U.S. Wants to Hike Untimely Auto Recall Fines to $300 Million

Washington — Transportation Secretary Anthony Foxx wants Congress to hike maximum fines to $300 million for automakers who fail to recall vehicles in a timely fashion. The current limit is $35 million.

In the Obama administration’s transportation reauthorization proposal, Foxx also wants to force rental car companies to repair recalled vehicles before they are rented again.

Foxx told reporters on a conference call that the fines on automakers — which were doubled from $17.5 million to $35 million in 2012 — need to be “more than a rounding error” to ensure compliance. Under the law, automakers have five days to recall vehicles after determining they pose an unreasonable risk to driver safety. The department “wants to make sure there’s an ability to make it count and ensure that there’s enough of an effect across the industry,” Foxx said.

In recent years, Toyota Motor Corp. was fined the maximum amount three times — or a total of about $66 million — for failing in three separate instances to recall vehicles in a timely fashion. In 2013, Ford Motor Co. was also fined the maximum $17.5 million for failing to recall Ford Escape SUVs in a timely way.

The National Highway Traffic Safety Administration is now investigating whether General Motors Co. failed to recall 2.6 million vehicles for ignition switch defects in a timely way. The defect is linked to at least 13 deaths.

NHTSA would also get “new strengthened authority to require manufacturers to remove automobiles from the market when a defect is first discovered,” said Peter Rogoff, acting under secretary for policy. He said the new authority would ensure “it not sit out there subject to a voluntary recall for an extended period of time if we know there is a really imminent hazard.”

In 2010, Congress considered but abandoned auto safety legislation that would have given NHTSA new authority to order automakers to stop sales and order immediate recalls if it found “an imminent hazard of death or serious injury.” Currently, NHTSA must go through a two-step process of initial investigation and then engineering analysis before it then must hold an administrative hearing to compel a recall. Then it must go to court to enforce the order.

NHTSA doesn’t have the authority to order an automaker to tell its owners to stop driving their recalled cars, former NHTSA officials say.

Foxx declined to comment directly on a request by Sens. Ed Markey, D-Mass., and Richard Blumenthal, D-Conn., to urge GM to tell its owners of unrepaired recalled cars for ignition switch problems. Foxx said he would respond directly to the senators and said he is aware of the issue. Last month, he declined to urge owners to stop driving, saying they should follow GM’s advice to only use the ignition key.

Foxx unveiled a four-year $302 billion surface transportation reauthorization bill that would use revenue from corporate tax reform — rather than higher gas taxes — to rebuild “crumbling roads and bridges while providing much-needed certainty for local and state governments and addressing the country’s future needs.”

The bill would address the shortfall in the Highway Trust Fund and providing an additional $87 billion to fix bridges and transit systems.

“Whether traveling by motor vehicle, walking or bicycling, we are committed to ensuring that Americans reach their destinations safely. Our approach will continue to support both safer behavior and safer vehicles to prevent deaths and injuries on our roadways,” said NHTSA Acting Administrator David Friedman. “As the nation’s top regulator of the automotive industry, we hold manufacturers accountable for defect and compliance issues regarding their products and are seeking to further our ability to do so in the future, including increasing civil penalty limits nearly 10 times to $300 million.”