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February 11, 2002
DOT Docket No. NHTSA-2001-11107
Docket Management
U.S. Department of Transportation
Room PL-401
400 Seventh Street, SW
Washington, DC 20590
Comments of Public Citizen, Consumers Union, Center for Auto Safety and Consumer Federation of America Regarding 49 CFR Parts 573 and 577: Reimbursement Prior to Recall, Notice of Proposed Rulemaking, 66 FR 64078 et seq., December 11, 2001
Introduction
Public Citizen, Consumers Union, Center for Auto Safety and Consumer Federation of America submit these comments for the record on the National Highway Traffic Safety Administration's proposed rule reimbursing owners for the cost of a remedy incurred in advance of a manufacturer's recall. We have a special interest in this regulation because of our work in 2000 to secure passage of the Transportation, Recall Enhancement, Accountability and Documentation (TREAD) Act, which included the mandate for this rulemaking.
The Reimbursement Period Should Conform to Existing Statutory Remedies
The agency's determination of what constitutes a "reasonable time" for the purpose of establishing a claim for reimbursement should be grounded in the intent of Congress in enacting this provision to expand the rights of consumers prior to the start of a formal recall. In addition, the rules should facilitate such determinations with ease and certainty, in order to encourage the timely replacement of defective parts and vehicles by consumers, and to discourage foot-dragging by the manufacturers in the context of recall campaigns by making it less financially advantageous to delay announcement of a recall. In view of these criteria and objectives, we are perplexed that the agency has proposed an obscure process for determining an appropriate period for reimbursement, resulting in a standard that is both unduly narrow and highly technical and one that will serve, paradoxically, to penalize consumers who take the initiative to fix their unsafe, defective vehicles when a problem first arises.
The agency proposes to tie the period for reimbursement for influenced recalls to the opening of an engineering analysis (EA), while the time period for uninfluenced recalls begins one year before the date of a manufacturer's report filed under 49 CFR part 573. Neither time frame provides consumers with either a familiar or a straightforward reference for determining their rights under the Act. On the contrary, the proposal is predicated on the consumer having a detailed understanding of the statute and of the agency's internal investigation process, neither of which can reasonably be presumed to exist among consumers. Furthermore, tying reimbursement to the "date of the [manufacturer's] initial test failure or the initial observation of a possible noncompliance" confers upon manufacturers virtually unrestricted leeway to define a reimbursement period, latitude that would likely be advantageous to manufacturers at the expense of consumers.
A far more expansive reading of the time frame for consumer reimbursement would be consistent with Congressional intent to provide meaningful recourse under the TREAD Act to consumers affected by a recall. A uniform and easy-to-understand remedy period is essential to a consumer's ability to obtain redress. However, the proposed guidelines for reimbursement are unnecessarily complex, difficult to administer, fail to provide a uniform statutory remedy, and limit reimbursement in a manner contrary to good public policy. Fundamentally, they penalize those who took steps to remedy a defect before an official acknowledgement of that defect and may provide a windfall to manufacturers by narrowly defining the period for reimbursement. This is clearly contrary to Congressional intent in enacting this provision.
We urge, instead, that the period for reimbursement be the same as the remedy period described in 49 U.S.C. Section 30120 (g)(1), as amended under the TREAD Act, thus requiring reimbursement to be available when the recalled motor vehicle or replacement equipment is fixed or replaced by the purchaser within 10 calendar years of manufacture. This bright-line rule would be easy for the public to understand and would greatly encourage the timely remedy of safety-related defects.
Congress Has Demonstrated Its Intent to Maximize Reimbursement Rights
Congress amended 49 U.S.C. Section 30120 (g)(1) of the Motor Vehicle Safety Act (in passing TREAD), to extend the time, from 8 years to 10, during which manufacturers of motor vehicles or motor vehicle equipment must remedy, without charge, safety-related defects and noncompliances with federal motor vehicle safety standards. The expanded period was a direct response to manufacturers' failure to adequately address the need for a recall in the Ford/Firestone cases. In changing the Act's original time limits, and requiring NHTSA to issue a new rule as to the reimbursement period, Congress clearly intended to expand consumers' rights with regard to both recalls and reimbursement.
In a similar vein, section 6(b)(2) of the TREAD Act requires a manufacturer's remedy program to include a plan to reimburse an owner who has already incurred the cost of a remedy within a "reasonable time" prior to the manufacturer's notification of a defect or noncompliance with a FMVSS. In view of the 10-year time frame for repair, replacement, or refund provided by Section 30120(g)(1), we believe that it would be unreasonable, punitive, and contrary to the intent of the Act to refuse compensation during this same period to owners who repair defects prior to a recall.
To reimburse owners differently based on the timing of a repair, rather than on the nature of a repair, inequitably distinguishes between similarly-situated individuals whose vehicles have identical safety defects. Owners should be encouraged to make safety-related repairs. The proposed rule instead short-changes owners who take the initiative to correct motor vehicle safety defects and who otherwise would have been eligible for repair or replacement under a recall.
Reimbursement End Date Should be Based on Vehicle Manufacture Date
The agency proposes the same end dates for reimbursement regardless of whether the notice is predicated on a safety-related defect or on noncompliance with a Federal motor vehicle safety standard. The reimbursement period for motor vehicles would end ten days after the manufacturer mailed the last of its initial Part 577 notices, and, in the case of replacement equipment, 30 days after the conclusion of the manufacturer's initial efforts to publicize the existence of the defect or noncompliance.
For the same reasons, we oppose the agency's proposal that reimbursement rights for repair previous to the official recall should terminate prior to the end of ten years, upon the announcement of a recall. A consumer who has fixed a vehicle before an official recall should remain eligible for reimbursement for the full ten-year period.
While a consumer who has not fixed the vehicle prior to the recall may indeed be subject to the terms and limitations of the recall, this is a separate question from monetary reimbursement of expenses once a defect has been fixed. In this context, we believe the time period for reimbursement is unreasonable. The mailing date of a manufacturer's notice and the concluding date of a manufacturer's efforts to publicize a defect or noncompliance are irrelevant to an owner's right to be reimbursed for repairs made prior to a safety recall. Neither the consumer's receipt of a recall notice nor his or her knowledge of a recall effort can be assured. A consumer who repairs a vehicle prior to a recall should be entitled to the same rights under the Act that are provided to a consumer who obtains a repair in response to a recall notice.
We urge the agency to set the period for reimbursement at 10 years from the date of manufacture, the same period for reimbursement during which manufacturers of motor vehicles or motor vehicle equipment are obligated to remedy, without charge, safety-related defects and noncompliances with motor vehicle safety standards. A vehicle's manufacture date is obvious and clear to consumers. Consequently, we believe the 10-year limit should be the only applicable time limit.
Replacement Child Seats
The agency has proposed
various limitations on the right of pre-notification
reimbursement for the replacement of defective child seats. The principle goal
of a recall or of reimbursement is to give a refund for, or repair or replace
a defective product. The impact of the agency's proposed conditions on reimbursement
prior to notification must be considered in light of these critical objectives.
To facilitate the removal of recalled child seats from the marketplace, and to encourage the repair or replacement of defective seats, we urge the agency to insure that reimbursement need only be predicated on proof of ownership and of replacement, if no repair is feasible, with an essentially similar product that is free of the defect. The agency's proposal to refuse reimbursement to an owner of a child seat covered by a defect recall because the owner replaced the seat when his or her child outgrew the seat, rather than when the defect became apparent or public, does not facilitate removal of defective seats from the market place and from potential use, nor does it encourage the replacement of defective seats.
The owner's intent in replacing a recalled child seat should not be the determining factor; the goal should be the replacement or repair of the defective seat. Any consumer who has replaced a recalled child seat, prior to recall, should be reimbursed upon proof of ownership of the recalled seat and upon proof of purchase for a replacement seat that at least duplicates the function of the recalled seat. A consumer who purchases a child seat with features that expand upon those offered or available in the original seat should not be denied reimbursement under a manufacturer's plan.
Sincerely,
Joan Claybrook
President, Public Citizen
Sally Greenberg
Senior Product Safety Counsel, Consumers Union Washington DC Office
Clarence Ditlow
Executive Director, Center for Auto Safety
Jack Gillis
Director of Public Affairs, Consumer Federation of America
February 11, 2002
(Filed Electronically)
Docket Management, Room PL-401
National Highway Traffic Safety Administration (NHTSA)
400 Seventh Street, SW
Washington, DC 20590
Re: Docket No. NHTSA-2001B11107
Comments Submitted
by the Center for Auto Safety (ACAS@)
on Motor Vehicle Safety: Reimbursement Prior to Recall
Notice of Proposed Rulemaking
66 Fed. Reg. 64078 (Dec 11, 2001)
On November 1, 2000, Congress passed the Transportation Recall Enhancement, Accountability and Documentation (TREAD) Act. Pub. L. No. 106-414 which requires: AA manufacturer's remedy program shall include a plan for reimbursing an owner or purchaser who incurred the cost of the remedy within a reasonable time in advance of the manufacturer's notification [of a safety defect or standard non-compliance].§ 49 U.S.C. ' 30120(d) as amended. The TREAD Act authorized the National Highway Traffic Safety Administration ("NHTSA") to promulgate a rule to implement the reimbursement requirement.
The entire basis for passage of TREAD was that auto makers and suppliers concealed defects to avoid recalls at the cost of untold lives lost and injuries suffered from unsafe vehicles, tires and equipment that went unrecalled. In recognition of and to correct this egregious industry conduct, Congress imposed criminal penalties, increased civil penalties from less than $1 million to $15 million, extended recall periods, and required extensive early warning reporting. In short, Congress wanted to incentivize recalls and disincentivize stonewalls.
NHTSA's proposed rule to implement the reimbursement requirement stands the TREAD Act on its head by creating a new incentive for a manufacturer to stonewall and mislead the agency. By triggering the duty to reimburse on the opening of an Engineering Analysis (EA), the longer a manufacturer can ward off an EA, the lower its liability. In addition to standing TREAD on its head, NHTSA's proposal ignores basis principles of consumer law.
NHTSAs files are replete
with examples of how this proposal would let auto makers off the hook when Congress
wanted to put them on the hook. The draconian impact of NHTSA's proposal is
clearly seen in the pending investigation of failed airbag clock springs in
1996-00 Chrysler minivans. At the time NHTSA upgraded PE00-032 to EA01-007 on
February 21, 2001, Chrysler had replaced 450,000 clock springs at an average
cost to consumers of approximately $300.(1) Since
no more than 75,000 of these sales were due to crashes where the airbag went
off, implementation of NHTSA's proposal could stick consumers with a repair
bill of $112,000,000.(2)
Examination of past NHTSA fines for failure to do timely recalls show case after
case where EA's were not opened until well after consumers incurred repair costs.
For example, on April 25, 1996, Ford announced it would recall 7.9 million 1988-93
vehicles for defective ignition switches. An EA, 95-002, was not opened on this
defect until February 23, 1995. Before then the agency had opened at least three
PE's (PE92-069, PE94-034, and PE94-078 specifically into ignition switch underdash
fires as well as PE89-133 into underdash fires of unknown origin). After State
Farm Insurance submitted internal Ford documents to NHTSA that showed Ford had
withheld information from the agency, NHTSA compelled Ford to pay a $425,000
fine.
Yet even where a manufacturer withholds information and delays opening of an EA that leads to a recall, under NHTSA's proposed rule, the manufacturer is left off the hook. This is a particularly egregious result in the Ford ignition switch case because all the vehicles recalled were two to seven years old at the time the EA was opened and many had already had ignition switches replaced that are not reimbursable under NHTSA's distorted interpretation of the remedial TREAD Act.
In the case of the thick film ignition (TAI) module mounted on distributors in 1983-95 Ford vehicles, Ford's cover up was so successful that there was never a safety recall even though there were at least five investigations by NHTSA. When NHTSA confirmed Ford's withholding of requested documents during Howard v Ford Motor Co., Cal. Super Ct for Alamed Cnty, Case No. 763785-2, it failed to take any action because Ford's coverup had gotten it beyond the then 8-year limit for recall. To add to the incentive of avoiding a recall the additional incentive of avoiding prior recall reimbursement responsibility is headed in the wrong direction.
Another example of how wrong and confusing is NHTSA's proposal can be found in its investigation of fuel rail leaks in 1993-95 Chrysler LH vehicles. In that situation, NHTSA opened EA95-028 on September 22, 1995 and closed it without a recall on February 24, 1997. After realizing that it had been misled by Chrysler, NHTSA opened EA98-007 on March 10, 1998 which led to recall 98V-184 on August 6, 1998. For its misconduct, Chrysler agreed to pay a fine of $400,000 on July 19, 2000. Even NHTSA must concede that there is no bright line here for which EA opening applies, that of EA95-028 in September 1995 which led to no recall or that of EA98-007 in March 1998 which belatedly led to a recall only after Chrysler's cover up was uncovered.
Given the vagaries of
NHTSA's investigatory process which has recently been criticized by the Inspector
General for the Department of Transportation, "Review of the Office of
Defects Investigation," Report Number MH-2002-071, January 2, 2002, setting
any deadline for reimbursement based on the opening of an investigation is inherently
arbitrary. The above cases are but a few examples of where basing the right
to reimbursement on the opening of an EA would lead to arbitrary results while
rewarding industry for delaying recalls contrary to Congress' intention in passing
the TREAD Act.
There are two truly bright lines which could be adopted in the current rulemaking
B one is derived from consumer law and one is derived from the TREAD Act. If
one looks to consumer law, then the bright line is the discovery rule B i.e.,
the applicable period of time to seek recovery is from the date the consumer
discovers the defect recall remedy which is the date of the recall notice. The
consumer would have the right to seek reimbursement from the date of the recall
notice as governed by state law. All NHTSA would have to do is specify that
the consumer's right to seek reimbursement and the applicable statute of limitations
begins to run on the date of the recall.
However, the better approach is for NHTSA to simply adopt adopt the new limits for the repair for free remedy in the TREAD Act which is 10 years from date of sale for vehicles and equipment and 5 years for tires. This would promote consistency and clarity through the recall process which is essential for consumers to secure their remedies under the Act. The Center agrees with Public Citizen in this recommendation and also in the recommendation that owners of recalled child seats who purchase a new seat prior to receiving the recall notice should receive a refund. Such a measure would create an additional incentive for child seat manufacturers to do prompt recalls as intended by Congress.
Respectfully submitted,
Clarence M. Ditlow
Executive Director
Footnotes:
_____
(1) Although EA01-007 opening resume lists 124,511 as Apart
sales of clocksprings,@ this is as of August 2000. Enclosure #6 to Chrysler's
May 18, 2001 submission to NHTSA in EA01-007 shows clockspring part sales as
451,704 through February 28, 2001, just 7 days later than the opening date of
the investigation.
(2) Although consumers could file lawsuits to recover the repair costs, individual
lawsuits are a poor substitute for reimbursement programs as part of recalls
and auto makers could introduce NHTSA's regulation into evidence in an effort
to avoid liability. Such a result would be a step backward because auto makers
today claim they are willing to reimburse owners for recall repairs made prior
to the recall. See e.g., Carson v. Chrysler, Civ. No. 304032-2, D Ky.
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