Part II Navigating NHTSA: What Automotive Leaders Need to Know

The Recall Filing and Customer Notification

Alert

In Part I of this series Before the Recall: Defect Determinations and NHTSA Investigations we provided an overview of the legal requirements for when manufacturers are required to file recalls, how manufacturers make defect and noncompliance determinations and how NHTSA investigates safety issues.

Once a manufacturer has made a determination that a defect or noncompliance exists in one of their products, its next step is to file a Part 573 Safety Recall Report (“Part 57 Report”) with NHTSA. This report may also be referred to as a Form 573 or a 573 Report. The Part 573 Report requires the manufacturer to provide certain information about the vehicles or equipment being recalled and the defect or noncompliance that caused the filing. One must be filed within five (5) business days of when the manufacturer makes a determination that the defect or noncompliance exists.

What information must manufacturers report to NHTSA in the recall filing?

At the time of the initial filing, the Part 573 Report must include the name of the manufacturer, a description of the vehicles or items of equipment potentially containing the defect or noncompliance, a description of the defect or noncompliance, and the safety risk posed by the defect or noncompliance.  If not known at the time the report is filed, the manufacturer must update the Part 573 Report with:

• The number of vehicles or items of equipment that potentially contain the defect;
• The percentage of vehicles or items of equipment within the total population estimated to contain the defect or noncompliance;
• A chronology with the principal events that led to the defect determination or test results or other information on which the noncompliance determination was based;
• A description of the manufacturer’s plan for remedying the defect or noncompliance; and
• The estimated dates on which the manufacturer will begin sending notifications to affected consumers.

Because recall filings often are followed by litigation, manufacturers should take care to ensure that the description of the defect and noncompliance is accurate without being overexpansive.

NHTSA’s regulations do not require manufacturers to report the complete scope of the population of affected vehicles or equipment at the time the recall is filed.  The manufacturer is also not required to list the remedy in the initial filing.  It is NHTSA’s position that once a manufacturer has identified a defect or noncompliance, the manufacturer should file a Part 573 Report regardless of whether the full scope of the population or root cause of the issue is known.

Are suppliers required to file recall reports? 

While the manufacturer is responsible for filing a Part 573 Report for defects or noncompliances in original equipment installed in their vehicles, there are special rules for suppliers of original equipment whose equipment is installed in vehicles made by multiple  manufacturers.  Once two manufacturers have filed Part 573 Reports related to the same component, the supplier  also is required to file a Part 573 Report.  There may be questions as to whether components installed in the vehicles of two different manufacturers are the same if there are differences in the components based on the manufacturer’s specifications.  In this situation NHTSA does not require the supplier to make a determination that the component contains a defect or noncompliance.  When suppliers are required to submit a Part 573 Report, the report often states that it is being filed because of defect or noncompliance determinations by the manufacturer.

What if there is no safety risk?  

NHTSA’s regulations contain a process for manufacturers to petition the agency for relief from the requirements to notify consumers and remedy vehicles or items of equipment on the grounds that the defect or noncompliance is inconsequential to safety.  NHTSA is most likely to view minor noncompliances with marking or labeling requirements as inconsequential to safety.  But because defects by definition involve a risk to motor vehicle safety, petitions asserting that a defect is inconsequential to safety are rare.  The manufacturer must state in its Part 573 report whether it intends to file a petition for inconsequentiality.  Filing a petition for inconsequentiality stays the requirements to notify owners or remedy vehicles or equipment until NHTSA reaches a decision on the petition.

What are manufacturers required to do to notify purchasers of the defect or noncompliance?

Within 60 days of filing a Part 573 Report, the manufacturer must send a letter to owners of affected vehicles or, if the recall involves equipment, purchasers of the equipment, stating that the manufacturer has determined in good faith that the vehicle or equipment contains a defect or noncompliance.  The purpose of this letter is to communicate the safety risks created by the defect or noncompliance and to inform owners of affected vehicles and equipment about how to get their vehicles or equipment repaired or replaced.  NHTSA’s regulations contain detailed requirements regarding the content of the letter and the order in which the required information must appear.  Manufacturers are required to submit a draft of the letter to NHTSA for review five days before they send the letter to owners or purchasers.

If the remedy is not available within 60 days of when the Part 573 Report is filed, the manufacturer is required to send an interim notice indicating that the remedy is not available and a second notification when the remedy becomes available.   

Part III of our Client Alert series will discuss options for remedying a defect or noncompliance.

If you have questions about the recall process or how it applies to your business, please contact Tom Healy or another member of Honigman’s Regulatory Practice Group. Learn more about Honigman's Automotive Regulatory & Compliance Services here.