A Peek at the NHTSA Provisions in the DOT's Transportation Bill

Last week, the U.S. Department of Transportation (DOT) unveiled its long-term transportation bill, entitled the Grow America Act, which it is sending to Congress for consideration. Among other things, the bill contains several provisions that enhance the National Highway Traffic Safety Administration’s (NHTSA) enforcement and rulemaking authority – provisions the automotive industry must closely watch as the proposal makes its way through Congress. 

Most notably, the bill proposes to:

• Increase the civil penalty cap for a related series of violations from $35 million to $300 million, and to increase the per-vehicle penalty from the current inflation-adjusted $7,000 per vehicle to $25,000 per vehicle (and $100,000 per vehicle for certain violations related to school buses).
• Extend NHTSA’s civil penalty authority to individuals who willfully cause a violation of the Safety Act.  Importantly, under this provision, an individual would not be deemed to be acting willfully if he or she acts under instructions from a superior.
• Require NHTSA to adopt rules or guidelines “for the design, functional safety process, verification and validation, and development of safety-related electronics or software used in motor vehicles and motor vehicle equipment to ensure that they are likely to function as intended and contain fail safe features.”  Unlike any of NHTSA’s current safety standards, these standards (or guidelines) would specify process requirements related to the development and production of electronics and software for vehicles and equipment.
• Authorize NHTSA to issue a stop sale or repair order when the agency determines that vehicles or equipment contain a defect presenting an imminent hazard.  The agency (in its section-by-section analysis of the bill) stated that the threshold for what constitutes an “imminent hazard” is high, representing any condition “that substantially increases the likelihood of death or serious injury to the public if not discontinued immediately.”
• Limit the ability to challenge NHTSA orders, including recall orders, and limit the level of judicial review.
• Authorize NHTSA to require rental car companies and used car dealers to remedy defective and noncompliant vehicles before rental, sale or lease.
• Extend the existing “render inoperative” provision of the Safety Act – which prohibits a “manufacturer, distributor, dealer, or motor vehicle repair business” from knowingly removing or disabling a component that would take a vehicle out of compliance – to cover any person other than the vehicle owner.  (The stated purpose of this proposed amendment is “to permit enforcement actions against persons who use electronic devices to affect the performance of a motor vehicle or motor vehicle equipment of which they are not the individual owner,” but the amendment itself is not limited to electronic devices.)
• Provide NHTSA broader investigative authority under the fuel economy laws, including the right to conduct inspections at vehicle dealers.

While it remains to be seen whether any of these proposed amendments progress through Congress in their current form, manufacturers would be wise to follow these very closely. At a minimum, the amendments being advocated by the DOT/NHTSA should send a clear message to the industry and the public as to NHTSA’s priorities.