What’s Next for NHTSA and Automotive Safety

During 2014, we witnessed aggressive auto safety enforcement, record-setting civil penalties, a record number of vehicle recalls, multiple congressional hearings and numerous legislative proposals.

In the midst of its active enforcement, NHTSA also maintained a busy rulemaking docket, including major actions related to vehicle-to-vehicle (V2V) communications, distracted driving and other initiatives.

What will 2015 bring?

Aggressive Enforcement

NHTSA has been aggressively enforcing its defect and early warning reporting regulations this past year and it will certainly continue to do so in 2015 and beyond, as it reacts to public and Congressional pressure to further flex its enforcement muscles.

The statutory civil penalty maximum for violating NHTSA’s regulations recently was increased to $35 million, and the agency already has reached settlements with manufacturers at this new level. In fact, NHTSA has sought and obtained the maximum penalty at least eight times since 2010, and it has reached numerous other settlements in amounts greater than $1 million.

To reduce compliance risks, all vehicle and parts manufacturers should implement compliance policies for identifying and investigating potential safety defects and complying with NHTSA reporting requirements. It also is critical that relevant personnel across the organization – domestically and globally – are thoroughly trained in these policies and procedures.

NHTSA’s Legislative Agenda

Recent events have brought significant bipartisan attention to the area of motor-vehicle safety.

During the last year, bills have been introduced in Congress that would, among other things, eliminate the civil penalty cap, require additional public disclosure of manufacturers’ early warning data and encourage whistleblowers to come forward with information about possible safety defects.

Indeed, the Obama Admin.’s legislative wish list (contained in the GROW AMERICA Act) includes increasing the civil penalty cap to $300 million, extending NHTSA’s civil penalty authority to individuals, authorizing NHTSA to issue “stop sale” orders when it finds that there is an “imminent hazard,” and authorizing the agency to require rental-car companies and used-car dealers to remedy defective and noncompliant vehicles before rental, sale or lease.

Manufacturers should closely monitor these legislative developments, as they will have significant implications if passed.

Autonomous Vehicles and Crash-Avoidance Technologies

NHTSA has been studying the safety benefits of advanced crash-avoidance technologies, focusing recently on warning technologies, such as blindspot detection; intervention technologies, such as lane-departure prevention, crash imminent braking and dynamic brake support; and automatic pedestrian detection and braking.

The agency will continue to evaluate data, technologies and potential countermeasures and may initiate rulemaking to require one or more of these technologies in vehicles. NHTSA proposed in January to add automatic emergency braking (AEB) – crash imminent braking and dynamic brake support – to the list of recommended advanced safety features in its New Car Assessment Program (NCAP). While not mandating AEB at this time, the inclusion in NCAP is intended to encourage manufacturers to voluntarily incorporate these features into their vehicles.

The agency also has been studying vehicle-to-vehicle and vehicle-to-infrastructure communications.

In August 2014, it issued an advanced notice of proposed rulemaking as a first step toward adopting a V2V standard. According to NHTSA, “by mandating V2V technology in all new vehicles, but not requiring specific safety applications, it is NHTSA’s belief that such capability will in turn facilitate market-driven development and introduction of a variety of safety applications, as well as mobility and environment-related applications that can potentially save drivers both time and fuel.”

The safety agency will review the numerous comments it received and evaluate next steps, which likely will be a formal rulemaking proposal.

Other significant rulemakings expected this year may include speed limiters and electronic stability control systems for heavy vehicles.

Recall Review and Completion Rates

During 2014, NHTSA launched its online “Recalls Portal,” where most defect reporting and recall-related correspondence now must be submitted.

During 2015, we expect the recall review process to become significantly more streamlined, with quicker NHTSA review and response times. As a consequence, recalls likely will be posted to the NHTSA website more quickly, so manufacturers must be prepared to respond to inquiries from customers, dealers and the media sooner than they have in the past.

The large number of recalls during 2014, and the correspondingly large number of unrepaired vehicles, has brought renewed attention to the issue of recall-completion rates, which have historically averaged 70%-80% for light vehicles.

Therefore, we anticipate NHTSA will take further steps over the next year, likely by working with manufacturers and others, to find ways to increase completion rates. One legislative proposal, which has support from some manufacturers, would require states to adopt systems that would prevent registration renewals on vehicles with unperformed recalls, much like some states handle emissions recalls.

In light of the current environment, manufacturers must review and update their safety policies and procedures and conduct appropriate training across their organization. When potential safety issues are encountered, technical experts and counsel should be consulted, decision-making should be documented at critical stages and NHTSA should be engaged when necessary.

Importantly, senior management should actively promote a safety culture across the organization and encourage open communication about potential safety issues.

Manufacturers also should implement a regulatory and legislative monitoring program to ensure they are kept abreast of changes that could affect their reporting obligations.

Christopher H. Grigorian is a partner with Foley & Lardner LLP, focusing on federal motor vehicle safety law, antitrust, trade regulation and related litigation. He represents motor vehicle manufacturers and major parts suppliers on a variety of compliance issues with the NHTSA.