Did GM Rouse a Passive NHTSA?

Did GM Rouse a Passive NHTSA? Phot: SayCheeeeeese, via Wikimedia Commons

While the leaders at General Motors Co. sounded contrite last week after the release of the company’s internal investigation into its ignition-switch recalls, a day earlier the top lawyer at another organization that was also skewered when Congress held hearings on the scandal sounded positively upbeat.

O. Kevin Vincent, chief counsel at the National Highway Traffic Safety Administration, was giving a speech to defense lawyers in Chicago. It was an odd moment for NHTSA. At times Vincent sounded as though his agency had helped bring the car manufacturer to justice. And, in point of fact, NHTSA had fined GM $35 million for its delay in reporting the defect—the maximum penalty permitted by law. But this was also the agency that did not so much as open a formal investigation of GM even after multiple deaths were attributed to the defective ignition switch. And NHTSA only acted to punish GM after plaintiffs lawyers, the media and congressional hearings revealed the company’s failures.

Speaking at the 7th Annual Summit on Defending and Managing Automotive Product Liability Litigation, Vincent suggested that his own agency was not best positioned to uncover defects. It was the manufacturers themselves who ought to pitch in, he said, according to Sean Kane, president and founder of Safety Research and Strategies Inc. (Kane, who began working in this field at Ralph Nader’s Center for Auto Safety in 1991, wrote about the speech on his organization’s The Safety Record blog, based on a report from someone who was there.)

“We don’t have analysts, but your clients do,” Vincent told the lawyers. “You have the ability to find these defects.”

The federal Transportation Recall Enhancement, Accountability and Documentation (TREAD) Act requires NHTSA to “follow up on civil litigation that sends up red flags,” Vincent reminded the lawyers. “We fully realize that every time a company settles, that is not an indication of a defect,” he noted.

Then, in a moment of uncommon candor, he added that NHTSA has dragged its feet while waiting for companies to act. “I think it’s fair to say that in the past, the agency probably acquiesced to that,” he acknowledged. “We will be following up on that in the future.”

Kane and others welcomed the sentiment—while retaining a healthy dose of skepticism. It has been widely noted that NHTSA has been hamstrung not only by the limits on the penalties it can impose on companies, but by the paltry resources it is allocated by Congress. As its former chief, Joan Claybrook, told The New York Times recently, NHTSA receives about $10 million a year to pay for its defects investigations, which is less than the compensation of GM CEO Mary Barra.

Of the nine top positions on the agency’s organization chart [PDF], three are vacant, including the administrator position (the top slot). The job is currently being covered by David Friedman, who was elevated from deputy to acting administrator last December; at the time he’d only worked at the agency for seven months. An engineer by training, Friedman had a hard time fielding the onslaught of questions at a Senate subcommittee meeting on GM in April. Asked by the subcommittee chairwoman Claire McCaskill, D-Mo., if his agency had the authority to demand from car manufacturers details of sealed and confidential lawsuits and settlements, Friedman had to check with his staff before affirming that it did [PDF].

“It worried me that you did not know,” the senator told him.

“It worries me as well,” Friedman replied.

It worries many NHTSA critics that the last administrator, David Strickland, left in January to join Venable, where he is now a partner in the firm’s regulatory group. Among the agencies he focuses on, he told our affiliate The National Law Journal, is NHTSA. The agency has a history of watching its former employees go to work for the companies it regulates—and firms that counsel those companies and lobby NHTSA.

Asked to reply, NHTSA did not make Friedman available for an interview. Instead, it emailed the following statement:

“GM knew about the safety defect for years, did not report it as required by law and did not take action to protect Americans from that defect until earlier this year. As a result of NHTSA’s engagement, all of the GM vehicles with defective ignition switches have been recalled for replacement of the defective ignition switches. The results of NHTSA’s timeliness investigation and GM’s own internal investigation into the Chevrolet Cobalt recall, led by former U.S. Attorney Anton Valukas, showed at all levels of the organization, GM’s decision-making, structure, process and corporate culture stood in the way of safety at a time when airbags were failing to work properly in millions of GM products.”

Strickland told CorpCounsel.com that he is bound by ethics rules that will prevent him from having any contact with NHTSA for two years. “The reason I came to Venable,” he added, “is not that I want to focus on any particular agency.” He says has a variety of interests and a varied background that he expects will shape his practice.

Near the end of Kane’s post on The Safety Record, he recalls a piece he wrote four years ago about NHTSA and Toyota’s unintended-acceleration mess. “At what point does the agency get tired of being played?” he asked back then. “According to Vincent,” Kane continues, “the agency has officially gotten to that point.

“What accounts for this new enthusiasm?” he asks. “Is it the near-constant flaying in the press? Is it the rumblings from Capitol Hill to pass legislation strengthening the agency’s enforcement power and giving them more analytical tools to find defects?”

Sounding more than weary, Kane concludes: “We don’t know and we don’t even care as much as we care about NHTSA picking itself up, dusting itself off and actually doing some meaningful regulation and enforcement.”