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NHTSA Issues Guidance of Civil Penalty Considerations

On March 1, 2016, the National Highway Traffic Safety Administration (“NHTSA”) published in the Federal Register, a final rule relating to its interpretation of factors to be considered in determining amounts of civil penalties for violations of the National Traffic and Motor Vehicle Safety Act. The final rule becomes effective after 60 days and with it, maximum penalty amounts also take effect. The Fixing America’s Surface Transportation Act (“FAST Act”) which became law in Dec. 2015, required finalization of this guidance prior to the higher penalties under the previous highway program extension law taking effect. Having satisfied this requirement, the penalty caps increase officially from $7,000 per violation to $21,000 per violation and overall maximum rises from $35 million to $105 million.

The final rule notes that NHTSA has historically considered the gravity of the violation, safety risk, cooperation with investigators and size of the violator when considering penalties. This is particularly the case with small businesses in assessing their ability to pay penalties. The rulemaking goes on to detail the nine discretionary factors NHTSA will utilize moving forward in such cases:

  • Nature of the defect or noncompliance.

  • Knowledge by the respondent of its obligations (if respondent is a corporation/partnership this extends to employees and employee training and corporate processes are a factor).

  • Severity of the risk of injury as a result of the violation.

  • The occurrence or absence of injury. NHTSA interprets this to extend to “alleged” death/injuries “regardless of whether NHTSA has been able to establish that the defect, non-compliance or violation was the definitive cause of the death or injury.”

  • Number of motor vehicles or items of motor vehicle equipment distributed with the defect or non- compliance. This can be applied as total number or percentage of manufacturer’s annual production.

  • Actions taken by the respondent to identify, investigate, or mitigate the condition, including timeliness and adequacy of communications to owners and dealers, or lack thereof. Failure to act or respond fully to NHTSA investigators is also considered.

  • Appropriateness of penalty in relation to the size of the business of the respondent. Small business threshold is employing 1,000 people or less with annual receipts less than $15 million.

  • Whether respondent has been assessed civil penalties in the most recent five year period. This is interpreted by NHTSA looking back from the date of the violation, not the date of resolution.

  • Other factors: history of violations, economic gain from the violation, effect of conduct on integrity of NHTSA’s programs, and whether respondent responded to NHTSA in a timely fashion.

The final rule also notes that NHTSA considers these nine criteria to be discretionary. They may consider some, all, or none of them in a particular case. But in rejecting several comments on the proposed rule, NHTSA signaled that they intend to be fairly strict in their enforcement efforts. Since all cases are unique, NATM members are encouraged to seek their own counsel to address any situations they may face in this regard.

After consecutive years of collecting record amounts of civil penalties from motor vehicle manufacturers, it remains clear that NHTSA intends to continue its strong focus on enforcement and ensuring compliance with manufacturer obligations. To assist its members, NATM recently commissioned and has made available on its website a compendium outlining manufacturer obligations under NHTSA’s early warning reporting (“EWR”) regulations. To view that document, visit the members’ only section of

About the Authors

Darrell Conner is a Government Affairs Counselor and Dennis Potter is a Government Affairs Advisor at the law and lobbying firmof K&L Gates,where they represent NATM and other clients on legislative, regulatory, policy and political matters. Conner can be reached at and Potter can

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