GM Ignition Switch Recall Failures has Senators Scrambling to Fix NHTSA

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Since its first announcement, the GM ignition switch defect has expanded time and time again with new recall notices being issues being issued throughout the spring and summer months. While the initial recall involved approximate 800,000 vehicles, the scale of the recall has exploded with approximately 12.9 million recalled vehicles worldwide thus far. Of those 12.8 million recalls worldwide, 11.1 million of those vehicles were sold and used in the United States.

A number of U.S. Senators have inquired into why this serious safety defect was not noticed and addressed sooner. They have generally directed their ire at GM and its executives, like CEO Mary Barra and GM General Counsel Michael Millikin, and NHTSA and its administrators. While GM executives have already testified before Congress, NHTSA officials have yet to be the main focus of an inquiry and have not been questioned since April 2014. While the inquiries to GM were more focused on what went wrong, the expectation is that the questions that will be posed to NHTSA administrator, David Friedman, will focus on potential reforms. Before delving more specifically into the calls for reform to NHTSA, let’s take a brief look at the agency’s actions throughout the GM ignition switch defect recall.

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What Actions Did NHTSA Take on the Ignition Switch Recall?

While NHTSA had looked at the problem of airbags failing to deploy in GM vehicles, like the Cobalt, in 2007 and 2010, it did not take action because the agency claims it lacked the data to support the opening of a formal investigation. However, following GM’s February 2014 recall, on March 4, 2014, NHTSA’s Chief Counsel, O. Kevin Vincent, served GM with a Special Order regarding the timeliness of GM’s original February recall of Chevrolet Cobalts and Pontiac G5s. Based on the chronology of GM’s recall, NHTSA was seeking to determine whether GM adhered to the legal processes and requirements for reporting vehicle recalls. GM was required to answer the questions posed by the special order by April 3rd, 2014. Areas of inquiry included information and records for each vehicle in the recall such as:

  • The part number for the ignition switch for each vehicle.
  • The number of consumer complaints, including those from fleet operators.
  • Pending and closed lawsuits and 3rd party arbitrations.
  • A total count for all claims paid by GM including warranty claims, extended warranty claims and good-will repair work.
  • Identification of each individual associated with Problem Resolution Tracking System (PRTS) requests.
  • What GM meant when its recall press release stated that GM’s “process employed to examine this phenomenon was not as robust as it should have been.”
  • A description of each of the potential solutions proposed by GM.
  • On what dates in 2005 did GM receive field reports of Cobalt vehicles losing engine power and how GM handled the subsequent investigation.

All in all, the Special Order to GM contained 107 points of inquiry and required a response by April 3, 2014. Although GM had advised NHTSA that it would not be able to meet the deadline because the technical questions that were posed required consultation with engineers, there were questions about the accuracy of this statement. NHTSA was unconvinced by GM’s reasons for its failure to respond. In an April 8, 2014 letter the agency wrote that “…many of the requests to which GM failed to respond by the April 3 deadline are not ‘technical engineering questions’ at all.” Further, GM failed to certify and swear its answers under oath as required by 49 U.S.C. 30166(g)(1)(A). NHTSA Sought the statutory maximum fine of $7,000 for each day that GM failed to answer.

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This aspect of the matter was resolved through a May 16, 2014 consent order signed by GM and NHTSA, GM agreed to pay $35 million in a civil penalty – the maximum allowed by law. Other notable elements contained in the consent order include:

  • GM’s admission that it failed to notify federal regulators of the safety-related defect within 5 days of its discovery.
  • GM agreed to provide NHTSA with unfettered access to GM’s internal investigation
  • GM agreed to implement measures to speed up its decision-making process regarding recalled vehicles.
  • Take steps to encourage and ensure that employees pass safety concerns up the corporate chain.

While the $35 million dollar civil penalty and oversight requirements were certainly a victory for the agency, senators are demanding answers into why the regulatory body did not catch the safety defect earlier. Other senators have focused on the limited enforcement options available to NHTSA in handling the recall post-hoc.

Senator McCaskill Introduces Bill to Eliminate Civil Penalty Cap

Appearing on the ABC political affairs show This Week in April, Senator McCaskill characterized GM’s legal strategy as, “They’ve tried to lawyer up and play whack-a-mole with these lawsuits, and terrible things have happened. Now it’s time for them to come clean, be transparent and most of all make victims whole no matter when this deadly ignition caused heartbreak in their families.”

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To address their problems and prevent a similar situation from reoccurring, Senator McCaskill’s bill, Motor Vehicle and Highway Safety Enhancement Act of 2014, would make several key changes to NHTSA. First, it would eliminate the cap on civil penalties for violations of federal safety laws. Second, over a 6-year period, the bill would double NHTSA’s safety funding. Finally, criminal prosecutors would be granted greater powers and discretion when there is a knowing violation of standards that lead to catastrophic injury or wrongful death. The currently proposed version would permit prosecutors to seek a sentence of life in prison. Other important provisions of the bill include changes to rental car safety and include:

  • A requirement that rental companies ground vehicles under a safety recall.
  • Authorizes rental companies to rely on temporary safety fixes provided by manufacturers.
  • Prohibits the sale or rental of a recalled vehicles

Portions of McCaskill’s proposed bill are not necessarily novel. As early as April 2014, U.S. Transportation Secretary Anthony Fox asked Congress to increase the maximum civil penalty for violations of federal safety from the current $35 million maximum to $300 million. The request would be included as part of the DoT’s Grow America Act long-term transportation bill which contained a number of other reforms to the agency and its practices.

Senators from Connecticut and Massachusetts Propose Bill to Reform NHTSA’s Early Warning Reporting

Sens. Edward Markey (D-Mass.) and Richard Blumenthal, D-Conn., introduced legislation revising the National Highway Traffic Safety Administration’s (NHTSA) Early Warning System. The proposed bill the, Early Warning Reporting System Improvement Act, would require NHTSA to consider Early Warning Reporting data in its safety investigations. The organization would also be required to upgrade its online database system by improving the site’s search functionality. The bill would further require automakers to provide documents detailing the crash, such as police and accident reports, rather than the brief summaries that are currently required.

Senator Blumenthal has also introduced the Automaker Accountability Act and the Sunshine in Litigation Act. The former bill would eliminate the $35 million civil fine cap. The former bill would require judges to consider the public’s safety interest prior to allowing auto manufacturers to seal settlement agreements.

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Is your Vehicle Safe? Reports indicate NHTSA is Understaffed and Underfunded

If the GM ignition switch defect, first discovered as early as 2001, hadn’t already made you consider that safety concerns can slip through the cracks, former NHTSA administrator Joan Claybrook, provides a dire warning. She says the “NHTSA needs more money, staff, legislative clout and transparency, and it needs to be more user-friendly so people can make complaints.” She compared today’s NHTSA with the one she ran from 1977 to 1981 finding that during her tenure the agency employed roughly 900 people. Today, it employs 600 people despite population growth and the rise of more complex supply chains and global trade. Further, she claims that the agency’s funding during her tenure was about double today’s budget. She states that the recall department is currently staffed by about 20 people for the entire nation which she considers to be “totally inadequate”. She cites these manpower and funding shortfalls as one reason why complaints submitted to NHTSA have fallen from roughly 240,000 a year to today’s 50,000 a year. David Friedman was receptive to Ms. Claybrook’s criticisms of the agency stating, “It is something that is currently hamstringing our ability to fully pull together all of what happened.”

The GM ignition switch recall has provided a window of opportunity where the political will may be present to protect U.S. consumer from serious injuries or wrongful death due to car, truck and SUV defects. However only time will tell if Congress will be able to seize this chance to improve safety for all Americans.

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