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September 29, 2000 02:00 AM

Congress wants to pass defect bill before adjourning(weekly update)

Miles Moore
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    WASHINGTON (Sept. 29, 2000)—A House subcommittee passed unanimously a bill which would greatly enhance federal regulators´ ability to gather tire and auto defect information. It also would punish those who withhold such information.

    Sponsors of the bill hope it will pass both houses of Congress before adjournment for the November election. But first they must reconcile their bill with the Senate legislation which passed the Senate Commerce Committee last week.

    Both versions predictably created a firestorm among warring factions of Washington lobbyists. Consumer advocates want strong criminal penalties and heavy fines in the finished bill, while industry representatives insist legislators should be aware of "the real-world limits and unintended negative consequences" inherent in the process.

    Meanwhile, Bridgestone/Firestone Inc.—the Nashville-based tire maker whose travails with its 6.5-million-tire recall inspired the legislation—battled further salvos of negative publicity.

    A BFS spokeswoman dismissed reports that newly released court documents showed Firestone tires made in the company´s Wilson, N.C. plant to have a higher rate of tread separation complaints than tires made in other BFS facilities.

    The adjustment data was "just one part of the overarching picture," the spokeswoman said. "We need to find the root cause...you can´t tell the whole story from just one tiny part of the picture."

    Both BFS and Ford Motor Co. discounted as "old news" a story from the Sept. 28 Wall Street Journal that said Ford would source the majority of its original equipment tires for the 2002 Ford Explorer from Michelin North America Inc.

    The "WSJ" based its story on remarks from Ford CEO Jacques Nasser, who called the move to allow customer choice "a major shift" in Ford policy. Both Ford and BFS, however, insisted Mr. Nasser said nothing that he or others at Ford hadn´t said a few weeks earlier.

    "We said before that there would be a choice of tires for the 2002 Explorer, and Firestone is one of the choices," the BFS spokeswoman said. A Ford spokeswoman said the Explorer´s tires have always been double-sourced, and that Michelin has had "slightly more than half of the high-volume tires" for the Explorer since as far back as 1997, when it signed a contract with Ford.

    Later, in a statement, BFS said that when the 20002 Explorer launches domestically in 2001 it will be available in three original equipment tire sizes. "As of today, Firestone will supply 100 percent of the P245/70R16 and P255/70R16 sizes. The third tire, the P235/70R16, will be provided 50 percent by Michelin and 50 percent by Firestone.

    "Based on those breakdowns, when the vehicle launches, Michelin will supply 30 percent of the total domestic line. However, a few weeks ago, Ford announced plans to allow its customer to choose between Firestone and other brands. Based on that (statement), those numbers may not hold," the company said.

    A Michelin spokeswoman declined comment, except to say the company always defers to its auto-maker customers in making comments on original equipment.

    Goodyear and Continental General Tire Inc. also are negotiating with Ford to supply OE tires for the 2002 Explorer.

    The bill passed by the House Commerce Subcommittee on Telecommunications, Trade and Consumer Protection was amended significantly from the original legislation during the Sept. 27 markup session. Its provisions as passed by the subcommittee include:

    *Requiring auto, tire and parts manufacturers to report foreign recalls or safety campaigns involving their products within five days;

    *Directing the Secretary of Transportation to establish early warning reporting requirements on possible safety defects, and to revise the 32-year-old federal tire safety standard;

    *Requiring manufacturers to send the National Highway Traffic Safety Administration their warranty and claims data;

    *Requiring manufacturers to fully reimburse motorists for the replacement costs of defective parts if the manufacturers are unable to provide replacements themselves;

    *Increasing civil penalties for violating reporting and recall statutes from $1,000 to $5,000 per vehicle, with a maximum penalty of $15 million, up from the current $925,000; and

    *Creating criminal penalties for individual executives of up to 15 years in prison and a $100,000 fine for deliberately misleading NHTSA about defects that lead to death or injury.

    Amendments directing DOT to develop dynamic testing procedures on rollovers and requiring manufacturers to test or perform engineering analyses on their products before certifying them as DOT-compliant were withdrawn for further discussion.

    The House bill contains many similarities to the Senate version, including the provisions on civil penalties and rewriting the tire standard. But the criminal penalty provisions differ—the maximum prison sentence in the Senate version is 10 years, and can be passed only if an executive knows a product is defective at the time of commercial introduction. There are other differences as well, such as the Senate version´s lack of an early warning requirement.

    Lobbyists on both sides withheld judgment on the House bill until they could study it further. Joan Claybrook, president of Public Citizen and a former NHTSA administrator, said she thought at first glance that the bill passed by the subcommittee was a substantial improvement over the original version, largely because the new bill includes criminal penalties.

    The day before the vote, Ms. Claybrook held a press conference blasting auto industry lobbyists for trying to gut recall enhancement legislation.

    "They are working furiously behind the scenes to mold the legislation to their liking," said Ms. Claybrook, who released documents detailing industry efforts in past years to block NHTSA reform bills.

    She cited ways in which the Senate bill already had been watered down, such as the removal of a rollover prevention standard requirement and removal of criminal penalties for executives except for knowingly introducing defective products. In most cases, she said, product defects only come to light after years of use, and withholding data on product failures should also invoke fines and jail terms.

    Meanwhile, representatives of the auto and tire industries—as well as spokesmen for general industry, including the National Association of Manufacturers and the U.S. Chamber of Commerce—are indeed trying to make their concerns over a sweeping, hastily passed NHTSA reform bill well known in the House and Senate.

    Typical of their efforts is a Sept. 26 written statement by Josephine S. Cooper, president and CEO of the Alliance of Automobile Manufacturers.

    "In the effort to criminalize egregious disregard for public safety, vaguely worded proposed legislation may inadvertently criminalize specific products and legitimate engineering design decisions," Ms. Cooper said. It takes NHTSA 16 months on average to identify a defect, she said, yet the legislation would put executives in jail for not quickly identifying defects.

    Furthermore, the requirements for reporting foreign recalls and safety actions "would generate mountains of paper that would bury any useful insights the data might contain," she said.

    The Rubber Manufacturers Association, though less alarmist in its tone, is also fighting for legislation and regulation it considers sensible.

    "In the current environment, care must be taken to provide solutions that are doable, technically viable, and will indeed accomplish the desired results," wrote RMA President Donald B. Shea in a Sept. 26 letter to NHTSA Administrator Sue Bailey.

    The agency granted the RMA´s petition to revise the tire safety standard in January 1999, and the tire industry has been working on a standard based on best global practices since 1997, Mr. Shea noted. He invited Ms. Bailey to meet with industry representatives "as soon as possible."

    As of Sept. 28, no dates had been set for either Senate floor action on the Senate bill, or action on the House version before the full House Commerce Committee.

    Congress is set to adjourn Oct. 6, but unfinished business on several fronts may keep legislators in session for as long as two weeks after that.

    Regarding the Bridgestone/Firestone adjustment data, U.S. District Judge Anthony A. Alaimo released the papers after The Washington Post, CBS News and the Chicago Tribune Co. filed suit to obtain them.

    The documents had been sealed as part of a case involving Michael and Kim Van Etten, whose 19-year-old son, Daniel, was killed in the crash of a Ford Explorer equipped with Firestone tires from Wilson.

    The papers, which covered BFS adjustment data from 1990 to 1995, showed that tread separations figured in nearly 60 percent of all Firestone adjustments during that period, but in 68 percent of adjustments involving tires made in Wilson.

    BFS´s investigation of problems with recalled ATX and Wilderness AT tires have concentrated largely on quality control and manufacturing practices at the tire maker´s Decatur, Ill., facility. The recall covers all 15-inch ATX and ATX II tires, but only those 15-inch Wilderness AT tires made in Decatur.

    Consumer advocates have charged since the recall began Aug. 9 that all ATX and Wilderness tires are defective, not just 15-inch tires or tires made in Decatur.

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