Foxx wants to hike NHTSA penalty cap to $300M

Anthony Foxx’s transportation plan faces uncertain odds in Congress.
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WASHINGTON -- Transportation Secretary Anthony Foxx asked Congress today 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 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 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 today 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, including the then-maximum $17.5 million from Ford Motor Co. last June 28 for an untimely recall of Ford Escape crossovers.

“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.”

Uncertain odds

Foxx’s transportation plan faces uncertain odds in Congress, where the shortfall in highway dollars has led to a deadlock. Although infrastructure funding is a shared priority, Republican leadership in the House is reluctant to collect new tax dollars to replenish the federal fund.

Auto safety advocates support Foxx’s penalty proposal. But industry lobbyists are likely to resist it, calling it an unnecessary deterrent.

Toyota paid several civil penalties totaling more than $66 million over its handling of the unintended-acceleration cases. But it also struck a $1.2 billion settlement with the U.S. Department of Justice in March to resolve a charge of criminal wire fraud.

U.S. Attorney General Eric Holder told reporters at the time that the government could use this strategy in other cases.

“My hope and expectation is that this resolution will serve as a model for how to approach future cases involving similarly situated companies," Holder said. “Other car companies should not repeat Toyota’s mistake.”

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.

You can reach Gabe Nelson at gnelson@crain.com.

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