Citing violations of the Motor Vehicle Safety Act’s requirements to repair vehicles with safety defects, the Department of Transportation’s National Highway Traffic Safety Administration this month imposed the largest civil penalty in its history.

The consent order imposes a record civil penalty of $200 million against Japan-based airbag supplier Takata following its massive recall over defective airbags that can inflate violently, ripping from their brackets and causing an explosion of shrapnel. Of the $200 million, $70 million is payable in cash. An additional $130 million would become due if Takata fails to meet its commitments or if additional violations of the Motor Vehicle Safety Act are discovered.

The order also imposes unprecedented oversight on Takata for the next five years, including an independent monitor selected by NHTSA to assess, track and report the company’s compliance with the phase-out schedule and other requirements of the consent order, and to oversee the Coordinated Remedy Program.

“For years, Takata has built and sold defective products, refused to acknowledge the defect, and failed to provide full information to NHTSA, its customers, or the public,” said Transportation Secretary Anthony Foxx. “The result of that delay and denial has harmed scores of consumers and caused the largest, most complex safety recall in history.”

As part of the consent order, Takata has admitted that it knew of a defect but failed to issue a timely recall in violation of the Motor Vehicle Safety Act. NHTSA also issued findings that Takata provided NHTSA with selective, incomplete or inaccurate data dating back to at least 2009, and continuing through the agency’s current investigation, and that Takata also provided its customers with selective, incomplete or inaccurate data.  

Remedy Order

Furthermore, NHTSA for the first time will use its legal authority established under the 2000 TREAD Act to accelerate safety defect repairs to millions of affected vehicles. Under the consent order, Takata must address the greatest safety risks first. It also lays out a schedule for future recalls of other Takata inflators that use a suspect propellant unless the company can prove they are safe or can show it has determined why its inflators are prone to rupture.

The order also establishes a Coordinated Remedy Program under which the agency will oversee the supply of remedy parts and manage future recalls with the assistance of an independent third-party monitor.

Under the Coordinated Remedy Order, vehicle manufacturers must ensure they have sufficient replacements on hand to meet consumer demand for the highest-risk inflators by March 2016, and to provide final remedies for all vehicles, including those that will receive interim remedies because of supply and design issues, by the end of 2019.