Auto Troubles a Retread of Past Problems

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Congressional Quarterly Weekly

February 23, 2010

A major automaker is under fire for faulty products, consumers blast federal regulators for failing to act, and lawmakers demand swift action to protect public safety?all in the glare of intense media scrutiny. The automaker sounds like the Toyota of today, but the same headlines could have been ripped from any newspaper a decade ago, when Firestone tires on Ford vehicles were linked to more than 100 crash deaths.

The parallels between the Toyota and Firestone-Ford investigations are striking and the questions familiar: What did Toyota officials know about safety defects in some of its vehicles, and when did they know it? Did the National Highway Traffic Safety Administration (NHTSA) act quickly enough to contain the problem, and if it didn?t, why not?

?How is it so many warning signs went undetected? How is it the companies involved and the federal regulators failed to notice?? Maine Republican Olympia J. Snowe asked during a Senate hearing on auto safety?nearly 10 years ago.

As Congress kicks off oversight hearings this week on problems with sudden acceleration, braking and steering systems that have led Toyota to recall about 8 million of its most popular models, lawmakers will be asking many of those same questions again. The Transportation Department?s inspector general also plans to investigate the NHTSA?s actions. Much of the scrutiny will focus on why the watchdog agency Congress tasked a decade ago with preventing just this sort of problem didn?t bark sooner.

?The situation here strikes me as containing elements of d?j? vu,? said Kenneth M. Mead, Transportation Department inspector general during the Firestone investigation. ?It seems as though NHTSA is playing catch-up now and asking questions that should have been asked before.?

Using its power to subpoena, the force of its mandate from the body politic and the volume of its bully pulpit, Congress will work to squeeze answers from Toyota and the NHTSA?answers that could once again lead to an overhaul of the country?s auto-safety system. At least three committees?House Oversight and Government Reform; House Energy and Commerce; and Senate Commerce, Science and Transportation?have already scheduled hearings and more are likely down the road.

Power boost

The last time Congress was faced with an auto-safety issue on this scale was in 2000, when defective Firestone tires on Ford SUVs were blamed for killing at least 101 people and injuring hundreds more.

Congress moved with unusual speed to enact legislation: Less than two months after congressional hearings opened, a broad-ranging auto-safety bill?known as the Transportation Recall Enhancement, Accountability and Documentation Act (TREAD)?was signed into law.

TREAD was designed to fix weaknesses in the collection and analysis of auto-defect data, weaknesses that came to light during a series of congressional hearings. Oversight panels found that Ford and Firestone withheld significant defect information from the NHTSA. The agency said the magnitude of the problem wasn?t apparent because it had no access to the information.

In addition to making sure the agency had greater access to safety information, TREAD aimed to give the watchdog agency sharper teeth. The law strengthened the NHTSA?s authority and required manufacturers to provide the agency with access to a mountain of data that had been previously off-limits, primarily related to possible product defects. All this was intended to create an ?early warning system? to catch defects before they became deadly.

From the start, however, there were questions about whether the law was tough enough. A bill proposed by Republican Sen. John McCain of Arizona would have subjected industry officials who knowingly allowed the sale of dangerous products to criminal penalties of up to 15 years in prison and $15 million in fines.

McCain?s bill was stymied in the Senate by a series of anonymous holds, and eventually he agreed to accept ?safe harbor? language in the House version that gave amnesty to employees who admitted their criminal violations. Consumer advocates called the safe harbor language a loophole that would neutralize the law?s deterrent effect.

Even after President Bill Clinton signed the legislation into law, implementation by the George W. Bush administration was a lengthy process, requiring repeated rounds of tedious rule-making.

Now, lawmakers are starting to ask why the NHTSA didn?t effectively use the new tools TREAD provided to identify the Toyota problems much sooner. California Republican Darrell Issa, ranking member on the House Oversight committee, said the investigation is in its early stages but that there are already some indications the NHTSA may have dropped the ball.

Democrats share his concern. Last week, Issa and the panel?s chairman, New York Democrat Edolphus Towns, sought information from insurers about whether they tipped off the NHTSA about sudden acceleration concerns on some models?and if so, when.

The questions are significant when viewed through the lens of history: During the Firestone hearings, it came out that insurance giant State Farm had warned the NHTSA about the tire problem early, but the agency didn?t react. In Toyota?s case, State Farm said it sent letters to the automaker as early as 2007 warning of the acceleration problem.

Light regulation

Ohio Democrat Dennis J. Kucinich, a senior member of the Oversight committee, said he has ?serious questions? about what he called minimal supervision by the NHTSA. He questioned whether the agency has become too close to the industries it regulates?another echo from the Firestone inquiry.

?Study of this issue makes it very clear that there were design elements that should have caused warning lights to flash,? Kucinich said. ?This is going to be a very important inquiry into the injurious effect and even the deadly effect upon consumers of an inappropriate relationship between regulators and the regulated.?

Indeed, two of Toyota?s Washington employees already have come under scrutiny for allegedly helping Toyota ward off recalls. They are former NHTSA regulators Christopher Tinto, Toyota?s vice president of regulatory affairs, and Christopher Santucci, who also works at Toyota with Tinto.

Transportation Secretary Ray LaHood has taken pains to highlight the fact it was the NHTSA that prompted the recalls. Toyota finally acted after agency officials flew to Japan for an uncomfortable meeting at which they pressed the automaker on its slow response to inquiries. He said the agency will ?continue to hold Toyota?s feet to the fire ? We will not sleep until every Toyota is safe to drive.?

Joan Claybrook, a longtime consumer product safety advocate and former NHTSA administrator, said the agency already has ?incredible authority.? This includes the power to subpoena information from manufacturers, suppliers, dealers and repair facilities; to test products; and to collect data from around the world. In her view, the problem is the NHTSA hasn?t been willing to flex its muscles?in this situation and in the past.

Indeed, though the agency has accused Toyota of repeated foot-dragging on inquiries, it has not once used its subpoena power to gain the information it sought from Toyota. ?In this case, it was clear that the agency wasn?t interested,? Claybrook said, suggesting agency officials may have taken their cues from what she described as the Bush administration?s laissez-faire attitude to regulation.

Regardless of whether the NHTSA has adequate authority, some lawmakers have asked whether it has adequate staff and other resources. In documents released by Issa, the agency cited strained resources as a reason to deny a Toyota Tacoma owner?s petition to investigate a sudden-acceleration problem.

A review of budget documents indicates that funding for the agency?s analysis and enforcement operations has been roughly flat since the mid-1990s, and staffing levels have been fairly steady since the 1980s. Clarence Ditlow, executive director of the Center for Auto Safety, questioned whether the NHTSA has the resources to parse the increased data flow after TREAD. ?You still have to analyze it and spot trends,? he said.

A 2004 report by Mead, then the Transportation Department?s inspector general, noted the NHTSA had run into ?serious problems? in implementing its early warning database, including schedule delays and cost overruns. Even when the database was operational, the report said it lacked ?advanced analytical capabilities originally envisioned to help point analysts to potential safety defects.?

The NHTSA has also been troubled by inconsistent leadership, being headed by a string of short-term or ?acting? administrators?at least four of them in five years. The current administrator, David Strickland, was not confirmed until Christmas Eve of last year.

Consumer advocates also complain the NHTSA has refused to make most early warning information filed by automakers available to the public, preventing watchdog groups from monitoring whether regulators were properly using the data. Public Citizen, the consumer advocacy group founded by Ralph Nader, sued successfully to compel release of the information, which the NHTSA began to release in 2008 under a federal court order.

A former top U.S. auto-industry executive said there is no doubt the congressional hearings will increase scrutiny on other automakers, as well as Toyota. But he predicted it would be the NHTSA that would face some of the toughest questioning.

?I think there are several main issues here, and one of them is: Is the regulatory function working for the safety of the driving public?? asked Gerald Meyers, former CEO of American Motors Corp., now a business professor at the University of Michigan.

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