US to fine air bag maker Takata $14,000 per day

Author: Associated Press
Published: Updated:

RICHMOND, Va. (AP) – The U.S. government will fine Japanese air bag maker Takata Corp. $14,000 per day for failing to fully cooperate in a long-running investigation of faulty and potentially dangerous air bag inflators.

The inflators, in cars made by 10 companies, can explode with too much force, spewing shrapnel into drivers and passengers. At least six people have been killed and 64 injured worldwide due to problem.

Transportation Secretary Anthony Foxx announced the fines Friday in Richmond, Virginia, on a bus tour to promote a major transportation bill. He called Takata a “bad actor” and said the fines will grow each day it fails to comply with two special orders issued last year by the National Highway Traffic Safety Administration.

Takata has resisted demands to recall its driver’s side air bags nationwide, although automakers have done recalls themselves. The agency also has demanded data from the company, but said in a letter to Takata that it has failed to explain a “deluge” of 2.4 million pages of documents. Federal law requires Takata to provide an index so investigators know what to look for. Fines will accrue until Takata “fully and substantively” explains the documents, the letter said.

Takata officials have said publicly they are cooperating, but that’s not the case, Foxx said. “We have a very serious defect issue. We’re working as hard as we can to get defective (cars) off our roads. … We will not tolerate this.”

The letter also threatens Takata with depositions of employees and court action from the U.S. Justice Department, which already is investigating the company.

In a statement, Takata disagreed with the contention that it hasn’t cooperated. The company said it turned over documents, meets regularly with the agency and has explained testing to find the cause. Tests so far support Takata’s view “that age and sustained exposure to heat and humidity is a common factor in the small number of inflators that have malfunctioned,” the company said.

Takata also said it has increased production of replacement parts and is working with competitors to support automaker recalls.

“We remain fully committed to cooperating with NHTSA,” the statement said.

NHTSA has said that Takata’s inflator propellant, ammonium nitrate, can burn faster than designed if exposed to prolonged airborne moisture. That can cause it to blow apart a metal canister meant to contain the explosion. So far, automakers have recalled about 15 million vehicles in the U.S. and about 22 million globally due to Takata inflators. There could be as many as 30 million vehicles with the air bags nationwide.

Fines from NHTSA are capped at $35 million per infraction. Since Takata is alleged to have violated two orders, it could be fined a maximum of $70 million. But at $14,000 per day, it would take nearly 1½ years to reach the cap.

Takata may keep paying the relatively small fines rather than guiding NHTSA to documents that could result in bigger penalties, said Kelley Blue Book Senior Analyst Karl Brauer, who said such a decision is “probably another cost of doing business that they can roll into some budget line and not really even notice it.”

Takata reported a $278 million loss in its most recent fiscal quarter, a reversal from a $74 million profit a year earlier. Quarterly sales rose 16 percent from a year earlier to $4 billion.

The transportation bill, called the Grow America Act, would raise the maximum fine against automakers to $300 million, triple NHTSA’s investigations budget to $31.3 million and give it new authority to stop sales of defective autos that are an “imminent hazard.”

Also in the bill are provisions requiring used-car dealers and rental-car companies to get recall repairs made before they can rent or sell cars.

NHTSA is continuing to pursue the national driver’s air bag inflator recall from Takata, but the agency must find the cause of the inflator failures to do that, Administrator Mark Rosekind said. Takata and automakers are testing air bags under NHTSA-approved protocols, he said.

Rosekind also said the government is watching legal efforts in South Carolina by plantiffs trying to gain control of air bags involved in their accidents. It appears that many were sent to Takata for testing, he said.

In Miami Friday, U.S. District Judge Federico Moreno held the first hearing on more than 80 potential class-action lawsuits against Takata. Most seek damages for loss in vehicle values and have been being consolidated for pretrial decisions. A smaller group of plaintiffs seek damages for injuries.

Moreno also urged attorneys to agree on preserving inflators. “Whatever you can’t work out, I’ll decide,” he said.

Takata attorney David Bernick said recalled inflators are destroyed when tested.

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