On June 19, 2001, two Subcommittees of the House Energy and Commerce Committee held a hearing to examine, among other things, the "owner notification program" conducted by Ford Motor Company (Ford) to replace Firestone Wilderness AT tires on Ford, Mercury, and Mazda brand vehicles. Following the hearing, Committee staff provided officials of the National Highway Traffic Safety Administration (NHTSA) with a list of several specific tire models/sizes on Ford's replacement list that had claims rates of more than five claims per million tires produced. The Chairman of the Committee, the Honorable W.J. "Billy" Tauzin, had expressed concern about the safety of some of the tires Ford is offering as replacements for those Firestone tires, stating that some of the tires being replaced by Ford had "a better claims history" than some of the replacement tires. The Committee staff provided NHTSA with claims data submitted by the manufacturers of those tires, with a request that the agency review it and report back within 30 days. This memorandum describes the results of that review. However, before doing so, it is appropriate to explain the process by which NHTSA decides whether to open a defect investigation and the meaning of its decision whether or not to do so.

NHTSA'S DEFECT INVESTIGATIONS

Pursuant to 49 U.S.C. §30118, manufacturers of motor vehicles and replacement equipment (including tire manufacturers) are required to notify owners or purchasers of their products about safety-related defects in those products and to provide a cost-free remedy. Pursuant to 49 U.S.C. §30166, NHTSA is authorized to conduct investigations to determine whether vehicles and equipment contain safety-related defects.

NHTSA considers a wide variety of factors in deciding whether to open a defect investigation and, following such investigations, in deciding whether to order a manufacturer to conduct a safety recall. As Deputy Secretary of Transportation Michael Jackson said at the June 19 hearing, "There are a multiplicity of factors that we have to look at to be able to dig into the question of whether a possible defect exists." Thus, there is no "threshold" number of reports, claims, warranty payments, property damage incidents, fires, crashes, injuries, or deaths that automatically "triggers" the opening of a defect investigation. If NHTSA were to establish a binding threshold level governing the opening of defect investigations, it would improperly constrain itself in two separate ways. First, it would have to wait until the threshold was reached before it could act, and, second, it might have to open unwarranted and time-consuming investigations that would divert resources from other, more important matters.

Historically, in deciding whether to open a defect investigation, NHTSA has initially had to rely upon reports of "real-world" failures (e.g., owner reports to NHTSA through its Auto Safety Hotline and/or its website). After implementing the 'early warning" provisions of the TREAD Act, the agency will have far more data on which to base such decisions. Nevertheless, even after that data is available, decisions will still not be based on mere thresholds. Rather, the agency will continue to apply its expertise on a case-by-case basis after considering all relevant information. Depending on the particular matter under consideration, the agency may also consider information from a variety of other sources, such as the agency's National Center for Statistics and Analysis, manufacturers, dealers, independent repair facilities, fleet operators, insurance companies, media reports, attorneys, hospitals, consumer affairs agencies, and advocacy groups. Among other things, the agency considers the severity of reported incidents, as well as when they occurred. (As Chairman Tauzin noted at the hearing, ". . . if, for example, the claims data is all about minor property damage rather than injuries and deaths, that makes a difference. If, on the other hand, this claims data is accompanied by personal injury and death claims, it may have a much larger significance.")

A decision by NHTSA to open a defect investigation does not mean that a safety defect exists. Rather, it reflects the judgment of the agency that there is a potential safety problem and that additional information is needed to decide whether a safety defect warranting a recall is present.

Conversely, a decision by NHTSA not to open a defect investigation, or a decision to close such an investigation without seeking a recall, does not signify that the agency has concluded that the vehicles or equipment in question are "safe." Rather, it simply means that, under all of the circumstances, the agency has decided not to devote additional efforts and resources to the alleged defect at that time. NHTSA always retains the authority and the ability to revisit the issue if new information becomes available.

NHTSA'S REVIEW OF THE TIRES ON THE COMMITTEE STAFF'S LIST

1. The Definition of a "Claim"

Although there are certain differences in the way the various tire manufacturers compile their claims data, they each use essentially the same definition for a "claim." A claim is a request for payment from a consumer and/or a consumer's representative for reimbursement for costs beyond the cost of a failed tire. Claims can involve everything from minor damage to the vehicle (a dented inner fender, for instance) to deaths and injuries arising from a crash allegedly caused by a tire failure. The overwhelming majority of claims involve minor vehicle damage allegedly due to the failure of the tire.

2. The Relevance of Claims Rates

The Committee staff asked NHTSA to review those tire models on Ford's list of replacement tires that had claims rates greater than five parts-per-million (ppm). This criterion apparently was selected on the basis of statements made by Ford that were construed as indicating Ford's belief that this was the average or "ambient" rate of tread separation claims in the tire industry. However, NHTSA does not believe that a claims rate above 5 ppm necessarily indicates the existence of a safety concern.

3. The subject tires

The Committee staff identified eleven models/sizes of replacement tires as having claim rates greater than 5 ppm. Each of the manufacturers that submitted claims and production data to the Committee requested that the data be kept confidential, and the Committee agreed to do so. Similar requests for confidentiality with respect to data submitted to NHTSA have been granted by the agency. Moreover, although there have been media reports that have purported to identify some of the tires on the Committee's list, there has been no formal identification by the Committee. Therefore, to maintain appropriate confidentiality, and consistent with the agency's longstanding practice of only identifying those vehicles and equipment whose performance it has decided to investigate for possible defects, this memorandum does not identify the ten models/sizes of tires on the Committee's list with respect to which NHTSA has decided not to open a defect investigation at this time.

4. NHTSA's Review

NHTSA has reviewed the claims data provided by the Committee staff. In addition, NHTSA officials have had conversations with all of the manufacturers of the tires on the Committee's list and met separately with representatives of Continental Tire North America, Inc. (CTNA) and Ford. The agency also received additional submissions from CTNA and Ford.

After reviewing all of the available information, NHTSA has decided to open an investigation into a possible defect in General Ameri*550 AS tires of the P235/70R16 size manufactured by CTNA. NHTSA has decided that it will not open a defect investigation at this time with respect to any of the other tires on the Committee's list.

A. The General Ameri*550 AS P235/70R16 Tires

The data provided by the Committee staff shows that this tire has experienced a claims rate of 124 ppm. While ppm claims rates are not determinative in themselves, this rate far exceeds any of the other tires on the Committee's list. These claims include seven incidents in which the tire failure allegedly led to an injury-producing event (six of which allegedly involved a tread separation), with a total of 17 alleged injuries. Most of the claims (and the highest claims rates) involve tires manufactured in 1996-1998, many of which are still on the road.

At a meeting held on June 29, 2001, representatives of CTNA identified numerous design and production changes to these tires since they entered production in April 1995. CTNA asserted that several of these changes had the effect of reducing the likelihood of a tread separation, particularly certain modifications implemented in July 1998 that were intended to reduce the rolling resistance of the tires. The claims rates for tires manufactured after these modifications were adopted are extremely low, and there have not been any injury-producing crashes attributed to those tires. Nevertheless, to assure that relevant information is not missed, NHTSA's investigation (a Preliminary Evaluation) will consider the safety performance of the entire population of these tires, rather than only those produced prior to those design changes.

As emphasized above, the opening of this defect investigation does not mean that NHTSA has concluded that these tires contain a safety-related defect or that they are not "safe." Rather, it reflects a decision that issues have been raised that warrant further investigation by the agency.

B. The Other Tires on the Committee's List

With respect to six of those ten tire models/sizes, the agency is unaware of any crashes or injuries allegedly associated with the claims data. Additionally, the claims frequency is so low that it appears no defect trend currently exists. (For one of those tire lines, the overall claims rate is high compared to most of the other tires on the list, but the total production is so low that only a few claims can lead to a relatively high rate, without necessarily reflecting the existence of a serious problem.)

With respect to each of the remaining four tire models/sizes on the list, there are at least some claims that tire failures have led to crashes (some involving alleged injuries and/or fatalities). However, almost all of the crash-related claims involved tires manufactured in the late 1980s or early 1990s, and tires of that age are almost certainly no longer on the road. (Pursuant to 49 U.S.C. §30120(g)(1), manufacturers are not required to provide a remedy without charge for tires that are more than five years old at the time of the defect determination.) Moreover, although the overall claims rates (in ppm) for these tires may be somewhat above average, those rates do not, in themselves, warrant the opening of a defect investigation.

As noted above, the agency emphasizes that the decision not to open a defect investigation at this time does not mean that NHTSA has concluded that the tires are "safe." Moreover, if the agency becomes aware of additional crashes or injuries associated with alleged failures of these tires, or that claims rate were to increase significantly, it will conduct a thorough and comprehensive review of the new data to determine whether opening a defect investigation is justified by the new information.