U.S. Auto Regulator Leverage May Grow Under House Plan, Agency Chief Says

The head of the U.S. auto-safety agency said legislation giving him power to order immediate recalls adds needed leverage over carmakers, while an industry group called the measure premature.

The bill, sponsored by Representative Henry Waxman, a California Democrat, would “make us stronger,” National Highway Traffic Safety Administration head David Strickland told a House Energy and Commerce Committee panel today during a hearing on the legislation in Washington.

“If enacted, these measures would significantly increase the agency’s leverage in dealing with manufacturers,” Strickland said.

Automakers would pay new fees to fund expanded U.S. safety regulations, under the bill that Waxman, chairman of the House Energy and Commerce Committee, proposed last week in response to Toyota Motor Corp.’s record recalls.

The legislation would impose requirements on automakers, such as adding brake-override technology and event-data recorders, that were questioned by Dave McCurdy, chief executive officer of the Alliance of Automobile Manufacturers, whose members include Toyota, the world’s largest carmaker.     “A number of rulemakings are mandated, many of them to be conducted concurrently according to unrealistic timelines,” McCurdy said in testimony. “Some are overly prescriptive. Other rulemakings are simply unnecessary because they mandate standards already adopted by NHTSA. Still other mandates are premature.”

Penalty Ceiling

McCurdy also called for capping civil penalties NHTSA can levy “at some reasonable level.” The legislation would remove the current cap of $16.4 million.

“It is not clear to the alliance why auto manufacturers should be singled out for disproportionate penalties relative to other consumer-products manufacturers,” said McCurdy, whose group is based in Washington.

Toyota agreed to pay the maximum $16.4 million for failing to alert regulators to a vehicle defect that could cause unintended acceleration. The Toyota City, Japan-based company has recalled more than 8 million vehicles worldwide since last year for pedal-related flaws.

The recalls by Toyota may not have happened had requirements in the measure, such as the brake-override technology, been in place, said Representative Bobby Rush, an Illinois Democrat who is chairman of the subcommittee on Commerce, Trade and Consumer Protection, which held today’s hearing.

“The laws were written in the 60s and 70s and do not reflect today’s global marketplace,” Rush said.

To contact the reporter on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net.

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