NHTSA and Hyundai Agree to a Civil Penalty of $17.35 Million
August, 2014
Dear Care for Crash Victims Community Members:
NHTSA – Hyundai Agreement The attached Agreement was co-authored by NHTSA & Hyundai in private meetings. As you read it consider the following questions:
1. What should the corporate penalty be for withholding from the public information that could result in preventable deaths and disabilities for American people?
2. Who should decide?
3. Under what transparency conditions should the decisions be made?
Senate Bill on Penalties
Senator McCaskill has introduced legislation for NHTSA to have the power to enforce the law with criminal penalties for corporate wrongdoing. Seehttp://www.mccaskill.senate.gov/media-center/news-releases/automotive-and-highway-safety-bill-introduced-by-mccaskillhttp://www.mccaskill.senate.gov/imo/media/doc/MVHSEAText.pdfhttp://www.mccaskill.senate.gov/imo/media/doc/MVHSEASummary.pdf
Senate Hearings Ahead
Senator McCaskill’s Committee is holding Hearings soon on NHTSA’s performance and participation in both GM and NHTSA’s failures to protect the public — for nearly a decade in the case of the GM Ignition Switch Recall.
The NY Times reported on this NHTSA – Hyundai consent order athttp://www.nytimes.com/2014/08/08/business/regulators-fine-hyundai-17-4-million-after-it-fails-to-report-defect.html?mabReward=RI%3A7&action=click&pgtype=Homepage®ion=CColumn&module=Recommendation&src=rechp&WT.nav=RecEngine
The Times asked for comment:
“Rosemary Shahan, president of Consumers for Auto Reliability and Safety, said that provision may be a result of regulators being “under more scrutiny than ever before,” but that it was a welcome surprise.
“I hope it’s a trend,” she said.”
I agreed and thought the agreement penalty was a slap on the wrist for a corporation of Hyundai’s size.How does one judge the significance of a NHTSA – Hyundai agreement penalty of $17.4 million?
Hyundai – NHTSA Agreement on Value of Fine
The cost of a single 30 second ad for the Super Bowl was $4 million plus a production cost of about $1 million. Seehttp://admeter.usatoday.com/story/sports/ad-meter/super-bowl/2014/01/20/ad-meter-story-super-bowl-ad-costs/4476441/
Hyundai bought two 30 second ads for this last Super Bowl at a cost approaching $10 million. Seehttp://adage.com/article/special-report-super-bowl/hyundai-advertise-fox-s-broadcast-super-bowl-xlviii/244008/http://adage.com/article/special-report-super-bowl/super-bowl-ad-chart-buying-super-bowl-2014/244024/
Compare that $10 million to NHTSA’s annual budget for the Office of Defects Investigation which also is about $10 million.
Now let’s compare the cost of those two Super Bowl ads to the DOT policy value of just one statistical life — $9.1 million. See attached DOT Policy Guidance on Value of Life (a morally reprehensible but required bureaucratic policy exercise of placing a dollar value on life).
Why Did NHTSA Agree?
Appearances often are important in Washington especially when an agency and a company are facing negative scrutiny for known failures to protect people in favor of profits. As a regulator, if NHTSA has been shown to be a weak regulator, it must at least appear tough before the Hearings.
And if you can make GM look like it is not as bad as others, too, that’s a smart political opportunity. As shown in NHTSA – Hyundai Agreement “Nature of Action” items 5, 6, and 8 both GM and Hyundai were notified by their supplier of a brake fluid corrosion problem in 2012. GM, in November 2012, issued a Technical Service Bulletin (TSB) to its dealers in the U.S. and informed its customers. Hyundai, in March 2013, issued a TSB to its dealers but not to its customers.
The Agreement states:
“WHEREAS, it is the mutual desire of NHTSA and Hyundai to resolve the TQ14-002 without the need for further action, to avoid the legal expenses and other costs of a protracted dispute and potential litigation:…” Hyundai and NHTSA agree to the terms of the Consent Order (See attached).
Note: To my knowledge, neither crash victims past, present, and future nor consumer advocates were participants in these private meetings between NHTSA and Hyundai. Nor does the Agreement address the tax deductibility of the civil penalties or legal and other expenses of Hyundai. So taxpayers may be paying for this in more ways than one.
Hopefully, the Hearings will address these issues on behalf of the public interest as consumers, taxpayers, insurance premium payers, and motorists, cyclists, and pedestrians.
The NHTSA – Hyundai Agreement came out as the nation was noting the 40th Anniversary of the resignation of President Nixon for criminal activities, abuses of power, coverups, and obstruction of justice. One can read transcripts of the Watergate Tapes with discussions of Nixon with CEOs of Ford and GM (Henry Ford II, Lee Iacocca, John Roche) discussing weakening auto safety and air pollution regulations. See https://www.careforcrashvictims.com/assets/Nixon-Transcriptions.pdf
Presidents Nixon, Reagan, both Bushes, Clinton and Obama, as well as VP Biden, and candidate Romney have failed the American people. More than two million Americans have died of crash injuries since Nixon took office. Seehttp://www.fairwarning.org/2012/09/a-strange-indifference-to-highway-carnage/
So is the NHTSA – Hyundai Agreement more evidence of covering up the corporate control of NHTSA?
Lou
