(Bloomberg) -- The National Transportation Safety Board told Tesla Inc. on Wednesday that the carmaker was being removed from the investigation of a fatal accident, prior to the company announcing it had withdrawn from it, according to a person familiar with the discussion.
NTSB Chairman Robert Sumwalt relayed the decision in a call to Tesla’s Elon Musk that was described as tense by the person because the chief executive officer was unhappy with the safety board’s action. NTSB is expected to make a formal announcement in a release later Thursday, said the person, who spoke on the condition of anonymity.
The unusual move followed public statements by the company blaming the driver of a Tesla Model X who died in a March collision, in apparent violation of agency protocols. The NTSB guards the integrity of its investigations closely, demanding that participants adhere to rules about what information they can release and their expected cooperation. These so-called parties to investigations must sign legal agreements laying out their responsibilities.
Tesla shares were down 1.3 percent to $297.07 at 12:58 p.m. in New York after falling by as much as 2.4 percent following Bloomberg’s report.
Tesla, in a statement issued Wednesday, suggested it chose to leave the probe.
"Tesla withdrew from the party agreement with the NTSB because it requires that we not release information about Autopilot to the public, a requirement which we believe fundamentally affects public safety negatively," the company said in an emailed statement. "We believe in transparency, so an agreement that prevents public release of information for over a year is unacceptable."
On Thursday, the company issued a statement saying "the characterization of the call as relayed to Bloomberg is false."
While relations between the highest levels of the company and the agency are now frosty, the NTSB believes staffers at the two entities will continue cooperating, the person said. Tesla said that although it won’t be a formal party to the probe, it will continue to provide technical assistance to the NTSB.
Companies that no longer have formal status as a party to an NTSB investigation can lose access to information uncovered in the probe and the ability to shape the official record of the incident, said Peter Goelz, a former managing director at the NTSB who is now senior vice president at O’Neill & Associates, a Washington lobbying and public relations firm.
"By removing yourself from the process, you’re really taking yourself out of play in a critical element of the investigation," he said. "It will by no means stop the investigation, and it will by no means hinder the investigation."
The dispute between the safety agency and carmaker stems from statements the company made regarding Walter Huang, a 38-year-old who died last month in his Model X using the driver-assistance system known as Autopilot.
Musk and Sumwalt spoke by phone over the weekend and had what an agency spokesman said at the time was a constructive conversation. Musk promised to follow NTSB rules barring the company from commenting on the investigation.
But this week, Tesla responded to a local television appearance by Huang’s family saying the "only" explanation for the crash was that he "was not paying attention to the road, despite the car providing multiple warnings to do so."
The company’s statements violated agency protocol for parties to an accident investigation by alleging the cause of the crash, Goelz said.
Goelz said Tesla’s statement that it was withdrawing from the so-called party agreement was likely a preemptive move to get ahead of the NTSB announcing that the agency was giving Tesla the boot.
"The NTSB is a trusted investigatory agency. Their processes can be challenging and frustrating but they are ultimately fair," Goelz said by phone. "Mr. Musk and his company, and frankly the future of autonomous vehicles, would have been better served had they followed the rules and continued to participate fully in the investigation."
Companies or others who lose formal status as a party to an NTSB investigation can lose access to certain information uncovered in the probe and the ability to shape the official record of the incident, Goelz said.
The action to remove the company from the probe was limited to the most recent fatal accident. Tesla is still a formal participant in the NTSB’s investigation of a January crash involving a Tesla Model S that was using Autopilot when it rear-ended a fire truck parked on a freeway near Los Angeles, according to the person.
The stakes for Tesla’s bid to defend Autopilot are significant. The NTSB’s investigation of the March 23 crash involving Huang contributed to a major selloff in the company’s shares. Musk claimed almost 18 months ago that the system will eventually render Tesla vehicles capable of full self-driving, and much of the value of the $50 billion company is linked to views that it could be an autonomous-car pioneer.
The safety board has in some cases thrown airlines, aircraft manufacturers and unions off of investigations in cases where they were either making unauthorized statements or not producing information the NTSB expected of them.
Because it’s a relatively small agency with a limited numbers of employees, the NTSB relies heavily on these parties to assist its investigations. The safety board has subpoena power that it’s used in rare instances to compel companies involved in investigations to provide information.
NTSB rules don’t in fact prohibit participants in investigations from releasing general information about their products. The agency’s oft-repeated rule of thumb is that factual information that could have been released before an accident can be put out afterward as well.
What the NTSB prohibits is the release of information related to the accident itself.
In December 2010, the safety board removed American Airlines, now part of American Airlines Group Inc., from an investigation into a runway accident in Jackson Hole, Wyoming. American had taken one of the plane’s two crash-proof recorders and downloaded its contents prior to turning the device over to the agency.
In 2014, it kicked United Parcel Service Inc. and its pilots’ union off of a probe into a cargo-jet crash that killed two people in Alabama. The safety board said then that the company and union "took actions prejudicial to the investigation by issuing comments and analyzing findings before the NTSB had met to determine a cause."
"If one party disseminates information about the accident, it may reflect that party’s bias," then acting chairman of the NTSB Christopher Hart said at the time. "This puts the other parties at a disadvantage and makes them less willing to engage in the process, which can undercut the entire investigation."
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