two-person operations that crank out more than 500 utility trailers a year. I mean, NHTSA doesn't have a clue how many large manufacturers there are out there under that definition.”
He said NATM's approach is not to focus on the number of vehicles per year as much as on its belief that all manufacturers of 26,000-lb-and-under GVWR trailers should be classified as small manufacturers. He said other organizations are seeking to increase the threshold from 500 to 2,500 a year — a change that would help 50-60% of NATM's members. He said the Recreation Vehicle Industry Association and others are seeking to change the threshold to 5,000 — a change that would help 80-90% of NATM's members.
“I still don't like that approach because I'm convinced that NHTSA, when it gets to acting on the petitions, will reach some kind of a compromise and will not give the industry the 5,000 number, but perhaps in the 2,500-vehicle range,” he said.
He told the manufacturers in attendance that they must look at a two-year period, and if they produced over 500 units in either of those years, then they are defined as a large manufacturer.
“And it isn't sufficient to just figure out how many trailers your company is manufacturing,” he said. “You must count the number of vehicles or trailers that your subsidiaries manufacture, your sister company and your parent company, and add them.
“What is a manufacturer? NHTSA defines it as a final-stage manufacturer. An alterer is also a manufacturer for reporting purposes. If you have a dealer to whom you ship trailers and that dealer uses specialized tools to add accessories to your trailer, for reporting purposes he or it is going to be deemed a manufacturer.”
What to report?
Mann said that manufacturers are required to report only data or information that comes to them in the normal course of business.
“So if you learn about an accident in the newspaper, that is not information that has come to you in the normal course of your business,” he said. “If you're sitting around a trade show and somebody says your vehicle was involved in an accident and so-and-so was killed, that is not information that comes to you in the normal course of your business and is not reportable to NHTSA.”
He said the information that is reported must be coded based on numbers NHTSA has assigned to components and systems of a motor vehicle. He said there are 24 reporting categories, but only 12 that are pertinent to trailers. If a manufacturer receives a report involving a fatality or personal injury and can't determine which component was involved, he should: (1) enter #98 if the report comes in and identifies a part of the vehicle that isn't one of the 12; or (2) enter #99 if the component can't be determined.
Mann said that large manufacturers will be required to call NHTSA to receive their company ID number and password. They must do it by Aug 1, and also must change the password every 90 days.
The reports will use a template that can be found on NHTSA's Web site. There will be a downloadable Excel spreadsheet designed specifically for trailers that is to be transmitted electronically to NHTSA.
“It's pretty sensitive information for most of us, and you will be concerned about its confidentiality,” he said. “Is it protected from disclosure? Can anybody get into that Web site? That's important, because NHTSA is going to publish this information to the extent it's not confidential on their Web site. Anybody can get that information.
“NHTSA has confidentiality regulations that are being revised, but we don't know what those final revised regulations are going to look like. They're being revised because NHTSA recognizes the TREAD Act reporting regulations are going to bring a lot of information into the public sector that can be or may be sensitive. They have given preliminary signals that certain types of information — specific warranty claims and consumer complaints — are likely to be treated automatically as confidential. You do not even have to request that they be treated confidentially.
“But to the extent that any of those categories are not treated as automatically confidential, if you wish to protect that information from disclosure, when you submit it, you have to request that NHTSA treat it as confidential and you have to demonstrate to NHTSA that confidentiality is deserved. In essence, you will probably have to establish that you need to prevent public disclosure in order to protect your competitors from getting that information. There has to be some competitive need to keep that information confidential. Even the confidential information you're required to report will be available to plaintiffs if you get into litigation through the mechanism of discovery.”
He said that although NHTSA has the enforcement mechanism in place, it probably has a minimal budget devoted to enforcement actions, absent a recall.
“If you get into a recall situation, I suspect they have virtually an unlimited budget to go after whoever out there has a motor vehicle or a piece of equipment that needs to be recalled,” he said. “Whether they will respond to complaints about your competitor who doesn't know a thing about this (final rule) and has not submitted an Early Warning report, I don't know. I don't think they would do it automatically. It would take a serious situation, possibly in conjunction with an accident, before they would do that.”
The intricacies
Mann said these are the categories:
- Fatalities.
“You are required to report the number you receive information about through a claim or a notice in writing,” he said. “They don't even have to allege that your vehicle was defective. The claim will be a demand for compensation. A notice is simply a written notice that your vehicle has been involved in a fatality and your trailer is alleged to have been defective. But it does not demand compensation. A newspaper article is insufficient.”
- Injuries.
“You're reporting a claim or notice about personal injury, and it doesn't matter how serious that injury is,” he said. “A sprained knuckle, you report it.”
- Property damage.
“The amount doesn't matter,” he said. “If it's $1 and it's in writing and it's codeable — one of the 12 — you report it.”
- Consumer complaints.
“This is a nasty one,” he said. “It can be in writing or orally. You have to have a system in place to record that telephone consumer complaint. If this complaint comes in — ‘Man, we're having big problems with your brakes’ or ‘We're having big problems with the tires’ or ‘Your lighting system is flashing on and off’ — right there, that's three separate consumer complaints. One telephone call, three reportable complaints, because it pertains to three separate codeable components on the system.”
- Warranty claims.
“The only reportable claims are those that you honor,” Mann said. “It has to come in writing during the normal course of business. If a customer drives in to a dealer and the dealer performs the work, and there's nothing in writing and it has come to the dealer and not you, as long as that dealer has not written up a report and sent it to you, you don't have to report it.”
- Field reports.
He said this is a “tricky area” because there are those that dealers prepare and those manufacturers prepare. “It has to be regarding the failure of the trailer, malfunction of the trailer, the lack of durability of the trailer, or some other performance problem associated with that trailer, and it has to be related to one of the 12 codeable components,” he said.
He also said there's a subset of field reports that NHTSA believes is important and “will be a rich source of information for NHTSA.
“It is not enough to report the number of field reports — you have to submit the field report itself,” he said. “It includes a technical assessment of the trailer's alleged defect. Now that is something I'd be very concerned about protecting the confidentiality of. You want to consider coupling it with a requirement for confidential treatment and you have to demonstrate you are entitled to it under regulations.”
- Production.
“NHTSA wants to know the number of vehicles by make, model, and year that you produce during the 2nd quarter of 2003, and there's a continuing obligation every quarter,” he said. “It's reported on a cumulative basis.”