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UPDATE 1-NTSB removes Tesla as a party in its probe of 'Autopilot' crash

(Recasts, adds NTSB statement)

WASHINGTON, April 12 (Reuters) - The National Transportation Safety Board said on Thursday it had removed Tesla Inc as a party in its investigation of a fatal crash in March in which the semi-autonomous "Autopilot" driving system was in use, after Tesla flouted terms of an agreement with the agency.

The statement follows one by Tesla, in which the company said it was withdrawing as a formal party in the probe but made no mention of the NTSB's action.

Tesla had "violated the party agreement by releasing investigative information before it was vetted and confirmed by the NTSB," the safety board said in a statement.

The agency said releasing incomplete information often leads "to speculation and incorrect assumptions about the probable cause of a crash, which does a disservice to the investigative process and the traveling public."

The move means Tesla may not be privy to some information obtained by investigators before it is made public.

Driver Walter Huang died in the March 23 crash and vehicle fire in a Tesla Inc Model X near Mountain View, California, prompting investigations by the NTSB and the National Highway Traffic Safety Administration.

Tesla's announcement late Wednesday in California came after the company publicly blamed the driver for the crash and made a series of statements about the incident that drew criticism from the NTSB.

Tesla said in a statement it withdrew because the party agreement with the NTSB required "that we not release information about Autopilot to the public, a requirement which we believe fundamentally affects public safety negatively."

Autopilot is a semi-autonomous system that handles some driving tasks.

Being a party to an NTSB investigation requires participants to agree to limits on the dissemination of investigation information, the NTSB website says.

AUTOPILOT

NTSB Chairman Robert Sumwalt told Reuters on Tuesday the NTSB had a good working relationship with Tesla, but companies must follow the rules if they are a formal party to investigations. He and Tesla Chief Executive Elon Musk had spoken with each other over the weekend.

In its statement, Tesla said "an agreement that prevents public release of information for over a year is unacceptable. Even though we won't be a formal party, we will continue to provide technical assistance to the NTSB."

Huang's family said on Wednesday it had hired law firm Minami Tamaki LLP to explore legal options, adding the law firm believed the Autopilot feature probably caused his death. The firm said its preliminary review of the crash suggested Autopilot was defective and that it had uncovered complaints by other Tesla drivers of navigational errors by the system.

The NTSB has not disclosed any findings from the probe.

Tesla has said Huang had activated Autopilot and it was in operation at the time of the crash. Vehicle logs from the accident showed no action was taken by Huang before the crash and that he had received warnings from the system to put his hands on the wheel, the company said.

While sympathizing with the family, Tesla again blamed Huang on Wednesday, saying the driver was well aware that Autopilot was not perfect and, specifically, he had previously told them it was not reliable in that exact location, but nonetheless he engaged Autopilot.

Tesla said the Autopilot system always reminds drivers to be alert and to keep their hands on the wheel.

The NTSB confirmed earlier this week it had two other pending investigations of Tesla crashes, including an August 2017 Tesla battery fire in Lake Forest, California, after an owner lost control and ran the vehicle into his garage. The investigation into that fire has not previously been reported. (Reporting by David Shepardson Editing by Bernadette Baum)