Washington — Two U.S. senators, including the incoming head of the Commerce Committee, will unveil legislation Thursday to allow auto industry employee whistle-blowers to potentially be paid millions if they reveal hidden dangers.
The bill would grant the secretary of transportation the discretion to award whistle-blowers up to 30 percent of the total monetary penalties resulting from Department of Transportation or Department of Justice enforcement actions that total more than $1 million. The bill covers employees or contractors of motor vehicle manufacturers, parts suppliers and dealerships.
Sen. John Thune, R-S.D., the top Republican on the Commerce Committee, and Sen. Bill Nelson, D-Fla, are introducing the Thune-Nelson Motor Vehicle Safety Whistleblower Act. The bill is being cosponsored by Sens. Claire McCaskill, D-Mo., and Dean Heller, R-Nev., the leaders of the Commerce Committee's subcommittee on consumer protection that held two hearings this year on General Motors’ delayed recalls.
The legislation "is intended to incentivize whistle-blowers from the automotive sector to voluntarily provide information to the U.S. Department of Transportation to prevent deaths and serious physical injuries by identifying problems much earlier than would have otherwise been possible,” the senators said in a statement.
It comes the same day that the Senate Commerce Committee is holding a hearing on the recall by 10 major automakers of at least 7.8 million vehicles since 2013 for Takata air bags that may rupture and spew metal fragments.
The defect is linked to five deaths worldwide in Honda vehicles and more than 30 injuries. The committee will hear from Honda, Chrysler, Takata and the deputy chief of the National Highway Traffic Safety Administration, David Friedman.
General Motors Co. in May paid a record $35 million fine to the NHTSA and agreed to up to three years of intense oversight by the safety agency. That means if a whistle-blower had alerted NHTSA, he or she could have received up to $10.5 million under the bill.
Toyota Motor Corp. in March paid a $1.2 billion fine for its delayed recalls linked to at least four deaths after it was charged with wire fraud in New York. No executives were charged criminally. The Justice Department announced a deferred prosecution agreement with Toyota after it admitted it misled U.S. consumers by concealing and making deceptive statements about safety. In theory, a Toyota whistle-blower could have collected a staggering sum of $360 million under the bill.
The Thune-Nelson bill marks the first significant auto safety proposal to receive backing of a top Republican. Democrats earlier this year in the House and Senate introduced sweeping auto safety reform measures including more than doubling NHTSA's budget, hiking maximum fines for delaying recalls and allowing for up to life in prison for auto executives who delay callbacks for defects that result in fatalities.
Rep. Fred Upton, R-St. Joseph, chairman of the House Energy and Commerce Committee, said in a Detroit News interview Tuesday he is still considering introducing an auto safety reform bill and was holding meetings this week.
McCaskill, who heads a Senate Commerce panel, in August introduced a bill that “gives federal prosecutors greater discretion to bring criminal prosecutions for auto safety violations and increases the possible penalties, including up to life in prison for violations that result in death,” her office said.
The bill would do away with the current $35 million maximum fine on automakers for delaying recalls, and would hike the maximum per-vehicle fine from $5,000 to $25,000. Congress doubled the fines to $35 million in 2012. It also would double funding for NHTSA over six years.
The Thune-Nelson bill is modeled after similar whistle-blower protections that exist at the Internal Revenue Service and Securities and Exchange Commission.
But there are important hurdles.
The bill will cover “original information” not previously known to NHTSA relating to any motor vehicle defect, noncompliance or violation of any reporting requirement that is likely to cause risk of death or serious physical injury. The Transportation Department will assess whether the whistle-blower had the chance to report the problem internally and how significant the information is.
NHTSA would protect whistle-blowers identities. But they would get no money if convicted of a crime in connection with the issue — that is, if they were engineers who later were charged and found guilty of wrongdoing. Whistle-blowers not satisfied with the secretary's decision could appeal.
A spokeswoman for Transportation Secretary Anthony Foxx didn't respond to a request for comment late Wednesday.