WASHINGTON/DETROIT (Bloomberg) -- Takata Corp.’s refusal to comply with a U.S. demand to widen its airbag recall leaves regulators in a quandary: take the parts supplier to court or try to convince automakers to do the job instead.
The reason the National Highway Traffic Safety Administration went after Takata is because it believes the airbag maker has the responsibility to declare a defect, Deputy Administrator David Friedman told Congress on Wednesday. Takata said regulators don’t have the safety data to support their decision -- and questioned the agency’s authority to make the request in the first place.
It may take months to resolve the dispute, a rare example of a company choosing to openly defy its government regulator rather than work out a compromise behind closed doors. NHTSA needs to decide whether to redouble efforts to force Takata’s hand by suing it in court, or shift gears and get the car companies to do recalls without Takata’s endorsement.
The last such showdown came in 1998, when NHTSA lost a bid to force Chrysler to recall sedans that the agency said had faulty seat-belt anchors.
“It’s exceptionally unusual, particularly when you have a valid safety issue,” said Neil Steinkamp, a managing director at Stout Risius Ross who studies warranty and recall issues. “It’s not as though there’s a question about whether there is a safety risk to consumers.”
About 8 million vehicles have already been recalled in states with high humidity, where weather conditions can degrade air-bag inflators to the point that the devices rupture when deployed, hurling metal and plastic shards at passengers. The flaw has been tied to at least five deaths worldwide and more than 100 injuries.
“Under the NHTSA statute, only manufacturers of motor vehicles and replacement equipment are required to decide in good faith whether their products contain a safety-related defect, and if so, to conduct a recall,” Mike Rains, Takata’s director of product safety, wrote in a Dec. 2 letter to NHTSA that declined the recall request.
Takata is correct about where the responsibility lies, said Allan Kam, an auto-safety consultant who retired from NHTSA as a senior enforcement attorney in 2000 after 25 years with the agency.
It’s “a bunch of saber-rattling by NHTSA,” he said. “If they wanted to demand a recall, it should have been sent to the auto manufacturers.”
NHTSA had asked Takata to conduct a nationwide recall for driver’s side airbags in models made by Honda Motor Co., Ford Motor Co., BMW, Chrysler Group LLC and Mazda Motor Corp. NHTSA is reviewing Takata’s response and deciding on its next steps, Friedman said at the congressional hearing. The regulator had told the company that failure to declare a recall of driver’s side airbag inflators that was nationwide in scope may lead the agency to force a call back and impose fines of $7,000 per violation.
A similar showdown last year with Chrysler over fuel tanks in Jeeps ended within 14 days when NHTSA agreed to accept a compromise that the automaker would install trailer hitches to help prevent rear crashes from puncturing tanks and causing a fire. NHTSA’s other prominent court defeat came in 1988, when General Motors Co. headed off a recall over brakes.
“While it’s true the automakers implement the actual recall, Takata is making the defective products and Takata should be declaring nationwide a defect in their products,” Friedman told reporters after the hearing. “That will lead to a recall from all the automakers.”
NHTSA is reviewing its next steps toward forcing a recall, which include a public hearing and a review of the record as the agency builds a solid legal case that will hold up in court, Friedman told the subcommittee. That could happen in a matter of several weeks or months, he said, without committing to a specific timetable.
NHTSA should instead work with Takata to roll out a national recall in stages, making sure people in the humid areas get the replacements first, said Jason Vines, who was the head of public relations at Ford and Chrysler during recall issues at those companies, including the Firestone tire crisis in 2000.
“If we do it nationally, people in Florida where they really need replacements will be waiting in line, and that’s stupid and deadly,” said Vines, who is also author of “What Did Jesus Drive? Crisis PR in Cars, Computers and Christianity.”
The Takata dispute is similar to the Firestone issue where parent company Bridgestone Corp. argued against a recall and Ford went forward on its own to replace tires with potentially faulty treads that could separate and cause an accident, said George Hoffer, a professor who has studied recall response rates at the University of Richmond in Virginia.
“The supplier was fighting the recall, and it was the automaker that took the bull by the horn,” said Hoffer, who also was a witness for Ford in court cases related to value lost because of that recall.
Honda, Takata’s biggest customer, is already taking that course, saying at Wednesday's hearing that it’s ready to expand regional recalls on the air-bag inflators nationwide. It’s already struck at least one deal with Takata competitor Autoliv Inc. to get more replacement parts faster.
The public has a big stake in the outcome in the confrontation between Takata and NHTSA, said Joan Claybrook, a consumer advocate who headed the agency in the 1970s.
NHTSA clearly has legal authority over equipment like airbags, she said. The regulator tries to persuade companies to do voluntary recalls because “they don’t want to have to spend five months” preparing a court case, she said.
“You want to have an agency that is determined to be a cop on the beat,” she said. “NHTSA’s finally gotten there under Friedman. He understands that is his role. I don’t think he’s going to back down, and he would be very foolish to back down.”
Friedman has been running NHTSA on a temporary basis since the top administrator, David Strickland, stepped down in January. Mark Rosekind, who last month was nominated by the White House to fill Strickland’s seat, vowed Wednesday at a separate Senate hearing to use “every one of the legal tools that are available” to enforce highway safety laws and recalls.
Rosekind, when asked specifically about the Takata case, said that as the nominee he had to be cautious, but he didn’t agree with Takata’s plan to recall airbags only in regions with high humidity.
Two U.S. senators urged NHTSA to move forward in its legal fight.
“Takata is right now risking more lives by rejecting this nationwide recall, and the company must be held to account,” U.S. Sens. Edward Markey, D-Mass., and Richard Blumenthal, D-Conn., said in an e-mailed statement.