NHTSA Announces Record Setting Civil Penalty in Consent Order With Chrysler
In 2014, NHTSA collected a record setting amount of civil penalties. For 2015, NHTSA may be on pace to exceed last year’s record. On July 26, 2015, NHTSA announced a $105 million civil penalty against FCA US LLC, the former Chrysler Group. As those who follow NHTSA have come to expect, the settlement came in the form of a consent order that included a number of performance obligations on FCA US.
For the penalty, NHTSA stacked three series of violations, each reaching the maximum civil penalty amount of $35 million, leaving FCA US with a total penalty amount of $105 million.
For the penalties, NHTSA divided the violations into three related categories:
- Failing to adequately remedy defective vehicles within a reasonable time (without specifying what a reasonable time is). Citing 49 U.S.C. §§ 30120(a) and 30120(c).
- Issuing untimely owner notifications and failing to timely submit owner and dealer notifications to NHTSA. Citing 49 U.S.C. §§ 30118(c), 30119(c)(2), and 49 CFR 577.5 and 577.7(a)(1).
- Failing to provide timely, accurate, and complete notice to NHTSA about vehicle defects and recalls. Citing U.S.C. § 30118(c) and 59 CFR 573.6.
The consent order structured the penalty amount with three components: $70 million due to the Treasury within 60 days, $20 million to be spent on “industry outreach” over the next 3 years, and $15 million held in abeyance pending satisfactory completion of the consent order.
FCA US will be under the consent order for three years and NHTSA has the option of extending it one additional year if it determines that FCA US failed to comply with one or more of the terms. The intention seems to be that an independent monitor working with NHTSA will determine whether FCA US is complying with the varied terms of the consent order.
Some of the big takeaways are:
- FCA US agreeing to buy back some vehicles;
- FCA US changing its corporate structure to give their safety program direct access to executives;
- NHTSA requiring an independent monitor to evaluate FCA US’s compliance with NHTSA’s regulations; and
- NHTSA requiring FCA US to reach out to suppliers for warranty and field report issues.
The consent order also requires FCA US to spend much of the $20 million in outreach on programs to increase owner participation in recall programs, which was the subject of a public meeting held at NHTSA earlier this year.
The terms of the consent order provide a clear window into what NHTSA expects from manufacturers: corporate structures that facilitate prompt safety determinations, greater communication between vehicle manufacturers and suppliers, and an emphasis on increasing owner participation in remedy programs.