Last week, NHTSA and GM announced an agreement to resolve recall timeliness claims related to GM’s massive Ignition Switch recall. In addition to the widely-reported $35 million civil penalty GM has agreed to pay (the maximum under the Safety Act), GM has agreed to various behavioral changes, reporting requirements and other commitments related both to the current recall and to how GM handles potential safety issues in the future. A copy of the agreement is available on NHTSA’s website.

Here are the key points of the agreement:

Penalties:

  • Payment of a $35 million civil penalty.
  • Payment of an additional penalty of $7,000 per day until GM provides a copy of the report of its internal investigation (conducted by Anton Valukas) to NHTSA, which must occur by June 30, 2014.
  • The agreement does not release GM or any of its employees from potential civil or criminal liability that may be asserted by the U.S. or any agency, other than GM’s civil penalty liability under 49 U.S.C. § 30165.

Documentation Related to NHTSA’s Ongoing Investigation:

  • GM will provide “a full and complete copy” of the written factual report of GM’s internal investigation prepared by Anton Valukas and will meet with NHTSA on a monthly basis to discuss the report’s recommendations and their implementation at GM.
  • GM will complete production of documents responsive to NHTSA’s March 4, 2014 Special Order by May 23, 2014, except customer complaints and field reports will be produced by August 14, 2014.
  • GM will respond to NHTSA’s April 4, 2014 Special Order concerning tests conducted by GM related to removal of items from a vehicle’s key ring as a means to prevent inadvertent movement of the ignition switch.

Provisions Related to Implementation of the Ignition Switch Recall:

  • GM will endeavor to make repair parts available in accordance with a production/availability schedule that runs through October 4, 2014.
  • GM will adopt a comprehensive plan for maximizing the recall completion rate, to include:  steps to prevent recalled switches from being reintroduced into the recall population, a multi-lingual communications strategy, maintaining up-to-date information on the GM website, and engaging with owners through new and traditional media and direct contacts.
  • GM and NHTSA will have bi-weekly meetings to discuss recall completion.

Policies and Practices Related to Future Safety Defect Analysis and Decision-Making:

  • GM will review and strengthen its process for employees to report potential safety defects or noncompliances and will rigorously enforce its nonretaliation policy related to that process.
  • GM will improve its processes for identifying and reporting safety defects, including:  improving data/product quality analytics, improving information sharing across functional areas and disciplines, streamlining its recall decision-making process, and improving communications with NHTSA.
  • GM will engage in efforts to improve employee training regarding proper documentation practices and to encourage discussion of safety issues.
  • GM will not delay any safety defect decision-making meetings because it has not identified the precise cause, the remedy or a remedy plan for the defect, and it will ensure expeditious internal reporting of safety-related concerns to the proper individuals or committees.
  • GM will meet with NHTSA monthly (for at least one year, but up to three years at NHTSA’s request) to discuss GM’s decision making with respect to potential safety-related issues.
  • GM will provide a monthly list (for one year) of all safety-related issues under review by the company that are relevant to the U.S. fleet.

If GM’s revised policies and practices are made available to the public, they could serve as a “gold standard” to be followed by all manufacturers (due to NHTSA’s review and input as contemplated under the settlement). In the meantime, all manufacturers should undertake a comprehensive review of their safety-defect evaluation policies and procedures to ensure they are current and are well understood and followed by company employees. As part of that process, manufacturers should consider implementing key concepts from the GM settlement:  conducting thorough employee training (including encouraging full and frank discussion of potential safety issues), improving cross-functional and cross-discipline information sharing, streamlining safety review processes, ensuring that safety defect decisions are not delayed pending a determination of the precise cause or a determination of a remedy, and improving data analytics.