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Automakers push back on legislation to increase recall fines

by Drew Johnson

Automakers are urging Congress to shelve a new proposal that would drastically increase the maximum fine for recalls.

Vehicle recalls became a hot topic on Capitol Hill following Toyota's unintended acceleration fiasco, and that debate is still raging on today. Congress is considering new legislation that would increase the maximum fine allowable for failing to recall vehicles properly to $250 million, prompting the world's automakers to speak out.

Sponsored by Sens. Mark Pryor, D-Ark., and Jay Rockefeller, D-W. Va., the bill aims to increase the maximum allowable fine for failing to report a vehicle safety issue from $17 million to a staggering $250 million. Although Congress maintains the bill would help reform the National Highway Traffic Safety Administration, many of the world's automakers argue the proposed penalties are just too steep.

"The proposed increases are so out of proportion either to the current penalty structure or the penalty structure for other manufacturers under the Consumer Product Safety Act as to appear unfairly punitive," the Alliance of Automobile Manufacturers, Association of Global Automakers, National Association of Manufacturers and American International Automobile Dealers Association wrote to Senate leaders Harry Reid, D-Nev., and Mitch McConnell, R-Ky in a letter obtained by The Detroit News. "The proposed increases should be scaled back to a more appropriate level."

The auto alliance includes a total of 12 automakers, including General Motors, Ford and Toyota.

Although fines for delayed recalls are seldom used, the proposed $250 million cap far exceeds any recent penalties. Toyota was required to pay $50 million to settle three delayed recalls with the NHTSA while BMW was recently forced to pay $3 million after the agency discovered the German automaker dragged its feet on 16 recall campaigns since 2010.

If the bill passes into law, automakers will have one year before the rules take effect.