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NHTSA Imposes Record-Breaking Fine on Takata & Requires Safety Improvements

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In a press release issued on November 3, 2015, the National Highway Traffic Safety Administration (NHTSA) stated that it had issued two orders imposing “the largest civil penalty in NHTSA’s history for Takata’s violations of the Motor Vehicle Safety Act.” Takata now faces up to $200 million in fines because of its alleged mishandling of the issue.

NHTSA Orders Takata to Make Safety Improvements

Takata air bags have been linked with at least 8 deaths and over 100 injuries over the past few years. The company was allegedly aware of the issue as far back as 2004, when the first air bag rupture took place. Since then, there have been a number of occasions when the air bags exploded upon deployment, sending shrapnel into the interior of the vehicle and injuring or even killing occupants.

The first of the two orders given by the NHTSA imposes the record civil penalty of $200 million. A total of $70 million is to be paid in six lump-sum payments, and the other $130 million will become due only if Takata doesn’t live up to the other requirements in the consent order. These include the following:

Phase out certain inflators: The chemical propellant used in Takata air bag inflators—ammonium nitrate—has been under suspicion for awhile now. Takata switched to this chemical in 2001, even though some of their own engineers raised concerns about its stability. The NHTSA has ordered Takata to phase out those inflators containing ammonium nitrate. Though Takata has repeatedly stated the chemical is safe, the NHTSA states in the order that it “does not share this same confidence in the long-term performance of such inflators.” Takata has agreed to phase out the manufacture and sale of certain of these inflators. The NHTSA has set out a series of deadlines by which these inflators are to be phased out. The dates extend out to December 2018.
Test other inflators: The NHTSA ordered Takata to continue testing other types of inflators, and to provide frequent updates to the NHTSA. The goal is to find a root cause of these ruptures by 2018.
Continued cooperation: Takata is ordered to continue to cooperate with the NHTSA, providing regular reports of its efforts and findings.
Safety culture improvements: Takata is to work “diligently to correct any lapses and improve its safety culture” by a) providing a detailed report regarding the history of the air bag issues to the NHTSA no later than June 2016; b) notifying the NHTSA of employee terminations that are related to Takata’s review of the air bag issues, c) assigning a Chief Safety Assurance and Accountability Officer who will oversee the company’s compliance with the process improvements, d) ensuring its whistleblower process encourages employees to report concerns, and enforcing a non-retaliation policy.
Meetings with the NHTSA: Takata agrees to several future meetings with the administration to update them on their progress.
Independent monitor: Takata agrees to retain an independent monitor who will ensure the company’s compliance with the consent order, develop and implement process improvements, create training programs, and make additional recommendations to enhance Takata’s safety program.

Should Takata not comply with any of these orders, it will pay more penalties as outlined in the order.

NHTSA Also Issues Order to Accelerate Air Bag Repairs

The second order, called the “Coordinated Remedy Order,” was issued to Takata and 12 vehicle manufacturers involved in Takata air bag recalls. It outlines plans to prioritize air bag repairs based on risk, and gives the manufacturers deadlines by which they have to have parts on hand to fix vehicles listed in the recalls.

It is hoped that this order will help accelerate repairs. It marks the first time the NHTSA has used its legal authority to step in and facilitate repairs to protect the public. The goal is to get the highest-risk vehicles repaired by March 2016, and to complete all repairs by the end of 2019.