FAR 91.25 refers to the NASA Aviation Safety Reporting Program, and Advisory Circular AC 00-46E Explains the program. AOPA has an excellent article about the program.

The Aviation Safety Reporting System, or ASRS, is the US Federal Aviation Administration's (FAA) voluntary confidential reporting system that allows pilots and other aircraft crew members to confidentially report near misses and close calls in the interest of improving air safety. The ASRS collects, analyzes, and responds to voluntarily submitted aviation safety incident reports in order to lessen the likelihood of aviation accidents. The confidential and independent nature of the ASRS is key to its success, since reporters do not have to worry about any possible negative consequences of coming forward with safety problems. The ASRS is run by NASA, a neutral party, since it has no power in enforcement. The success of the system serves as a positive example that is often used as a model by other industries seeking to make improvements in safety.

A notable feature of the ASRS is its confidentiality and immunity policy. Reporters may, but are not required to, submit their name and contact information. If the ASRS staff has questions regarding a report, it can perform a callback and request further information or clarification from the reporter. Once the staff is satisfied with the information received, the report is stripped of identifying information and assigned a report number. The part of the reporting form with contact information is detached and returned to the reporter. ASRS will issue alerts to relevant parties, such as airlines, air traffic controllers, manufacturers or airport authorities, if it feels it is necessary to improve safety. The ASRS also publishes a monthly newsletter highlighting safety issues, and now has an online database of reports that is accessible by the public.

Often, reports are submitted because a rule was accidentally broken. The FAA's immunity policy encourages submission of all safety incidents and observations, especially information that could prevent a major accident. If enforcement action is taken by the FAA against an accidental rule violation that did not result in an accident, a reporter can present their ASRS form as proof that the incident was reported. The FAA views the report as evidence of a "constructive safety attitude" and will not impose a penalty.Immunity can be exercised once every five years, though an unlimited number of reports can be filed.

Due to the self-selected nature of the reports to the ASRS, NASA cautions against statistical use of the data they contain. On the other hand, they do express considerable confidence in the reliability of the reports submitted:

"However, the ASRS can say with certainty that its database provides definitive lower-bound estimates of the frequencies at which various types of aviation safety events actually occur. For example, 34,404 altitude overshoots were reported to the ASRS from January 1988 through December 1994. It can be confidently concluded that at least this number of overshoots occurred during the 1988-94 period--and probably many more. Often, such lower-bound estimates are all that decision makers need to determine that a problem exists and requires attention."[3]

Speaking before a Flight Safety Foundation International Air Safety Seminar in Madrid in November 1966, Bobbie R. Allen, the Director of the Bureau of Safety of the U.S. Civil Aeronautics Board, referred to the vast body of accumulated aviation safety incident information as a "sleeping giant." Noting that fear of legal liability and of regulatory or disciplinary action had prevented the dissemination of this information, rendering it valueless to those who might use it to combat hazards in the aviation system, Mr. Allen commented:

“In the event that the fear of exposure cannot be overcome by other means, it might be profitable if we explored a system of incident reporting which would assure a substantial flow of vital information to the computer for processing, and at the same time, would provide some method designed to effectively eliminate the personal aspect of the individual occurrences so that the information derived would be helpful to all and harmful to none.”

Several years earlier, in testimony before the U.S. Senate on the legislation proposing the Federal Aviation Act of 1958, the late William A. Patterson, then President of United Airlines, touched on the need to develop accurate safety trend information. "On the positive side," said Mr. Patterson, "you take your statistics - and your records - and your exposures - and you act before the happening!“

These distinguished aviation figures were articulating an objective long-recognized, but which had frustrated all efforts at accomplishment. In the years to come, frequent references to the need for information collection and dissemination would recur.

Enforcement Restrictions. The FAA considers the filing of a report with NASA concerning an incident or occurrence involving a violation of 49 U.S.C. subtitle VII or the 14 CFR to be indicative of a constructive attitude. Such an attitude will tend to prevent future violations. Accordingly, although a finding of violation may be made, neither a civil penalty nor certificate suspension will be imposed if:

1. The violation was inadvertent and not deliberate;
2. The violation did not involve a criminal offense, accident, or action under 49 U.S.C. §44709, which discloses a lack of qualification or competency, which is wholly excluded from this policy;
3. The person has not been found in any prior FAA enforcement action to have committed a violation of 49 U.S.C. subtitle VII, or an regulation promulgated there for a period of 5 years prior to the date of occurrence; and
4. The person proves that, within 10 days after the violation, or date when the person became aware or should have been aware of the violation, he or she completed and delivered or mailed a written report of the incident or occurrence to NASA.