Foxx: Make Top NHTSA Fine $300M

Automotive News Print Version

May 13, 2014

Transportation Secretary Anthony Foxx asked Congress to hike the maximum civil penalty for a violation of U.S. auto safety laws more than eightfold to $300 million to push automakers to more quickly issue safety recalls.

The proposal is part of a $302 billion, four-year transportation plan that would replenish the federal government's dwindling Highway Trust Fund and fund bridge repairs and mass-transit programs.

It comes at a time when General Motors (GM) is under intense scrutiny for its handling of a defective ignition switch used in the Chevrolet Cobalt and other small cars. GM saw signs of problems as far back as 2001 and received dozens of crash reports, but it did not recall the 2 million-plus affected cars until this year.

Congress doubled the National Highway Traffic Safety Administration's (NHTSA) maximum civil penalty to $35 million after Toyota's unintended-acceleration recalls. The Obama administration had sought a cap of $200 million, but the auto industry resisted.

NHTSA Administrator David Friedman said in a statement on April 29, that increasing the cap to $300 million would serve as a deterrent. The agency collected just over $35 million in total penalties in fiscal 2013, records show.

"As the nation's top regulator of the automotive industry, we hold manufacturers accountable for defect and compliance issues regarding their products," Friedman said, "and are seeking to further our ability to do so in the future."

Foxx's transportation plan faces uncertain odds in Congress. Auto safety advocates support Foxx's penalty proposal. But industry lobbyists are likely to resist it, calling it an unnecessary deterrent.

Foxx's proposal also would bar car rental companies and dealerships from renting or loaning cars that are awaiting recall work—a longtime goal of auto safety advocates. There are few known cases of recalled cars being rented or loaned, but past legislation has been resisted by dealers, who worry about exposure to new legal risk.

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