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2000 — A look into the past: TREAD Act passes

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TREAD Act passes

(Editor's Note: This story is part of our #TireBiz30 in which we feature one archived story every day of September to celebrate Tire Business' 30th anniversary. Each story represents one of the most relevant news story published in our pages for that year.)

WASHINGTON — Major legislation stemming from Bridgestone/Firestone Inc.'s 6.5-million-tire recall has become reality.

The Senate passed the Transportation Recall Enhancement Accountability and Documentation (TREAD) Act the evening of Oct. 11, on a motion and without a recorded vote. This was one day after the House of Representatives approved the bill by voice vote.

Although consumer advocates decried the TREAD Act as too weak to be meaningful and business interests fought to kill its criminal provisions, the tire industry seems reasonably content with the legislation, which President Clinton is expected to sign.

"Given the situation and the public outcry, this is probably as good a bill as the industry could hope for," said Roy E. Littlefield, government affairs director for the International Tire & Rubber Association. The bill requires the National Highway Traffic Safety Administration to rewrite the 32-year-old safety standards for new tires, and ITRA is "glad they won't address retreads at this point," he said.

The Rubber Manufacturers Association said it was "unequivocal" in its support for the safety features of the bill, and vowed to work with NHTSA in drafting the new standard—something the agency promised to do when it granted an RMA petition nearly two years ago.

Meanwhile, the Tire Association of North America claimed a "major victory" by "helping to significantly narrow the applications of the criminal penalties" in the bill, "to ensure that tire dealers were not unjustly targeted."

Under the TREAD Act's provisions, tire and auto executives who knowingly sell defective products which cause death or serious injury, and fail to inform NHTSA, face prison terms of up to 15 years and fines of up to $100,000. The bill also raises the maximum fines for corporations guilty of lying about defective products to $15 million from the current $925,000.

In the Senate bill sponsored by Sen. John McCain, R-Ariz., the criminal penalties would have applied to "any officer, director or agent" of a tire, auto or parts manufacturer.

This was what particularly alarmed TANA.

"The broad, ambiguous and sledgehammer approach to criminal liability contained in Sen. McCain's (bill), coupled with the potentially broad application of the term 'agent,' made it a dangerous bill for tire dealers, manufacturers and other tire businesses," the association said in a press release. "The bill also would have set a precedent that would encourage and facilitate product liability litigation against tire dealers, manufacturers and others."

Mr. McCain's bill stalled on the Senate floor after several senators placed legislative holds on it. Mr. McCain originally fought for his own legislation—even at one point trying to hold the Department of Transportation appropriations package hostage to his bill. But in the end he was persuaded to drop the fight and support Senate passage of the TREAD Act, which does not include "agents" of tire companies among those liable for criminal penalties.

Even so, Mr. McCain fought to strengthen the criminal provisions in the bill that ultimately passed. One of its provisions grants a "safe harbor" to corporate whistleblowers who report information about fatal or injurious product defects within "a reasonable amount of time." Mr. McCain demanded and got a rewrite in which the safe harbor is available only to whistleblowers who don't initially know the defects are deadly.

Among other things, the TREAD Act also:

Establishes a requirement for dashboard signals warning motorists of low tire pressure;

Bans the sale of tires and other equipment named in a recall;

Requires NHTSA to create the first-ever vehicle rollover rating requirements based on dynamic testing;

Directs NHTSA to initiate rulemaking to establish an "early warning" system in which tire and auto makers would notify the agency of unusual numbers of product complaints; and

Requires tire and auto makers to inform NHTSA of foreign recalls and customer satisfaction programs.

In a press release about the TREAD Act, RMA President Donald B. Shea said his association "has been working with NHTSA to accelerate regulations that give all consumers a world-class testing standard for tires."

Since 1997, the RMA and various tire manufacturers have worked on harmonizing and modernizing world tire safety standards under the aegis of the Transatlantic Business Dialogue (TABD). NHTSA granted the association's petition in January 1999 to begin rulemaking to replace the current passenger tire standard with the "Global Tire Standard 2000" developed within the TABD.

The RMA worked closely with Congress in drafting the final provisions of the TREAD Act, Mr. Shea said, "and is pleased a solid piece of legislation was adopted."

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