New NHTSA Chief Vows Changes as Agency Levies Largest Fine in its History Against Honda

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It’s no secret that 2014 was the year that many safety concerns that had previously simmered just below the public eye exploded onto the scene. Early in the year the GM ignition switch defect dominated the news. Then, later in the year the Takata exploding airbag recall was announced and subsequently expanded to a nationwide recall. In all, auto defects in 2015 hit a new yearly record with more than 63.5 million recalls. With an average of more than 2 recalls a day, this number doubles the previous yearly record set back in 2004.

Senators and Safety Advocates Call on NHTSA to Do More

What was new in 2014, however, were calls from US senators and vehicle safety advocates for National Highway Traffic Safety Administration (NHTSA) to do more when it comes to auto safety. While in the past many seemed to be pleased with a deferential approach that accepted the word of car makers at face-value, such an approach no longer seems to be acceptable. At a November 2014 hearing regarding Takata’s airbag defects Senator John Thune remarked, “The troubling string of recalls this year should be a wake-up call.” The Republican Senator from South Dakota further stated that “I believe we can do a better job of addressing safety issues as they arise and holding automakers, their suppliers, and NHTSA accountable to their shared mission of ensuring safety on America’s roadways.”

This commitment to vehicle safety is not only finding the support of the Republican side of the aisle as a number of prominent Democrats have also expressed their displeasure with NHTSA’s performance. In July 2014, Senators Blumenthal and Markey sent a letter to NHTSA inquiring as to how the agency ensures compliance with Early Warning Reporting (EWR) system mandated by the TREAD Act.

With a new NHTSA administrator and bipartisan support in Congress, 2015 appears to be the year where regulatory standards are tightened and automakers and parts suppliers are held accountable for the safety issues that they create.

rear-ended car

New NHTSA Administrator Says More Recalls Coming; Vows To Take Action

While new NHTSA administrator Mark Rosekind is only in his second week on the job, he has already made big promises regarding the agency’s approach for 2015. Speaking at the North American International Auto Show in Detroit, Michigan, Mr. Rosekind discussed his plans for the agency. He outlined plans that would require the strict enforcement of safety and environmental standards. To achieve these goals he identified a number of measures the agency must take. These steps include:

  • Restructuring the NHSTA – To enhance the investigative powers of the agency, outlines for Mr. Rosekind’s plans would bifurcate the agency into two divisions.
  • Requesting additional funding – Agency staffing levels were discussed during hearings in 2014. It is believed that the agency is understaffed and overburdened. Aside from the lack of workers, the agency also states that it has skills and knowledge deficit in certain key areas. The agency is expected to hire an independent chemistry expert to assist the agency with problems like those presented by the Takata airbag inflators.
  • Requesting an increase on the maximum fines the agency can levy – To address the claims that EWR is not working properly, Mr. Rosekind has stated that he would support legislation that would increase the maximum fine the agency can impose to $300 million.
  • Supporting legislation that mandates repair for all recalls – It is currently estimated that only 70 percent of recalled vehicles receive the necessary repairs. These vehicles are then often sold to second owners who may be unaware of the recall and the vehicle’s unrepaired status.

The plans discussed above are still only in the planning stages. They may, and likely will change once a full and open debate regarding NHTSA’s effectiveness is held. Mr. Rosekind cautions that improved investigative and enforcement powers may uncover even more recalls. However, he points out the discovery of defects by NHTSA is actually good because “The reality is that means your system is working. We’d rather have people on the proactive end catching stuff really early. … I’d rather have people be preemptive than waiting too long and making a mistake because you can’t save those lives after they’re gone.” Recent events may provide further evidence that a new approach has already taken hold in the agency.

NHTSA Levies $70 million Fine after Honda Admitted to Two Tread Act Violations in November 2014

On January 8, 2015, Honda Motor Co agreed to accept a $70 million fine for the company’s failure to provide more than 1,700 required disclosures over the course of about 11 years. The $70 million fine is comprised of two $35 million fines – the maximum allowed by law for a single violation – for failing to turn over reports. The reports were required by the TREAD Act which established EWR system in response to the Firestone tire recall crisis of the 2000s.  The company said that problems with its computer systems, inadvertent data entry, and programming mistakes contributed to the automaker’s failure to fully comply with TREAD.

With Congressional leaders and safety advocates welcomed the penalties, many seemed to think that the action did not go far enough. Senator Bill Nelson of Florida viewed the fine as a “good start” but he added that “we still need automakers to step up and take care of consumers with defective airbags, and we need regulators to insist on more timely and accurate reporting of possible safety defects.” The director of the Center for auto safety, a private industry watchdog, has called for a criminal investigation against Honda.

fender bender

However, such a call for a criminal probe may still be premature. As part of the consent order that Honda agreed to, the company must also turn over all missing warranty claims, accident reports, and consumer complaints. Honda must update its EWR reporting so that it is current and compliant with the requirements set forth in the TREAD Act.  The company must also submit reports to NHTSA every 60 days, for at least a year, regarding the conception and implementation of new written policies and procedures. At the end of the one-year agreement, Honda must permit independent auditors to assess its policies, procedures, and systems.

In short, the treatment that Honda is currently facing may be representative of a new approach by NHTSA. Hopefully, this new approach will finally achieve the promise of EWR and catch safety problems early before they can grow into a crisis.

 

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