Upton Shaped by Ford Tire Recall Faces GM 14 Years Later

Representative Fred Upton, the Michigan Republican leading U.S. hearings into General Motors Co. (GM)’s recall of 1.6 million cars, has some of the closest ties to the automobile industry of any member of Congress.

Upton, chairman of the House Energy and Commerce Committee, said that’s no reason for anyone to question his ability to grill a powerful home-state employer, and he’s got the track record to prove it. Upton led the probe in 2000 over highway deaths linked to Firestone tires on Ford Motor Co. (F)’s Explorer SUV. That inquiry took on added relevance when Upton said he learned his daughter’s Girl Scout troop leader drove her to camp in a car with the defective tires.

“It struck home,” he said in a telephone interview. Afterward, he drafted and helped pass bipartisan legislation creating an early warning system to boost communication between the automobile industry and federal safety regulators.

While his April 1 hearing into this year’s GM recall is designed to extract answers from Chief Executive Officer Mary Barra and U.S. regulators, it may also raise questions about the effectiveness of the law that resulted from the Ford-Firestone crisis. The hearing also will test Upton’s ability to strike a balance between the needs of consumers and those of a company that employs 44,500 people in his home state.

Photographer: Andrew Harrer/Bloomberg

Representative Fred Upton, a Republican from Michigan and chairman of the House Energy and Commerce Committee, in Washington, D.C. Close

Representative Fred Upton, a Republican from Michigan and chairman of the House Energy... Read More

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Photographer: Andrew Harrer/Bloomberg

Representative Fred Upton, a Republican from Michigan and chairman of the House Energy and Commerce Committee, in Washington, D.C.

“Upton has to know that people are going to be looking at him and saying, ‘He’s just going to be an industry guy,’” said Joan Claybrook, a board member of consumer-advocacy group Public Citizen who ran the National Highway Traffic Safety Administration from 1977 to 1981. “I hope he steps outside of that, because there are some real deficiencies here.”

GM Conduct

The committee’s probe will examine the conduct of both GM and NHTSA, the auto industry’s main safety regulator, regarding an ignition-switch defect linked to 12 deaths in crashes. It revolves around the response to reported incidents involving stalls, air bags and ignition switches since 2003 in cars including the Saturn Ion, Chevrolet Cobalt and Pontiac G5.

Upton, 60, was the lead House author of the Transportation Recall Enhancement, Accountability and Documentation Act, or TREAD. The 2000 law boosted communication between carmakers and the government and increased NHTSA’s ability to collect data, with automakers required to report more potential threats like defect claims or lawsuits, and recalls in other nations.

Former U.S. Representative Billy Tauzin, who was Republican chairman of the Energy and Commerce Committee when he and Upton led the Firestone tire investigation, said Upton was a tough fact-finder in 2000 and let the information that emerged guide the committee toward a new law. Both GM and the agency can expect equally tough treatment, he said, and Upton sees auto-safety rules as helpful to auto sales.

Deja Vu

“It’s like deja vu all over again,” Tauzin said. “We thought we cured all the problems, but obviously he’s got to take another look at it.”

The ignition-switch flaw, which GM now says its engineers discovered in 2001 while developing the Ion, has spurred the automaker’s biggest crisis since its 2009 bankruptcy and government bailout. Documents show GM was aware as long ago as 2001 that the switches could slip out of position, cutting off power. Barra said March 18 she learned about an analysis of the stalling cars in December, weeks before she become CEO, and that she was informed of the decision to recall cars on Jan. 31.

Barra apologized for the lives lost and said there would be “no sacred cows” in the Detroit-based company’s investigation. She is scheduled to appear with acting NHTSA Administrator David Friedman at next week’s hearing.

Earlier Notification

“We’re going to be ready to share all the information we can with Congress,” Friedman told reporters after a March 21 speech in Washington.

Upton said he has plenty of questions for both sides.

“The most troubling thing is that it appears these cases were identified as early as 2001,” he said in the interview. “It’s 2014 now. I first learned about it reading USA Today two or three weeks ago. No earlier clues or earlier notification. It appears that there could have been hundreds of cases.”

While Upton has no GM facilities in his southwest Michigan district, he is often an advocate for the car industry’s positions. He’s a former co-chair of the Congressional Automotive Caucus, one of 32 House Republicans to back auto-industry bailout legislation in 2008 and a longtime opponent of higher fuel-economy standards for cars.

According to the nonpartisan Center for Responsive Politics in Washington, Upton’s campaigns have received $73,750 from the political action committee of GM and individual company employees since 1989, though that’s dwarfed by the $111,050 from the PAC and workers for Ford, his largest donor in that period.

Polarized Climate

A top question as the probe begins is whether the polarized climate in Congress will make it tougher to build the type of consensus that helped the TREAD Act win unanimous approval in both the House and Senate. It was signed into law less than three months after Firestone announced the recall.

A one-time White House aide and the grandson of one of the founders of Whirlpool Corp. (WHR), he is the wealthiest member of the Michigan delegation, and was long regarded as that group’s most centrist Republican, said Bill Ballenger, founder of Inside Michigan Politics, a newsletter in Lansing, Michigan.

Yet after winning his 2010 Republican primary against a more-conservative challenger with just 57 percent of the vote and enduring attacks from the Tea Party-aligned groups like the Club for Growth, Upton shifted. It helped him to fend off his 2010 primary challenger, former state Representative Jack Hoogendyk, in a 2012 rematch with 67 percent of the vote.

Light Bulbs

The political shift includes what Ballenger calls “ridiculous” moves like voting in 2011 to repeal a law banning incandescent light bulbs that Upton had championed four years earlier. Ballenger said Upton also has used his committee chairmanship -- gained after Republicans took the House in 2011 -- to embarrass President Barack Obama’s administration on issues such as the 2010 health-care law at least as often as he’s worked on bipartisan bills.

The current GM probe “gives Upton a chance to go back to being a good old-fashioned committee chairman, and conduct himself in a statesman-like, civil way without worrying about right-wingers lambasting him,” Ballenger said in an interview.

Representative Henry Waxman of California, the panel’s top Democrat, said the GM recall investigation is so far proceeding on a bipartisan basis. He said if the committee considers new auto-safety legislation, he and Upton probably can add it to their bipartisan accomplishments that include a response to 2012’s deadly meningitis outbreak and a measure freeing up airwaves to meet consumer demand for smartphones.

Boost Penalties

“I have a high regard for Chairman Upton,” Waxman said in an interview. “We’ve been able to pass some legislation even though Congress looks like it’s deadlocked on everything.”

As the GM probe advances, a key matter that may divide lawmakers is whether to boost penalties under the TREAD Act. The current law has maximum civil penalties of $35 million and a maximum criminal penalty of 15 years in prison.

Claybrook said the civil penalties are but a “fly speck” to companies the size of GM, which reported $155 billion in revenue for 2013, according to data complied by Bloomberg. The fines should be lifted to a maximum of $300 million, and companies should no longer be able to shirk criminal liability by coming back later to disclose defects that should have been reported earlier.

“We need to give the TREAD Act more muscle,” said Clarence Ditlow, president of the Center for Auto Safety, a Washington-based research group that has been tracking recalls and defects since it was founded by Ralph Nader in 1970.

Toyota Accord

Upton said he’ll let the hearings determine whether various penalties should be lifted, although he insisted “they’re pretty high” already. He cited last week’s agreement by Toyota Motor Corp. (7203) to pay a $1.2 billion penalty to end a U.S. criminal probe into sudden unintended acceleration of vehicles after a 10 million-car recall.

Tauzin said the partisan divide in Congress weighs against a repeat of the swift agreement on legislation seen in 2000 after the Bridgestone-Firestone tire recall.

During the 2000 recall, Upton and other lawmakers acted at a time of urgency, as the number of deaths related to tire defects mounted as they were drafting the bill and an annual congressional adjournment loomed. Upton, who was then chairman of the panel’s investigations subcommittee, sped the measure’s passage by negotiating with the Senate even as he wrote the House version and let the House Judiciary Committee insert criminal penalties without its own hearings.

“To be honest, I think it could be a harder pull this year,” Tauzin said.

To contact the reporter on this story: Laura Litvan in Washington at llitvan@bloomberg.net

To contact the editors responsible for this story: Bernard Kohn at bkohn2@bloomberg.net Romaine Bostick, Elizabeth Wasserman

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