Feds seek $16.4M fine against Toyota

April 5, 2010 http://detnews.com/article/20100405/AUTO01/4050400

Feds seek $16.4M fine against Toyota

Detroit News Washington Bureau

Washington — Federal regulators want to impose a $16.4 million civil fine against Toyota Motor Corp. for failing to notify the auto safety agency of the dangerous "sticky pedal" defect for at least four months, despite knowing of the potential risk to consumers.

The penalty is the maximum the National Highway Traffic Safety Administration can levy under federal law — and would be the largest NHTSA has ever imposed against an auto manufacturer. It also reflects a new far more aggressive stance by the safety agency.

Toyota didn’t immediately say whether it would fight the penalty.

"While we have not yet received their letter, we understand that NHTSA has taken a position on this recall," Toyota said in a statement. "We have already taken a number of important steps to improve our communications with regulators and customers on safety-related matters as part of our strengthened overall commitment to quality assurance. These include the appointment of a new chief quality officer for North America and a greater role for the region in making safety-related decisions."

Approximately 2.3 million vehicles in the United States were recalled in January for the sticky pedal defect. Toyota separately has recalled 5.4 million vehicles over pedal entrapment issues — though some vehicles are impacted by both.

Auto manufacturers are legally obligated to notify NHTSA within five business days if they determine that a safety defect exists. NHTSA said it learned through documents obtained from Toyota that the company knew of the sticky pedal defect since at least Sept. 29, 2009, the agency said.

That day, Toyota issued repair procedures to its distributors in 31 European countries and Canada to address complaints of sticky accelerator pedals, sudden increases in engine revolutions, and sudden vehicle acceleration. The documents also show that Toyota was aware that consumers in the United States were experiencing the same problems, the agency said.

Toyota automaker has two weeks to decide whether to accept or contest the fine. NHTSA will go to court to enforce the penalty to Toyota contests the fine.

"We now have proof that Toyota failed to live up to its legal obligations," said Transportation Secretary Ray LaHood. "Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families. For those reasons, we are seeking the maximum penalty possible under current laws."

Under NHTSA’s authority, the maximum possible civil penalty for related violations is $16.375 million. The penalty announced Monday relates specifically to the "sticky pedal" defect and NHTSA is still investigating Toyota to determine if there are additional violations that warrant further penalties.

"Safety is our top priority and we will vigorously pursue companies that put consumers at risk," said NHTSA Administrator David Strickland. "We will continue to hold Toyota accountable for any additional violations we find in our ongoing investigation."

On Feb. 16, NHTSA launched an investigation into the timeliness and scope of the three recent Toyota recalls and required the automaker to turn over documents and explanations related to its adherence to U.S. auto safety laws. NHTSA made a preliminary determination on the fine announced Monday based on a review of documents Toyota has provided.

To date, Toyota has submitted more than 70,000 pages of documents, which NHTSA officials are continuing to review.

Members of Congress are drafting legislation that would boost the amount of fines, given that major automakers report tens of billions of dollars in revenue annually.

In 2004, General Motors paid the largest fine to date, $1 million, to settle charges that it failed to conduct a timely recall to correct a safety defect. The problem involved windshield wiper failure in 581,344 vehicles manufactured in 2002 and 2003.

GM waited more than two years before notifying NHTSA and after checks showed the problem as early as October 2001.

The Toyota fine would still be smaller than a settlement GM made with the government in 1994.

At that time, the Clinton administration announced that a federal investigation showed GM had knowingly sold trucks that posed a hazard because of engine fires. Rather than order a recall, the Transportation Department announced that GM agreed to pay $51 million toward auto safety research programs.

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