Thursday, May 22, 2014
(Washington, DC) – Today, U.S. Senators Richard Blumenthal (D-Conn.), Edward J. Markey (D-Mass.), and Bill Nelson (D-Fla.) introduced the Automaker Accountability Act of 2014, a bill that would eliminate the cap on the maximum allowable civil fine the Department of Transportation (DOT) can levy on automakers for safety violations or failure to report known defects. The senators introduced the bill in response to DOT’s May 16 announcement that it plans to fine General Motors (GM) $35 million for its longtime mishandling of the ignition switch safety defect linked to at least 13 deaths and many more injuries. While the $35 million fine represents the maximum allowable civil fine, it’s less than 0.1 percent of the $37.4 billion in net revenue that GM took in during the first quarter of 2014.
“Only meaningful penalties can cause automakers to avoid concealing defects that lead to injury and death,” Blumenthal said.“The $35 million fine levied on GM is a pittance compared to the company’s revenue and the damage caused by its deception and delay. This legislation will ensure that penalties are commensurate with wrongdoing and are meaningful financial deterrents to mistakes and mismanagement harming consumers. GM’s lesson to Congress is that concealment can kill.”
“A penalty of $35 million is pocket change for a major auto manufacturer,” Markey said. “We can never put a price on the lives lost in auto accidents linked to safety defects but we can ensure that the price automakers pay after violating the law is a meaningful one relative to their profits. We need to remove the statutory caps for civil liability penalties to ensure that auto manufacturers know they will be held fully and fiscally accountable if they do not report safety issues in their vehicles in a timely and responsible manner.”
“This is about accountability and responsibility,” said Nelson. “When the violations are egregious, the penalties should be severe.”
Calls to eliminate the cap have been widespread. Most notably, DOT Secretary Anthony Foxx has asked Congress to raise the cap from $35 million to $300 million, an amount reflected in department’s proposed GROW AMERICA Act. Even $300 million, however, would represent a tiny fraction of GM’s revenue – far too small an amount to aggressively incentivize prompt reporting of life-threatening safety defects. The Automaker Accountability Act of 2014 would eliminate the cap, and give DOT the discretion to levy a fine it believes is commensurate with the severity of the violation. Specifically, the bill:
- Raises the statutory cap on civil penalties for individual violations of laws that prohibit the sale or importation of unsafe equipment and that require prompt reporting of known defects. The cap for individual violations remains in place to ensure that smaller businesses are not disproportionately penalized for discrete issues, but it is raised from $5,000 per violation to $25,000 per violation (and to $100,000 in the case of defects in school buses).
- Removes the statutory cap on maximum penalties for “a related series of violations” of these laws.
- Extends liability to include those who “cause the violation of” as well as those who “violate” these laws.